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Test your basic knowledge |
CA Life Agent Exam
Start Test
Study First
Subject
:
certifications
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Annuity distributions prior to age 59 1/2 incur a 10% IRS penalty EXCEPT for death - disability - immediate annuity - or rollover.
Pure risk vs. Speculative risk
IRS Penalties for Annuities
Common Life Exclusions
Equity Index Whole Life policy
2. Primary - if 2 or more - equally shared; Contingent (Secondary) - only if primary dead; Tertiary - only if both primary & secondary dead. If none listed - goes to estate.
Departments of an Insurer
Beneficiary provisions
Tax implications of an Annuity (1 of 2)
Medicare Supplement or Medigap policy
3. Earned premium is $ paid for coverage to date. Unearned premium is $ paid & returnable due to coverage not provided.
Dividends
Earned vs. Unearned premium
Types of Renewability provisions
Payor (aka Waiver of Payor's Premium) rider
4. 1: Skilled nursing care; 2: Intermediate care; 3: Custodial care; 4: Home health care.
IRS Penalties for Annuities
Levels of Long Term Care provided
Earned vs. Unearned premium
Types of Insurers (miscellaneous)
5. Coverage remains in effect for 31 days past premium due date; benefits paid during grace period would be deducted from sum.
Grace Period provision
Plans A-L of Medical Supplement or Medigap
Conformity with State Statute provision
Non-forfeiture options for WL policy
6. Accumulation or "pay-in" - contributions & interest earned are tax-deferred; Annuity or "pay-out" - monthly annuity (taxable) paid.
Types of Insurers (miscellaneous)
Graded Premium Whole Life policy
Phases of an annuity
Types of Accident & Health (A&H) providers
7. Agents - represent Insurer; Brokers - represent themselves & Insured; Solicitors - represent one agent to solicit leads.
Term Life policy
Types of Licensed Producers
Family policy
Non-forfeiture options for WL policy
8. Identical to Incontestable Clause in Life policy.
Split Dollar Plan
Time Limit on Certain Defenses provision
Blue Cross/Blue Shield
Valid life insurance contracts must identify...
9. After 2-3 yrs. - Whole Life policy equity builds tax-deferred @ fixed interest rate until it equals death benefit; borrowable but taxable.
Small Employer Medical Expense plan
Annuity surrender charges
Return of Cash Value rider
Cash value
10. Same as Universal Life but cash value put in investment vehicles chosen by policy owner (stocks - bonds - munis.); cash value NOT guaranteed.
Cost of Living Adjustment (COLA) Disability rider
Modified Endowment Contract (MEC)
Variable Universal Life policy
Multiple Employer Trust (MET) aka Multiple Employer Welfare Association (MEWA)
11. Available for any reason up to full cash value @ fixed (max 8%) OR variable interest rate; loan $ + interest deducted from benefit @ death.
Policy loans
Medicare Part A & B "Gaps"
Universal (aka Flexible Premium Adjustable) Life policy (1 of 4)
Universal (aka Flexible Premium Adjustable) Life policy (3 of 4)
12. Written contract to transfer risk of premature death from one party to another; pays stated sum upon death; creates instant estate.
Phases of an annuity
Life insurance policy
Accidental Death & Dismemberment (AD&D) Disability rider
Dread Disease policy
13. 1: mortality probability charge; 2: Insurer's investment return; 3: expenses (admin costs - commissions). 1 - 2 = net; 1 - 2 + 3 = gross.
COBRA Time Limitations
Factors that determine premium
Credit Life policy
Renewability provision
14. Disability income is based on "earned income" (salary - bonus - commission) - not unearned income (interest - investment - rents).
Estoppel
Loss of Earnings Test
Survivorship (aka "Last to die") policy
Spendthrift provision
15. Provides accidental death benefit @ full $ of "principal sum". Dismemberment is paid only @ 50% principal sum ("capital sum").
Accidental Death & Dismemberment (AD&D) Life policy
Rate (as defined by CIC)
Claim Form (aka Proof of Loss Form) provision
Major Medical plan
16. Prepaid med. benefits for members ONLY w/ approved primary care M.D. (HMO employee); focus on preventative care; low co-pay.
Tax implications of an Annuity (1 of 2)
Insurability Type Conditional receipt
Time Limit on Certain Defenses provision
Health Maintenance Organization (HMO)
17. Pays death benefit until age 100 or death; builds equity (cash value); may be transferred or sold; generally level premium.
Whole (aka Permanent or Straight) Life policy
Social Security Benefit (Supplement) rider
Accidental Death (aka Multiple Indemnity) rider
Term Life policy
18. Time period preceding each disability during which benefits are not paid; longer elimination periods = cheaper premium.
Elimination (aka Waiting) period
Return of Cash Value rider
Key Employee policy
Common Life Exclusions
19. No-cost provision that authorizes Insurer to borrow from cash value to pay unpaid premiums after grace period; must ask for @ app. time.
Major Medical plan
Types of Licensed Producers
Types of Insurers (by domicile)
Automatic Premium Loan (APL) provision
20. Same as WL but policy owner can adjust death benefit w/ corresponding premium adjustments; mostly obsolete.
Indeterminate Premium Whole Life policy
Human Life Value approach
Adjustable Whole Life policy
Workers' Compensation insurance
21. WL policy covering 2 or more Insureds but ONLY payable upon death of LAST Insured - generally low premium but high death benefit.
Survivorship (aka "Last to die") policy
Tax implications of an Annuity (1 of 2)
Common Life Exclusions
Incontestability clause/provision
22. Basic Medical; Major Medical; Comprehensive Major Medical
Types of Medical Plans
Equity Index Whole Life policy
Partial disability rider
Valid life insurance contracts must identify...
23. Same as Term Life but provides living benefit (endowment) to policy owner if Insured survives entire term.
Endowment Life policy
Change of Occupation provision
Business Continuation (aka Buy-Sell) policy
Blue Cross/Blue Shield
24. Same as WL but premium low for set # yrs. - THEN premiums vary (+ or -) based on Insurer's investment returns - w/ Gmax.
Non-Occupational Disability policy
Medicare Supplement or Medigap policy
Claim Form (aka Proof of Loss Form) provision
Indeterminate Premium Whole Life policy
25. Provides professional services - rehabilitation - training/re-training & related costs to assist Insured in returning to work.
Tax implications of Dividends - Loans & Interest
Settlement options for Life policy (1 of 2)
Fraud
Rehabilitation rider
26. IRS allows tax-free transfer of cash values between 2 LIKE policies (i.e. Life to Life - Annuity to Annuity - or Life to Annuity).
Family or Dependents rider
1035 Exchange
Equity Index Whole Life policy
Grace Period provision
27. Same as WL but w/ adjustable death benefit (& corresponding premium) & over-fund option but w/ annually renewable term (ART).
Misstatement of Age/Sex provision
Limited Pay Whole Life policy
Universal (aka Flexible Premium Adjustable) Life policy (1 of 4)
Medicare Part D
28. 1: Straight aka Pure Life - lifetime income but no survivorship refund; 2: Life w/ Period Certain - lifetime income w/ death benefit of monthly annuity for remaining predetermined term. 3: Annuity Certain - monthly income paid for predetermined term
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
Social Security Benefit (Supplement) rider
Whole (aka Permanent or Straight) Life policy
Binding receipt (aka Temporary Insurance Agreement)
29. An irrevocable IRS classification of a policy (determined by the 7 Pay Test) whereby tax advantages are lost for all distributions ONLY.
Health Reimbursement Account (HRA)
Reinstatement provision
Social Security Benefit (Supplement) rider
Modified Endowment Contract (MEC)
30. Same as WL but premium low for 1st 3-5 yrs. - THEN has one-time premium increase.
Term Life policy
Modified Premium Whole Life policy
Settlement options for Life policy (1 of 2)
Types of Licensed Producers
31. 'The inability to perform ANY gainful occupation'.
Non-Occupational Disability policy
Group Disability plan
Doctrine of Comity
Total disability (any-occupational definition)
32. Death benefit determined by Insured's projected lost earnings potential.
Accidental Death & Dismemberment (AD&D) Disability rider
Medical Savings Account (MSA) & Health Savings Account (HSA)
Human Life Value approach
Long Term Care (LTC) policy
33. Hybrid of HMO & PPO w/ greater flexibility on choosing specialists outside network w/ benefits still provided but @ higher co-pay.
Retrocession
Point of Service plan
Market Value Adjusted (aka Modified Guaranteed) annuity
Cost of Living Adjustment (COLA) Life rider
34. Mathematical calculation based on overall FICA contributions used to determine retirement/disability/survivorship benefit.
Fraud
Workers' Compensation insurance
Primary Insurance Amount (PIA)
Binding receipt (aka Temporary Insurance Agreement)
35. Insurance purchased by other Insurer(s) to spread or diversify risk; promotes industry stability.
Mortality vs. Morbidity tables
Renewability provision
Reinsurance
Social Security Benefit (Supplement) rider
36. Allows for use of HMO/PPO or other private carrier to provide expanded benefits @ additional premium & if enrolled in BOTH Parts A & B.
Medicare Part C (aka Medicare Advantage)
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
Settlement options for Life policy (2 of 2)
Rehabilitation rider
37. Beneficiary has right to leave death benefits / Insurer to protect $ from creditors; interest (taxable) paid on retained funds.
Tax implications of an Annuity (1 of 2)
Types of Medical Plans
Spendthrift provision
Loss exposure
38. Info already known; Info that should have been known; Waived info; Irrelevant info.
Reinstatement provision
Concealment exceptions
Types of Accident & Health (A&H) providers
Disability Income policy
39. Group plan initially self-funded by employer (like SIR); after which - group plan Insurer covers (up to policy limit); requires TPA.
Employer-Administered plan
Trial Application (aka Request for Offer)
Health Insurance Portability and Accountability Act (HIPAA)
Doctrine of Comity
40. Prepaid med. benefits for members w/ approved primary care M.D. (independent); low co-pay; non-PPO M.D. can be used at higher cost.
Trial Application (aka Request for Offer)
Preferred Provider Organization (PPO)
Premium modes
Residual disability rider
41. Part of IRS Section 125 cafeteria plan - which allows pre-tax payroll deductions for qualified medical expenses or child/dependent care.
Flexible Spending Account (FSA)
Universal (aka Flexible Premium Adjustable) Life policy (2 of 4)
Insurance contract characteristics (1 of 2)
Tax implications of Disability policy
42. Same as WL but death benefit increases annually - linked to Consumer Price Index; premium increases annually OR is set high from start.
Equity Index Whole Life policy
Annuity Classifications (5 of 5): # of lives
Endowment Life policy
Term Life policy
43. Time extension of benefits based on "qualifying" event. 18 mth. extension if laid off or fired; 36 mth. extension if death - divorce or child leaves home.
Social Security Benefit (Supplement) rider
COBRA Time Limitations
Recurrent disability clause/provision
Estoppel
44. Same as WL but cash value put in investment vehicles chosen by policy owner (stocks - bonds - munis.); cash value NOT guaranteed.
Variable Life policy (1 of 2)
Doctrine of Comity
Tax implications of an Annuity (1 of 2)
Non-forfeiture options for WL policy
45. Partially state-funded benefits for low-income people whereby cost of care is shared between state & recipient - based on income.
Health Maintenance Organization (HMO)
Medi-Cal Share Cost plan
Earned vs. Unearned premium
Dread Disease policy
46. Peril is the CAUSE of loss. Hazard is a condition that increases LIKELIHOOD of loss.
Estoppel
Peril vs. Hazard
Automatic Premium Loan (APL) provision
Family or Dependents rider
47. Fraternal - non-profit - members only; Reciprocal - unincorp'd org. - members insure each other; Lloyd's Assoc. - groups sharing risks; Surplus lines - special market risks.
Exclusions to Work. Comp.
Types of Insurers (miscellaneous)
Doctrine of Comity
Misstatement of Age/Sex provision
48. Same as WL but can be "paid-up" early by paying larger premium for shorter payment period (i.e. 10 Pay Life - 20 Pay Life).
Types of Insurers (by sector)
Limited Pay Whole Life policy
Types of Insurers (by authorization)
Annuity Classifications (3 of 5): Source of income
49. Level - fixed death benefit - premium fixed until renewal; Decreasing - death benefit decreases over term - premium fixed until renewal; Increasing - death benefit increases over term - premium fixed until renewal.
Guaranteed Insurability (aka Additional Purchase or Future Increase) Disability rider
Types of Term Life policies
Variable Universal Life policy
Employee Retirement Income Security Act (ERISA)
50. 1: Single (lump sum) premium; 2: Periodic premiums - can be level (fixed $) OR flexible from mth. to mth. (w/ req. min.)
Joint Life (aka "First to die") policy
Payment of Premium provision
Annuity Classifications (1 of 5): How premium is paid
Claim Form (aka Proof of Loss Form) provision