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Test your basic knowledge |
CA Life Agent Exam
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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. Term Life policy w/ decreasing death benefit; usually used to secure credit (loan) w/ lender as beneficiary & borrower as Insured.
Preferred Provider Organization (PPO)
Universal (aka Flexible Premium Adjustable) Life policy (3 of 4)
Comprehensive Major Medical plan
Credit Life policy
2. Actual/Expressed - written powers; Implied - unwritten but customary practices; Apparent - perceived powers.
Insurable interest
Plans A-L of Medical Supplement or Medigap
Market Value Adjusted (aka Modified Guaranteed) annuity
Types of Agency Authority
3. Refund of 50-80% of premium (minus claims paid) every 5-10 yrs. OR age 65; expensive!
Family or Dependents rider
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
Underwriting risk categories
Return of Premium rider
4. Policyholders - Mutual (participating) co. - may pay dividends; Stockholders - Stock (non-participating) co. - no dividends.
Total disability (any-occupational definition)
Exclusions to Work. Comp.
Types of Insurers (by ownership)
Impairment (Exclusion) rider
5. Funding mechanism whereby employer & employee share cost of premium. Upon death - benefit is shared between employer & beneficiary.
Group Disability plan
Policy loans
Split Dollar Plan
Workers' Compensation insurance
6. Federal law which prohibits companies w/ 15+ employees from decreasing coverage benefits for women affected by pregnancy or childbirth.
Types of Medical Plans
Medicare Part B (aka Supplemental Medical Insurance or SMI)
Joint Life (aka "First to die") policy
Civil Rights/Pregnancy Discrimination Act
7. Available for any reason up to full cash value @ fixed (max 8%) OR variable interest rate; loan $ + interest deducted from benefit @ death.
Rehabilitation rider
Policy loans
Insurability Type Conditional receipt
Time Limit on Certain Defenses provision
8. Covers entire family w/ WL for breadwinner & (convertible) Level Term for spouse & children (until certain age).
Preferred Provider Organization (PPO)
Long Term Care (LTC) policy
Rescission
Family policy
9. Compensates business for loss due to death or disability of key employee; premiums not deductible but benefits tax-free.
Types of Insurers (miscellaneous)
CHAMPUS (aka TriCare)
Insurability Type Conditional receipt
Key Employee policy
10. Death benefit is NOT taxable. Cash value grows tax-deferred but cost basis (base premium) is not taxable - only interest is.
Types of Agency Authority
Whole (aka Permanent or Straight) Life policy
Tax implications of Death Benefit & Cash Value
Rescission
11. 1: Surrender for cash value (taxable); 2: Buy equal-benefit paid-up Level Term policy; 3: Buy reduced-benefit paid-up WL policy.
Plans A-L of Medical Supplement or Medigap
Adverse selection
Non-forfeiture options for WL policy
Requirements to sell variable life products
12. A&H - A&S - Sickness only; Medical; Disability; Accident only; Travel accident; LTC; Medicare supplement; AD&D; Dental/Vision/Prescription; Limited.
Viatical Settlement Provider (VSP)
Types of Insurers (by sector)
Employer-Administered plan
Types of Accident & Health insurance
13. Compensates business for loss due to disability of key employee; premiums not deductible but benefits tax-free.
Medicare Part B (aka Supplemental Medical Insurance or SMI)
Graded Premium Whole Life policy
Key Employee Disability policy
Common Disability Exclusions
14. Death benefit determined by Insured's projected lost earnings potential.
Recurrent disability clause/provision
Relation of Earnings to Insurance provision
Endowment Life policy
Human Life Value approach
15. Federal law to protect Federal employees' (& their beneficiaries') pension - group insurance - & welfare benefits.
Major Medical plan
Dependent coverage
Convertibility provision
Employee Retirement Income Security Act (ERISA)
16. Provides medical & personal services for people needing extended assistance w/ Activities of Daily Living (ADL). Other benefits include: assisted living care; respite care; hospice care; adult day care.
Types of Accident & Health (A&H) providers
Long Term Care (LTC) policy
Workers' Compensation insurance
Elements to contract
17. Mortality is the statistical possibility of death @ each age. Morbidity is the statistical possibility & extent of disability @ each age.
Loss of Earnings Test
Approval Type Conditional receipt
Mortality vs. Morbidity tables
Impairment (Exclusion) rider
18. Both Contributory & Non-contributory Group policies are deductible to employer (not employee) but benefits are taxable. Individual policy premium is NOT deductible but benefit is received tax-free.
Types of Insurers (miscellaneous)
Preferred Provider Organization (PPO)
Tax implications of Disability policy
Workers' Compensation insurance
19. Provides for continued operation of business if partner becomes disabled - by allowing other partner(s) to buy disabled partner's interest in business.
Business Continuation (aka Buy-Sell) Disability policy
Group Disability plan
Change of Occupation provision
Enhanced Ordinary (aka Extraordinary) Whole Life policy
20. Periodic return of premium to policy owners from Mutual (Par) Companies; not guaranteed & not taxable as income; may be used in 6 ways.
Accidental Death & Dismemberment (AD&D) Disability rider
Considerations in replacing Health insurance
Equity Indexed annuity
Dividends
21. Tendency of poorer risks to seek insurance.
Adverse selection
Errors & Omissions (E&O)
Grace Period provision
Needs approach (most common)
22. 1: Fixed - guaranteed fixed monthly income & fixed interest rate; 2: Variable - unguaranteed; monthly income varies based on stocks/bond returns.
Grace Period provision
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Annuity Classifications (3 of 5): Source of income
Change of Occupation provision
23. Savings account for medical expenses; Tax-deductible contributions; tax-deferred growth; tax-free for qualified use; taxable for non-qualified use.
Retrocession
Medical Savings Account (MSA) & Health Savings Account (HSA)
Equity Index Whole Life policy
Approval Type Conditional receipt
24. Provides accidental death benefit @ full $ of "principal sum". Dismemberment is paid only @ 50% principal sum ("capital sum").
Insurance contract characteristics (1 of 2)
Accidental Death & Dismemberment (AD&D) Disability rider
Modified Endowment Contract (MEC)
Comprehensive Major Medical plan
25. Prohibited w/ regard to testing for people of same class; test results must remain confidential; coverage may be declined (once discovered).
Types of Insurers (by authorization)
Approval Type Conditional receipt
Policy loans
AIDS/HIV discrimination
26. Unintentional - up to $1 -000 + legal $; Intentional - $1 -000-5 -000 + legal $; If harmful - misdemeanor + up to 1 yr. prison + up to $10 -000.
Penalties for violating AIDS/HIV privacy laws
Concealment
IRS Penalties for Annuities
Medicare Part A & B "Gaps"
27. Written contract to transfer risk of premature death from one party to another; pays stated sum upon death; creates instant estate.
Life insurance policy
Credit Life policy
Employee Retirement Income Security Act (ERISA)
Misstatement of Age/Sex provision
28. Conditional - coverage is conditional; Personal - parties are people; Good faith - honesty/integrity; Fiduciary - req's financial trust.
Insurance contract characteristics (2 of 2)
Estoppel
Policy loans
Renewability provision
29. Receipt whereby coverage incepts conditionally upon submission of full consideration and that all underwriting reqs. are met.
Insurability Type Conditional receipt
Waiver of Premium provision
Estoppel
IRS Penalties for Annuities
30. Plan A is the CORE benefit & is least expensive; All other plans include Plan A + additional benefits. Plans F & J are high deductible. K & L are both deductible & co-pay plans.
Basic Medical plan
Pure risk vs. Speculative risk
Group Disability plan
Plans A-L of Medical Supplement or Medigap
31. Extreme form of Limited Pay Whole Life whereby entire premium is paid in a single payment.
Long Term Care (LTC) policy
Waiver of Premium (Waiver of Cost of Insurance) rider
Legal Action provision
Single Pay Whole Life policy
32. Dividends are NOT taxable but interest is. Loan interest is NOT tax-deductible. Interest paid by Insurer on retained funds is taxable.
Phases of an annuity
Tax implications of Dividends - Loans & Interest
Types of Insurers (by authorization)
Medicare Part A & B "Gaps"
33. Process whereby a reinsurer reinsures w/ another reinsurer.
Key Employee policy
Concealment
Accidental Death & Dismemberment (AD&D) Life policy
Retrocession
34. 'The inability to perform your OWN normal occupation or daily duties'.
Whole (aka Permanent or Straight) Life policy
Free Look provision
Return of Cash Value rider
Total disability (as commonly defined)
35. IRS allows tax-free transfer of cash values between 2 LIKE policies (i.e. Life to Life - Annuity to Annuity - or Life to Annuity).
Modified Endowment Contract (MEC)
Grace Period provision
Human Life Value approach
1035 Exchange
36. Prevents overinsuring in order to profit from disability by coordinating benefits between Insurers.
Relation of Earnings to Insurance provision
Market Value Adjusted (aka Modified Guaranteed) annuity
Loss of Earnings Test
Accidental Death & Dismemberment (AD&D) Life policy
37. Req. by CA statute & may provide workers coverage for action-over claims.
Insurance contract characteristics (1 of 2)
Modified Endowment Contract (MEC)
Employer Liability
Time Limit on Certain Defenses provision
38. Written policy terms supersede oral statements made prior to policy issue.
Medicare Part C (aka Medicare Advantage)
Family or Dependents rider
Dread Disease policy
Parole Pardon Rule
39. Grows @ fixed min. interest rate but w/ possible higher rate tied to equity index (i.e S&P Equity Index) appreciation; gains shared w/ Insurer.
Business Overhead Expense (BOE) Disability policy
Equity Indexed annuity
Entire Contract provision
Non-Occupational Disability policy
40. Mandatory 100% employer-funded coverage for injuries/illnesses occurring "on" job; full-time employees only; exclusive remedy. Provides: 1: unlimited medical benefit; 2: survivor income replacement & funeral ($5 -000 max.); 3: disability benefit @ 66
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41. Death benefits & premium automatically increase annually based on inflationary index (i.e. Consumer Price Index).
Whole (aka Permanent or Straight) Life policy
Cost of Living Adjustment (COLA) Life rider
Payor (aka Waiver of Payor's Premium) rider
Common Disaster (Simultaneous Death Act) clause/provision
42. Coverage remains in effect for 31 days past premium due date; benefits paid during grace period would be deducted from sum.
Tax implications of an Annuity (1 of 2)
Annuity
Non-forfeiture options for WL policy
Grace Period provision
43. Excludes coverage for suicide during 1st 2 yrs. ONLY but - if it does - all premiums must be returned to beneficiary.
Preferred Provider Organization (PPO)
Suicide clause/provision
Policy loans
Dread Disease policy
44. Domestic - within home state; Foreign - outside home state; Alien - outside home country.
Medicare Part C (aka Medicare Advantage)
Accidental Death (aka Multiple Indemnity) rider
Adjustable Whole Life policy
Types of Insurers (by domicile)
45. Preferred or Preferred Smoker; Standard or Standard Smoker; Substandard; Denied.
Tax implications of Death Benefit & Cash Value
Underwriting risk categories
Common Disability Exclusions
Types of Licensed Producers
46. Multiple small employers w/ common affiliation (trade assoc. OR Chamber of Commerce) band together to purchase group plan.
Long Term Care (LTC) policy
Multiple Employer Trust (MET) aka Multiple Employer Welfare Association (MEWA)
Credit Life policy
Flexible Spending Account (FSA)
47. 1: Cash (tax-free); 2: Apply to future premiums; 3: Retained by Insurer @ interest; 4: Buy Paid-up WL policy add-ons; 5: Pay-up existing policy; 6: Buy 1-yr. Term policy.
Policy delivery
Dividend options
Health Insurance Portability and Accountability Act (HIPAA)
Fraud
48. Insured can seek legal action against Insurer for denial of claim only after 60 days and up to 3 yrs. after providing proof of loss.
Waiver of Premium provision
Common Accident provision
Trial Application (aka Request for Offer)
Legal Action provision
49. War/Military; Intentional self-inflicted; Aviation (non-commercial); Foreign country; Loss of professional license; Illegal activity; Mental disorders (after 1-2 yrs.).
Common Disability Exclusions
Pure risk vs. Speculative risk
Policy delivery
Tax implications of Disability policy
50. Benefits automatically increase annually based on inflationary index (i.e. Consumer Price Index) OR flat rate (5% max.).
Flexible Spending Account (FSA)
Blue Cross/Blue Shield
Considerations in replacing Health insurance
Cost of Living Adjustment (COLA) Disability rider
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