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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. 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.
Suicide clause/provision
Medical Savings Account (MSA) & Health Savings Account (HSA)
Variable Life policy (1 of 2)
Tax implications of Disability policy
2. Provides disability income during surgery recovery from life-threatening condition (& sometimes cosmetic surgery).
Accidental Death & Dismemberment (AD&D) Life policy
Blue Cross/Blue Shield
Experience vs. Community rating in Group Health plan
Transplant/Cosmetic Surgery rider
3. WL policy covering 2 or more Insureds but payable upon death of FIRST Insured - after which policy ends.
1035 Exchange
Estoppel
Elements to contract
Joint Life (aka "First to die") policy
4. Same as Comprehensive Major Medical but w/ integrated deductible; much more expensive.
Equity Index Whole Life policy
Loss exposure
Supplemental Major Medical plan
Mortality vs. Morbidity tables
5. Earned premium is $ paid for coverage to date. Unearned premium is $ paid & returnable due to coverage not provided.
Earned vs. Unearned premium
Market Value Adjusted (aka Modified Guaranteed) annuity
Policy loans
Adverse selection
6. The state in which the contract is accepted or delivered is the state that possesses regulatory jurisdiction over Group plan.
Key Employee policy
Doctrine of Comity
Policy delivery
Business Overhead Expense (BOE) Disability policy
7. Receipt whereby coverage incepts immediately upon submission of full consideration - unless declined & premium refunded.
Workers' Compensation insurance
Binding receipt (aka Temporary Insurance Agreement)
Occupational Disability policy
Family policy
8. Life license + NASD (FINRA) Series 6 or 7.
Preferred Provider Organization (PPO)
Change of Occupation provision
Partial disability rider
Requirements to sell variable life products
9. Insurance purchased by other Insurer(s) to spread or diversify risk; promotes industry stability.
Reinsurance
CA Work. Comp. Statutes
Common Life Exclusions
Variable Universal Life policy
10. 1: mortality probability charge; 2: Insurer's investment return; 3: expenses (admin costs - commissions). 1 - 2 = net; 1 - 2 + 3 = gross.
Common Disaster (Simultaneous Death Act) clause/provision
Tax implications of Death Benefit & Cash Value
Equity Indexed annuity
Factors that determine premium
11. 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.
Legal Action provision
Adverse selection
Enhanced Ordinary (aka Extraordinary) Whole Life policy
Age Discrimination in Employment Act (ADEA)
12. Specialized policy covering diagnostic & preventative dental care; often no deductible; co-insurance; expensive; may be included w/ medical plan.
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
Dental Plan
Accelerated Benefits (aka Terminal Illness or Living Benefits) rider
Endowment Life policy
13. Authorized (admitted) - can conduct business in state; Unauthorized (non-admitted) - cannot conduct business in state (w/ one exception).
Plans A-L of Medical Supplement or Medigap
Business Continuation (aka Buy-Sell) Disability policy
Types of Insurers (by authorization)
Medicare Part B (aka Supplemental Medical Insurance or SMI)
14. If total premiums paid w/in 1st 7 yrs. exceed net level premium that should have been paid - policy is an MEC.
Flexible Spending Account (FSA)
Tax implications of an Estate
7 Pay Test
Modified Endowment Contract (MEC)
15. Same as WL but premium low for 1st 3-5 yrs. - THEN has one-time premium increase.
Universal (aka Flexible Premium Adjustable) Life policy (3 of 4)
Palliative vs. Curative care
Grace Period provision
Modified Premium Whole Life policy
16. Provides coverage for specific disease(s) - such as cancer or leukemia.
Limited Pay Whole Life policy
Automatic Premium Loan (APL) provision
Dread Disease policy
Viatical Settlement Provider (VSP)
17. Physical - slippery floor; Moral - dishonest acts; Morale - carelessness or recklessness.
Credit Life policy
Elimination (aka Waiting) period
Types of hazards
Automatic Premium Loan (APL) provision
18. After 2-3 yrs. - Whole Life policy equity builds tax-deferred @ fixed interest rate until it equals death benefit; borrowable but taxable.
Universal (aka Flexible Premium Adjustable) Life policy (3 of 4)
Cash value
Recurrent disability clause/provision
Concealment
19. Part A - Inpatient hospital deductibles vary on # of days; limited reserve days; finite benefit; 1st 3 pints blood; Part B - 20% co-payment.
Exclusions for Major Medical plan
Medicare Part A & B "Gaps"
Accidental Death & Dismemberment (AD&D) Life policy
Medicare
20. Death benefit is NOT taxable. Cash value grows tax-deferred but cost basis (base premium) is not taxable - only interest is.
Law of Large Numbers
Underwriting risk categories
Tax implications of Death Benefit & Cash Value
Medicare Part A & B "Gaps"
21. Type of partial disability rider - which pays fluctuating % of lost income w/out time limit.
Residual disability rider
Elements to contract
Current Assumption (aka Interest-Sensitive) Whole Life policy
Underwriting risk categories
22. Privately-provided or Medicare-provided (if no private carrier) prescription drug plans for qualified individuals but w/ premium - deductible & co-pay.
Medicare Part D
Universal (aka Flexible Premium Adjustable) Life policy (3 of 4)
Payor (aka Waiver of Payor's Premium) rider
Tax implications of an Estate
23. PURELY employer-funded account to reimburse employees for qualified medical expenses not covered by group health plan.
Health Reimbursement Account (HRA)
Mortality vs. Morbidity tables
Blackout Period
Common Disaster (Simultaneous Death Act) clause/provision
24. Peril is the CAUSE of loss. Hazard is a condition that increases LIKELIHOOD of loss.
Types of Renewability provisions
Types of Medical Plans
Retrocession
Peril vs. Hazard
25. Experience - rates impacted by actual prior claim experience of actual group; Community - identical rates used for entire community - regardless of experience.
Split Dollar Plan
Payment of Premium provision
Tax implications of an Annuity (1 of 2)
Experience vs. Community rating in Group Health plan
26. Partially state-funded benefits for low-income people whereby cost of care is shared between state & recipient - based on income.
Return of Premium rider
Medi-Cal Share Cost plan
Doctrine of Comity
Annuity Classifications (1 of 5): How premium is paid
27. 1: Individual; 2: Joint - multiple annuitants paid until 1st dies; 3: Joint & Survivor - multiple annuitants paid until 1st dies THEN survivors paid but @ reduced $.
Requirements to sell variable life products
Concealment exceptions
Annuity Classifications (5 of 5): # of lives
Rate (as defined by CIC)
28. Provides hospital insurance automatically @ age 65 (if FICA qualified) @ no fee but may have deductible & co-pay.
Convertibility provision
Variable Universal Life policy
Medicare Part A (aka Hospital Insurance or HI)
Disability Income policy
29. Allows Insured to increase benefit w/out medical exam (subject to age max.) w/ additional premium rate determined @ attained age; must prove income increase.
Loss of Earnings Test
Policy loans
Guaranteed Insurability (aka Additional Purchase or Future Increase) Disability rider
Single Pay Whole Life policy
30. Prevents overinsuring in order to profit from disability by coordinating benefits between Insurers.
Relation of Earnings to Insurance provision
Pure risk vs. Speculative risk
Accidental Death & Dismemberment (AD&D) Life policy
Types of Insurers (by domicile)
31. Insurer has right to adjust (+ or -) death benefit if age or sex is misstated but normally doesn't void policy.
Misstatement of Age/Sex provision
Levels of Long Term Care provided
Approval Type Conditional receipt
Consolidated Omnibus Budget Reconciliation Act (COBRA)
32. 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.
Tax implications of Death Benefit & Cash Value
Concealment
Basic Medical plan
Types of Term Life policies
33. Same as WL but premium low for set # yrs. - THEN premiums vary (+ or -) based on Insurer's investment returns - w/ Gmax.
Annuity surrender charges
Indeterminate Premium Whole Life policy
Non-forfeiture options for WL policy
Rate (as defined by CIC)
34. Govt. organization providing health care benefits for dependents of military personnel.
Underwriting risk categories
Types of Accident & Health (A&H) providers
Policy delivery
CHAMPUS (aka TriCare)
35. Commercial (private) companies; HMOs; PPOs; Blue Cross/Blue Shield; Employer-sponsored plans; Government.
Time Limit on Certain Defenses provision
Elimination (aka Waiting) period
Types of Accident & Health (A&H) providers
Basic Medical plan
36. 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)
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
Return of Premium rider
Long Term Care (LTC) policy
37. Palliative - treatment to manage pain; Curative - treatment to cure illness/condition.
Valid life insurance contracts must identify...
Trial Application (aka Request for Offer)
Palliative vs. Curative care
Health Reimbursement Account (HRA)
38. Identical to Incontestable Clause in Life policy.
Time Limit on Certain Defenses provision
Rescission
Business Continuation (aka Buy-Sell) Disability policy
Annuity surrender charges
39. Financial interest in insured party that must exist @ time of application OR policy issuance. Requires consent (except minors).
Non-Occupational Disability policy
Types of Insurers (miscellaneous)
Insurable interest
Premium modes
40. Coverage remains in effect for 31 days past premium due date; benefits paid during grace period would be deducted from sum.
Palliative vs. Curative care
Grace Period provision
24 Hour Coverage (CA)
Guaranteed Insurability Life rider
41. Term Life policy w/ decreasing death benefit; usually used to secure credit (loan) w/ lender as beneficiary & borrower as Insured.
Types of Term Life policies
Suicide clause/provision
Credit Life policy
Levels of Long Term Care provided
42. Excludes coverage for suicide during 1st 2 yrs. ONLY but - if it does - all premiums must be returned to beneficiary.
Common Life Exclusions
Health Maintenance Organization (HMO)
Suicide clause/provision
Accelerated Benefits (aka Terminal Illness or Living Benefits) rider
43. Same as WL but cash value increases @ current interest rates (not set); premium can start low or high & may change.
Binding receipt (aka Temporary Insurance Agreement)
Policy delivery
Insurance contract characteristics (2 of 2)
Current Assumption (aka Interest-Sensitive) Whole Life policy
44. Dividends are NOT taxable but interest is. Loan interest is NOT tax-deductible. Interest paid by Insurer on retained funds is taxable.
Accidental Death (aka Multiple Indemnity) rider
Claim Form (aka Proof of Loss Form) provision
Tax implications of Dividends - Loans & Interest
Phases of an annuity
45. Process which prevents claim denial as a result of false statement or promise (made by Insurer) - which was relied upon by Insured.
Age Discrimination in Employment Act (ADEA)
Estoppel
Earned vs. Unearned premium
CHAMPUS (aka TriCare)
46. 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
Single Pay Whole Life policy
Blue Cross/Blue Shield
Major Medical plan
47. Guaranteed min. interest rate on cash value buildup but possible higher rate if short-term investment returns higher than expected.
Medicare Supplement or Medigap policy
Universal (aka Flexible Premium Adjustable) Life policy (3 of 4)
Phases of an annuity
Renewability provision
48. Treating or mitigating loss exposures through 1: avoidance; 2: retention (deductibles); 3: sharing; 4: reduction; or 5: transfer.
Risk management
Rehabilitation rider
Term Life policy
Retrocession
49. 1: Surrender for cash value (taxable); 2: Buy equal-benefit paid-up Level Term policy; 3: Buy reduced-benefit paid-up WL policy.
Human Life Value approach
1035 Exchange
Non-forfeiture options for WL policy
Fraud
50. IRS allows tax-free transfer of cash values between 2 LIKE policies (i.e. Life to Life - Annuity to Annuity - or Life to Annuity).
Rehabilitation rider
Types of reinsurance
Accidental Death (aka Multiple Indemnity) rider
1035 Exchange