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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. Death benefit is NOT taxable. Cash value grows tax-deferred but cost basis (base premium) is not taxable - only interest is.
Approval Type Conditional receipt
Tax implications of Death Benefit & Cash Value
Medicare Part A & B "Gaps"
Entire Contract provision
2. Covers disabilities occurring both "on" AND "off" job; "on" job benefits paid in addition to work. comp. - if applicable (i.e. individual plan).
Types of hazards
Basic Medical plan
Occupational Disability policy
Notice of Claim provision
3. Excludes coverage for suicide during 1st 2 yrs. ONLY but - if it does - all premiums must be returned to beneficiary.
Family or Dependents rider
Suicide clause/provision
Juvenile Life (aka Jumping Juvenile) policy
Split Dollar Plan
4. Benefits automatically increase annually based on inflationary index (i.e. Consumer Price Index) OR flat rate (5% max.).
Modified Endowment Contract (MEC)
Medicare Supplement or Medigap policy
Elements to contract
Cost of Living Adjustment (COLA) Disability rider
5. A company providing lump sum buyout (50-90% of total) of Life policy; becomes owner & beneficiary & assumes premium payments; usually terminally ill viator.
Viatical Settlement Provider (VSP)
Permanent vs. Temporary disability
AIDS/HIV discrimination
Occupational Disability policy
6. Prepaid med. benefits for members ONLY w/ approved primary care M.D. (HMO employee); focus on preventative care; low co-pay.
Health Maintenance Organization (HMO)
Workers' Compensation insurance
CA Work. Comp. Statutes
Key Employee Disability policy
7. Underwriting - determines insurability; Marketing/Sales - determines products; Actuarial - determines rates; Claims - investigates/pays claims.
Departments of an Insurer
Variable Life policy (2 of 2)
Tax implications of Death Benefit & Cash Value
Human Life Value approach
8. Mathematical calculation based on overall FICA contributions used to determine retirement/disability/survivorship benefit.
Life insurance policy
Insurance contract characteristics (1 of 2)
Primary Insurance Amount (PIA)
Basic Medical plan
9. 1: Req. - unless self-employed; 2: 7-day wait for disability benefits; 3: Premium based on ex-mod; 4: Rates approved by CDI; 5: to sell - must satisfy education reqs.
CA Work. Comp. Statutes
Legal Action provision
CHAMPUS (aka TriCare)
Underwriting risk categories
10. Policy covering minor child; premium fixed but death benefit increases by 5 times @ age 18 or 21.
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
Juvenile Life (aka Jumping Juvenile) policy
Medicare
Family Income policy
11. Policy owner must notify Insurer of loss either in writing - in person or by phone w/in 20 days.
Fraud
Insurer (as defined by CIC)
Convertibility provision
Notice of Claim provision
12. Excludes coverage for specific injury/illness either temporarily or permanently in order to eliminate pre-existing condition.
Impairment (Exclusion) rider
Major Medical plan
Types of Renewability provisions
Tax implications of Dividends - Loans & Interest
13. Responsible adult trustee designated to manage death benefits for minor child beneficiary until adulthood.
Trusts
Cash value
Needs approach (most common)
Types of Insurers (by authorization)
14. Same as WL but policy owner can adjust death benefit w/ corresponding premium adjustments; mostly obsolete.
Dividends
Adjustable Whole Life policy
Entire Contract provision
Split Dollar Plan
15. If total premiums paid w/in 1st 7 yrs. exceed net level premium that should have been paid - policy is an MEC.
Graded Premium Whole Life policy
Parole Pardon Rule
7 Pay Test
Trial Application (aka Request for Offer)
16. Federally-funded but state-run program for truly indigent individuals & families providing medical care at Federal clinic.
Medicare Part A & B "Gaps"
Automatic Premium Loan (APL) provision
Family Income policy
Medicaid/Medi-Cal
17. Allows Term policy conversion to Permanent policy w/out medical exam; must be identical or lower death benefit; based on either attained OR original age.
Convertibility provision
Health Reimbursement Account (HRA)
Annuity surrender charges
Types of hazards
18. Funding mechanism whereby employer & employee share cost of premium. Upon death - benefit is shared between employer & beneficiary.
7 Pay Test
Split Dollar Plan
Tax implications of an Annuity (1 of 2)
Total disability (more restrictive definition)
19. Waives premium on Life policy for minor child until age 21 in event premium payor dies or becomes disabled.
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20. Agreement - Offer & acceptance; Consideration - application + premium; Legal capacity - licensed &/or competent; Legal purpose - public good.
Free Look provision
Annuity Classifications (3 of 5): Source of income
Elements to contract
Cross Purchase Plan
21. Upon death - death benefit is paid + the aggregate of cash value accumulated to date; add-on to WL policy ONLY.
Total disability (any-occupational definition)
Types of Licensed Producers
Term Life policy
Return of Cash Value rider
22. Specialized policy covering diagnostic & preventative dental care; often no deductible; co-insurance; expensive; may be included w/ medical plan.
Dental Plan
Claim Form (aka Proof of Loss Form) provision
Types of Accident & Health (A&H) providers
COBRA Time Limitations
23. 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.
Types of Accident & Health insurance
Split Dollar Plan
Preferred Provider Organization (PPO)
Binding receipt (aka Temporary Insurance Agreement)
24. Waives premium upon disability of Insured until return to work; disability must persist for 6 mths. or longer. Cash value & dividends not affected.
Change of Occupation provision
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
Waiver of Premium (Waiver of Cost of Insurance) rider
Preferred Provider Organization (PPO)
25. Same as WL but death benefit decreases each yr. w/ dividends paid annually to offset decrease.
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
Enhanced Ordinary (aka Extraordinary) Whole Life policy
Grace Period provision
Estoppel
26. Provides increased death benefit if death occurs w/in 90 days & as result of accident; relatively INexpensive add-on.
Tax implications of an Estate
Insurability Type Conditional receipt
Split Dollar Plan
Accidental Death (aka Multiple Indemnity) rider
27. Privately-provided or Medicare-provided (if no private carrier) prescription drug plans for qualified individuals but w/ premium - deductible & co-pay.
Social Security Benefit (Supplement) rider
Viatical Settlement Provider (VSP)
Health Insurance Portability and Accountability Act (HIPAA)
Medicare Part D
28. Intentional OR unintentional failure to disclose material underwriting facts that should have been disclosed; grounds for policy rescission.
Risk management
Family Income policy
Concealment
Proof of Loss provision
29. Upon death - death benefit is paid + the aggregate of premiums paid to date; add-on to Term policy ONLY.
Concealment
Return of Premium rider
Employer Liability
Types of Term Life policies
30. Combination of Basic Medical & Major Medical in one policy; Basic pays 1st - then Major Medical w/ corridor deductible.
Single Pay Whole Life policy
Loss of Earnings Test
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
Comprehensive Major Medical plan
31. Federal law allows employees/their dependents to continue group benefits w/in 60 days after termination (if employer has 20+ employees); Insured pays premium @ 102% of group cost.
Medi-Cal Share Cost plan
Concealment exceptions
CA Work. Comp. Statutes
Consolidated Omnibus Budget Reconciliation Act (COBRA)
32. Federal law which prohibits companies w/ 20+ employees from denying work & medical benefits to employees due to age.
Loss exposure
Medicare Supplement or Medigap policy
Disability Income policy
Age Discrimination in Employment Act (ADEA)
33. After 2-3 yrs. - Whole Life policy equity builds tax-deferred @ fixed interest rate until it equals death benefit; borrowable but taxable.
Major Medical plan
Limited Pay Whole Life policy
Cash value
Types of hazards
34. Receipt whereby coverage incepts immediately upon submission of full consideration - unless declined & premium refunded.
Limited Pay Whole Life policy
Insurance contract characteristics (2 of 2)
Binding receipt (aka Temporary Insurance Agreement)
Adverse selection
35. Peril is the CAUSE of loss. Hazard is a condition that increases LIKELIHOOD of loss.
Peril vs. Hazard
Considerations in replacing Health insurance
COBRA Time Limitations
Free Look provision
36. Qualified Annuity - Tax-deductible contributions & tax-deferred growth but fully taxable w/drawals.
Tax implications of an Annuity (1 of 2)
Rate (as defined by CIC)
24 Hour Coverage (CA)
Relation of Earnings to Insurance provision
37. No-cost provision that authorizes Insurer to borrow from cash value to pay unpaid premiums after grace period; must ask for @ app. time.
Retrocession
Comprehensive Major Medical plan
Pure risk vs. Speculative risk
Automatic Premium Loan (APL) provision
38. Beneficiary has right to leave death benefits / Insurer to protect $ from creditors; interest (taxable) paid on retained funds.
Spendthrift provision
Equity Index Whole Life policy
Key Employee policy
Annuity Classifications (3 of 5): Source of income
39. War - 2 types; Suicide (1st 2 yrs.); Aviation (non-commercial); Hazardous hobbies; Criminal acts; Alcohol/Drug influenced.
Employer-Administered plan
Common Life Exclusions
Blackout Period
Disability Income policy
40. 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.
Equity Indexed annuity
Adverse selection
Settlement options for Life policy (1 of 2)
Disability Income policy
41. 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.
Estoppel
Major Medical plan
Graded Premium Whole Life policy
Legal Action provision
42. Experience - rates impacted by actual prior claim experience of actual group; Community - identical rates used for entire community - regardless of experience.
Accidental Death (aka Multiple Indemnity) rider
Experience vs. Community rating in Group Health plan
Free Look provision
Guaranteed Insurability Life rider
43. Revocable - changeable anytime w/ Change of Beneficiary Form; Irrevocable - not changeable w/out beneficiary permission.
Notice of Claim provision
Revocable vs. Irrevocable beneficiary
Dental Plan
Common Disability Exclusions
44. 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.
Cross Purchase Plan
Applicant Representations vs. Warranties
Reinsurance
Tax implications of Disability policy
45. Expands individual WL policy to include Term Life for dependents (spouse - children - etc.).
Indemnify
Family or Dependents rider
Human Life Value approach
AIDS/HIV discrimination
46. Financial interest in insured party that must exist @ time of application OR policy issuance. Requires consent (except minors).
Trusts
Insurable interest
Annuity Classifications (5 of 5): # of lives
Presumptive disability
47. Physical - slippery floor; Moral - dishonest acts; Morale - carelessness or recklessness.
Types of hazards
Approval Type Conditional receipt
Universal (aka Flexible Premium Adjustable) Life policy (2 of 4)
Recurrent disability clause/provision
48. Intentional deception; grounds for rescission.
Insuring clause/provision (aka Insuring Agreement)
Binding receipt (aka Temporary Insurance Agreement)
Fraud
Occupational Disability policy
49. Provides for continued operation of business if partner becomes disabled - by allowing other partner(s) to buy disabled partner's interest in business.
Loss of Earnings Test
Business Continuation (aka Buy-Sell) Disability policy
Peril vs. Hazard
Employer-Administered plan
50. Time period preceding each disability during which benefits are not paid; longer elimination periods = cheaper premium.
CA Work. Comp. Statutes
Health Maintenance Organization (HMO)
Retrocession
Elimination (aka Waiting) period