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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. Insurance purchased by other Insurer(s) to spread or diversify risk; promotes industry stability.
Cash value
Types of Accident & Health insurance
Reinsurance
Key Employee policy
2. An attempt to contain costs by employing various strategies - including wellness programs - preventative testing - outpatient & alternative procedures.
Phases of an annuity
Medical cost containment (aka Managed care)
Waiver of Premium provision
Non-forfeiture options for WL policy
3. Process whereby a reinsurer reinsures w/ another reinsurer.
Time Limit on Certain Defenses provision
Types of Insurers (by ownership)
Basic Medical plan
Retrocession
4. Compensates business for loss due to disability of key employee; premiums not deductible but benefits tax-free.
Key Employee Disability policy
Concealment exceptions
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
Accidental Death & Dismemberment (AD&D) Disability rider
5. Req. by CA statute & may provide workers coverage for action-over claims.
Employer Liability
Variable Universal Life policy
Annuity Classifications (2 of 5): When benefits begin
Blackout Period
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)
Return of Premium rider
Return of Cash Value rider
Total disability (any-occupational definition)
7. 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.
Whole (aka Permanent or Straight) Life policy
Long Term Care (LTC) policy
Types of Agency Authority
Return of Premium rider
8. 4: Funds retained by Insurer until w/drawn - interest ONLY paid monthly (taxable); 5: Paid-up immediate annuity.
Disability Income policy
Survivorship (aka "Last to die") policy
Dental Plan
Settlement options for Life policy (2 of 2)
9. Preferred or Preferred Smoker; Standard or Standard Smoker; Substandard; Denied.
Underwriting risk categories
Indeterminate Premium Whole Life policy
Tax implications of Disability policy
Small Employer Medical Expense plan
10. Annuity distributions prior to age 59 1/2 incur a 10% IRS penalty EXCEPT for death - disability - immediate annuity - or rollover.
Term Life policy
Renewability provision
IRS Penalties for Annuities
Types of Term Life policies
11. To "make whole again" w/out benefit or detriment; neither monetary profit nor loss.
Underwriting risk categories
Settlement options for Life policy (1 of 2)
Indemnify
Types of Insurers (by sector)
12. Provides for continued operation of business if partner dies - by allowing surviving partner(s) to buy deceased partner's interest in business.
Common Disability Exclusions
Family Income policy
Business Continuation (aka Buy-Sell) policy
Penalties for violating AIDS/HIV privacy laws
13. Same as WL but policy owner can adjust death benefit w/ corresponding premium adjustments; mostly obsolete.
Presumptive disability
Automatic Premium Loan (APL) provision
Adjustable Whole Life policy
Equity Index Whole Life policy
14. Excludes coverage for specific injury/illness either temporarily or permanently in order to eliminate pre-existing condition.
Rate (as defined by CIC)
Grace Period provision
Trusts
Impairment (Exclusion) rider
15. Federal law which allows health coverage portability when changing jobs - so long as previous coverage was in effect 63+ days; allows some tax deductibility for LTC.
Health Insurance Portability and Accountability Act (HIPAA)
Small Employer Medical Expense plan
Elements to contract
Levels of Long Term Care provided
16. 1: Immediate benefits rec'd w/in 30 days but premium must be paid by lump sum; 2: Deferred - usually until retirement.
Annuity Classifications (2 of 5): When benefits begin
Insurability Type Conditional receipt
Waiver of Premium provision
Law of Large Numbers
17. Fraternal - non-profit - members only; Reciprocal - unincorp'd org. - members insure each other; Lloyd's Assoc. - groups sharing risks; Surplus lines - special market risks.
Adverse selection
Modified Premium Whole Life policy
Types of Insurers (miscellaneous)
Supplemental Major Medical plan
18. Two death benefit options - Option A: death benefit ONLY; Option B: death benefit + cash value; death benefit NOT guaranteed.
Loss of Earnings Test
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
Civil Rights/Pregnancy Discrimination Act
Human Life Value approach
19. Intentional deception; grounds for rescission.
Spendthrift provision
Rehabilitation rider
Fraud
Accidental Death & Dismemberment (AD&D) Life policy
20. 1: Fixed - guaranteed fixed monthly income & fixed interest rate; 2: Variable - unguaranteed; monthly income varies based on stocks/bond returns.
Common Accident provision
Social Security Benefit (Supplement) rider
Binding receipt (aka Temporary Insurance Agreement)
Annuity Classifications (3 of 5): Source of income
21. Prohibited w/ regard to testing for people of same class; test results must remain confidential; coverage may be declined (once discovered).
Market Value Adjusted (aka Modified Guaranteed) annuity
Tax implications of Death Benefit & Cash Value
AIDS/HIV discrimination
Accidental Death (aka Multiple Indemnity) rider
22. 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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23. Receipt whereby coverage incepts ONLY after underwriting approval.
Types of Insurers (by authorization)
Accelerated Benefits (aka Terminal Illness or Living Benefits) rider
Group Disability plan
Approval Type Conditional receipt
24. Authorized (admitted) - can conduct business in state; Unauthorized (non-admitted) - cannot conduct business in state (w/ one exception).
Impairment (Exclusion) rider
Enhanced Ordinary (aka Extraordinary) Whole Life policy
Types of Insurers (by authorization)
Annuity surrender charges
25. Price of insurance per exposure unit.
Incontestability clause/provision
Rate (as defined by CIC)
Conformity with State Statute provision
Multiple Employer Trust (MET) aka Multiple Employer Welfare Association (MEWA)
26. Upon death - death benefit is paid + the aggregate of cash value accumulated to date; add-on to WL policy ONLY.
Return of Cash Value rider
Tax implications of an Estate
Accidental Death & Dismemberment (AD&D) Disability rider
Earned vs. Unearned premium
27. If total premiums paid w/in 1st 7 yrs. exceed net level premium that should have been paid - policy is an MEC.
7 Pay Test
Suicide clause/provision
Waiver of Premium provision
Whole (aka Permanent or Straight) Life policy
28. Death benefit is NOT taxable. Cash value grows tax-deferred but cost basis (base premium) is not taxable - only interest is.
Modified Endowment Contract (MEC)
Claim Form (aka Proof of Loss Form) provision
Survivorship (aka "Last to die") policy
Tax implications of Death Benefit & Cash Value
29. Same as WL but premium low for set # yrs. - THEN premiums vary (+ or -) based on Insurer's investment returns - w/ Gmax.
Viatical Settlement Provider (VSP)
Dividends
Indeterminate Premium Whole Life policy
Tax implications of an Annuity (1 of 2)
30. Group plan initially self-funded by employer (like SIR); after which - group plan Insurer covers (up to policy limit); requires TPA.
Employer-Administered plan
Free Look provision
Annuity Classifications (2 of 5): When benefits begin
Change of Occupation provision
31. 1: parties to contract; 2: insured party or life; 3: insurable interest - if 3rd party; 4: risks insured against; 5: policy period (term); 6: premium & mode.
Departments of an Insurer
Insurer (as defined by CIC)
Valid life insurance contracts must identify...
Types of Agency Authority
32. Actual/Expressed - written powers; Implied - unwritten but customary practices; Apparent - perceived powers.
Types of Agency Authority
Relation of Earnings to Insurance provision
Tax implications of an Annuity (1 of 2)
Insuring clause/provision (aka Insuring Agreement)
33. Allows policy owner to w/draw set % of death benefit upon verification of terminal illness w/ expectancy 12-24 mths.; generally tax-free.
Accelerated Benefits (aka Terminal Illness or Living Benefits) rider
Insurability Type Conditional receipt
Employer Liability
Life insurance policy
34. Same as WL but cash value increases @ current interest rates (not set); premium can start low or high & may change.
Medicaid/Medi-Cal
Trial Application (aka Request for Offer)
Common Life Exclusions
Current Assumption (aka Interest-Sensitive) Whole Life policy
35. 'The inability to perform ANY reasonable occupation based on education - training or experience'.
Partial disability rider
Proof of Loss provision
Total disability (more restrictive definition)
Workers' Compensation insurance
36. Policy owner must notify Insurer of loss either in writing - in person or by phone w/in 20 days.
Risk management
Applicant Representations vs. Warranties
Notice of Claim provision
Recurrent disability clause/provision
37. 1: Skilled nursing care; 2: Intermediate care; 3: Custodial care; 4: Home health care.
Common Life Exclusions
Supplemental Major Medical plan
Levels of Long Term Care provided
Phases of an annuity
38. Provides accidental death benefit @ full $ of "principal sum". Dismemberment is paid only @ 50% principal sum ("capital sum").
Payor (aka Waiver of Payor's Premium) rider
Employer-Administered plan
Phases of an annuity
Accidental Death & Dismemberment (AD&D) Life policy
39. Insurer has right to adjust (+ or -) death benefit if age or sex is misstated but normally doesn't void policy.
Legal Action provision
Spendthrift provision
Misstatement of Age/Sex provision
Return of Premium rider
40. Although death benefit is tax-free - it is included in gross estate value so federal &/or state taxes may apply to a portion in excess of fixed federal limit.
Reinsurance
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Business Overhead Expense (BOE) Disability policy
Tax implications of an Estate
41. Tendency of poorer risks to seek insurance.
24 Hour Coverage (CA)
COBRA Time Limitations
Adverse selection
Residual disability rider
42. Provides 24 hr. health coverage both "on" & "off" job - but may cause coverage duplication & coordination challenges.
Parole Pardon Rule
24 Hour Coverage (CA)
Credit Life policy
Renewability provision
43. Provides supplemental coverage for physician/surgeon fees if enrolled (during enrollment period ONLY) & pay monthly premium w/ deductible and co-insurance.
Free Look provision
Employee Retirement Income Security Act (ERISA)
Medicare Part B (aka Supplemental Medical Insurance or SMI)
Reinsurance
44. No deductible coverage for: daily room/board; ancillary costs; surgeon &/or physician expense (for added premium).
Plans A-L of Medical Supplement or Medigap
Endowment Life policy
Medicare Part D
Basic Medical plan
45. 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
Medicare Supplement or Medigap policy
Cross Purchase Plan
Elimination (aka Waiting) period
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
46. A lapsed policy may be reinstated if not longer than 3-5 yrs. - & proof of insurability re-established - & back premiums + interest paid.
Reinstatement provision
Tax implications of an Estate
Incontestability clause/provision
Phases of an annuity
47. Commercial (private) companies; HMOs; PPOs; Blue Cross/Blue Shield; Employer-sponsored plans; Government.
Types of Accident & Health (A&H) providers
Concealment
Age Discrimination in Employment Act (ADEA)
Family Income policy
48. Beneficiary has right to leave death benefits / Insurer to protect $ from creditors; interest (taxable) paid on retained funds.
Spendthrift provision
Permanent vs. Temporary disability
Exclusions to Work. Comp.
Types of reinsurance
49. Accumulation or "pay-in" - contributions & interest earned are tax-deferred; Annuity or "pay-out" - monthly annuity (taxable) paid.
Dividends
Phases of an annuity
Loss exposure
Payor (aka Waiver of Payor's Premium) rider
50. Federal program financed by payroll taxes provided equally by both employer & employee OR entirely by individual (if self-employed). Provides benefits for: Medicare @ age 65+; retirement; $255 lump sum death benefit; (limited) disability; survivors;
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
Concealment exceptions
Free Look provision
Estoppel