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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. 1: Single (lump sum) premium; 2: Periodic premiums - can be level (fixed $) OR flexible from mth. to mth. (w/ req. min.)
Human Life Value approach
Annuity Classifications (1 of 5): How premium is paid
Endowment Life policy
Accidental Death & Dismemberment (AD&D) Life policy
2. Provides usual & customary business expenses (rent - utilities - salaries - mortgage) if owner becomes disabled; premiums deductible - benefits taxable.
Annuity
Valid life insurance contracts must identify...
Medicare Part A & B "Gaps"
Business Overhead Expense (BOE) Disability policy
3. Earned premium is $ paid for coverage to date. Unearned premium is $ paid & returnable due to coverage not provided.
Insurability Type Conditional receipt
Dependent coverage
Earned vs. Unearned premium
IRS Penalties for Annuities
4. Same as WL but premium low for 1st 3-5 yrs. - THEN has one-time premium increase.
Modified Premium Whole Life policy
Loss exposure
Types of Agency Authority
Total disability (more restrictive definition)
5. Funding mechanism whereby employer & employee share cost of premium. Upon death - benefit is shared between employer & beneficiary.
Split Dollar Plan
Types of Accident & Health (A&H) providers
Enhanced Ordinary (aka Extraordinary) Whole Life policy
Tax implications of an Annuity (1 of 2)
6. Group plan initially self-funded by employer (like SIR); after which - group plan Insurer covers (up to policy limit); requires TPA.
Factors that determine premium
Exclusions to Work. Comp.
Employer-Administered plan
Indemnify
7. Mortality is the statistical possibility of death @ each age. Morbidity is the statistical possibility & extent of disability @ each age.
Mortality vs. Morbidity tables
Types of Insurers (by authorization)
Life insurance policy
Needs approach (most common)
8. Partially state-funded benefits for low-income people whereby cost of care is shared between state & recipient - based on income.
Reinstatement provision
Medi-Cal Share Cost plan
Insuring clause/provision (aka Insuring Agreement)
Medicare Part C (aka Medicare Advantage)
9. Monthly; Quarterly; Semi-annually; Annually (cheapest due to less admin cost).
Universal (aka Flexible Premium Adjustable) Life policy (2 of 4)
Types of Medical Plans
Tax implications of Dividends - Loans & Interest
Premium modes
10. Application submitted w/out premium; no coverage until submission of full consideration & completed Statement of Continued Good Health.
Return of Premium rider
Total disability (more restrictive definition)
Types of Insurers (by ownership)
Trial Application (aka Request for Offer)
11. War - 2 types; Suicide (1st 2 yrs.); Aviation (non-commercial); Hazardous hobbies; Criminal acts; Alcohol/Drug influenced.
Accidental Death (aka Multiple Indemnity) rider
Waiver of Premium (Waiver of Cost of Insurance) rider
Factors that determine premium
Common Life Exclusions
12. Policyholders - Mutual (participating) co. - may pay dividends; Stockholders - Stock (non-participating) co. - no dividends.
Premium modes
Types of Insurers (by ownership)
Business Continuation (aka Buy-Sell) policy
Insuring clause/provision (aka Insuring Agreement)
13. Preferred or Preferred Smoker; Standard or Standard Smoker; Substandard; Denied.
Legal Action provision
Peril vs. Hazard
Preferred Provider Organization (PPO)
Underwriting risk categories
14. Tendency of poorer risks to seek insurance.
Adverse selection
Penalties for violating AIDS/HIV privacy laws
Tax implications of an Annuity (1 of 2)
Group Disability plan
15. Federally-funded but state-run program for truly indigent individuals & families providing medical care at Federal clinic.
Key Employee Disability policy
Permanent vs. Temporary disability
Insurer (as defined by CIC)
Medicaid/Medi-Cal
16. Insurance purchased by other Insurer(s) to spread or diversify risk; promotes industry stability.
Time Limit on Certain Defenses provision
Reinstatement provision
Reinsurance
Rescission
17. 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).
Medicare Supplement or Medigap policy
Spendthrift provision
Medicare Part A & B "Gaps"
Limited Pay Whole Life policy
18. Two death benefit options - Option A: death benefit ONLY; Option B: death benefit + cash value; death benefit NOT guaranteed.
Insurable interest
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
Credit Life policy
Waiver of Premium (Waiver of Cost of Insurance) rider
19. Prepaid med. benefits for "subscribers" @ approved facilities; many non-profit; Blue Cross - Hospital stays; Blue Shield - M.D. costs.
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
Blue Cross/Blue Shield
Incontestability clause/provision
Guaranteed Insurability (aka Additional Purchase or Future Increase) Disability rider
20. Treating or mitigating loss exposures through 1: avoidance; 2: retention (deductibles); 3: sharing; 4: reduction; or 5: transfer.
Medical cost containment (aka Managed care)
Guaranteed Insurability (aka Additional Purchase or Future Increase) Disability rider
Binding receipt (aka Temporary Insurance Agreement)
Risk management
21. Reappearance of disability w/in 6 mth. period after "recovery" from same disability is considered recurrence - not new disability.
Recurrent disability clause/provision
Medicare Supplement or Medigap policy
Cost of Living Adjustment (COLA) Disability rider
Proof of Loss provision
22. Life license + NASD (FINRA) Series 6 or 7.
COBRA Time Limitations
Comprehensive Major Medical plan
Return of Cash Value rider
Requirements to sell variable life products
23. 'The inability to perform your OWN normal occupation or daily duties'.
Market Value Adjusted (aka Modified Guaranteed) annuity
Phases of an annuity
Total disability (as commonly defined)
Medicare Part B (aka Supplemental Medical Insurance or SMI)
24. WL policy covering 2 or more Insureds but payable upon death of FIRST Insured - after which policy ends.
Spendthrift provision
Loss of Earnings Test
Tax implications of Dividends - Loans & Interest
Joint Life (aka "First to die") policy
25. Req. by CA statute & may provide workers coverage for action-over claims.
Employer Liability
Non-Occupational Disability policy
Trial Application (aka Request for Offer)
Fraud
26. Compensates business for loss due to disability of key employee; premiums not deductible but benefits tax-free.
Errors & Omissions (E&O)
Long Term Care (LTC) policy
Key Employee Disability policy
Insurance contract characteristics (2 of 2)
27. Disability income is based on "earned income" (salary - bonus - commission) - not unearned income (interest - investment - rents).
Loss of Earnings Test
Rehabilitation rider
Term Life policy
Credit Life policy
28. Peril is the CAUSE of loss. Hazard is a condition that increases LIKELIHOOD of loss.
Peril vs. Hazard
Medical cost containment (aka Managed care)
Insurance contract characteristics (2 of 2)
Employer-Administered plan
29. Same as WL but premium low for set # yrs. - THEN premiums vary (+ or -) based on Insurer's investment returns - w/ Gmax.
Indeterminate Premium Whole Life policy
Point of Service plan
Plans A-L of Medical Supplement or Medigap
Residual disability rider
30. Identical to Incontestable Clause in Life policy.
Medicare Part C (aka Medicare Advantage)
Business Continuation (aka Buy-Sell) Disability policy
Time Limit on Certain Defenses provision
Waiver of Premium provision
31. 'The inability to perform ANY reasonable occupation based on education - training or experience'.
Permanent vs. Temporary disability
Loss exposure
Group Disability plan
Total disability (more restrictive definition)
32. 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.
Insurable interest
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
Total disability (more restrictive definition)
Equity Indexed annuity
33. Financial interest in insured party that must exist @ time of application OR policy issuance. Requires consent (except minors).
Annuity Classifications (1 of 5): How premium is paid
Insurable interest
Tax implications of medical plans
Joint Life (aka "First to die") policy
34. Provides accidental death benefit @ full $ of "principal sum". Dismemberment is paid only @ 50% principal sum ("capital sum").
Accidental Death & Dismemberment (AD&D) Disability rider
Accidental Death & Dismemberment (AD&D) Life policy
COBRA Time Limitations
Social Security Benefit (Supplement) rider
35. Periodic return of premium to policy owners from Mutual (Par) Companies; not guaranteed & not taxable as income; may be used in 6 ways.
Tax implications of Dividends - Loans & Interest
Dividends
Medical cost containment (aka Managed care)
Partial disability rider
36. Provides increased death benefit if death occurs w/in 90 days & as result of accident; relatively INexpensive add-on.
Total disability (more restrictive definition)
Business Overhead Expense (BOE) Disability policy
Accidental Death & Dismemberment (AD&D) Life policy
Accidental Death (aka Multiple Indemnity) rider
37. 1: mortality probability charge; 2: Insurer's investment return; 3: expenses (admin costs - commissions). 1 - 2 = net; 1 - 2 + 3 = gross.
Factors that determine premium
Accidental Death & Dismemberment (AD&D) Life policy
Penalties for violating AIDS/HIV privacy laws
Universal (aka Flexible Premium Adjustable) Life policy (1 of 4)
38. Provides % of monthly income benefit if Insured becomes disabled due to illness or accident.
Suicide clause/provision
Disability Income policy
Tax implications of Disability policy
Dental Plan
39. Receipt whereby coverage incepts conditionally upon submission of full consideration and that all underwriting reqs. are met.
Market Value Adjusted (aka Modified Guaranteed) annuity
Insurability Type Conditional receipt
Common Disability Exclusions
Juvenile Life (aka Jumping Juvenile) policy
40. 1: Individual; 2: Joint - multiple annuitants paid until 1st dies; 3: Joint & Survivor - multiple annuitants paid until 1st dies THEN survivors paid but @ reduced $.
Flexible Spending Account (FSA)
Return of Premium rider
Key Employee Disability policy
Annuity Classifications (5 of 5): # of lives
41. A&H - A&S - Sickness only; Medical; Disability; Accident only; Travel accident; LTC; Medicare supplement; AD&D; Dental/Vision/Prescription; Limited.
Employer Liability
Accidental Death & Dismemberment (AD&D) Life policy
Employee Retirement Income Security Act (ERISA)
Types of Accident & Health insurance
42. Allows Insured to increase benefit w/out medical exam (subject to age max.) w/ additional premium rate determined @ attained age; must prove income increase.
Universal (aka Flexible Premium Adjustable) Life policy (3 of 4)
Medicare Part A & B "Gaps"
Dread Disease policy
Guaranteed Insurability (aka Additional Purchase or Future Increase) Disability rider
43. 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
Underwriting risk categories
Single Pay Whole Life policy
7 Pay Test
44. Pre-existing illness/injury; Waiting period; Elimination period; Probationary period; Benefits - Exclusions - Limitations; Underwriting reqs.
Considerations in replacing Health insurance
Medical cost containment (aka Managed care)
Automatic Premium Loan (APL) provision
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
45. Prevents overinsuring in order to profit from disability by coordinating benefits between Insurers.
Indeterminate Premium Whole Life policy
Considerations in replacing Health insurance
Relation of Earnings to Insurance provision
Consolidated Omnibus Budget Reconciliation Act (COBRA)
46. Death benefit is NOT taxable. Cash value grows tax-deferred but cost basis (base premium) is not taxable - only interest is.
Tax implications of Death Benefit & Cash Value
Return of Cash Value rider
Medicare Part A & B "Gaps"
Modified Endowment Contract (MEC)
47. Benefits automatically increase annually based on inflationary index (i.e. Consumer Price Index) OR flat rate (5% max.).
Cost of Living Adjustment (COLA) Life rider
Cost of Living Adjustment (COLA) Disability rider
Occupational Disability policy
Dread Disease policy
48. Dependent children are covered until 19 or 23 (full-time student only) or until self-sufficient (if handicapped).
Market Value Adjusted (aka Modified Guaranteed) annuity
24 Hour Coverage (CA)
Dependent coverage
Concealment exceptions
49. Business continuation funding plan whereby each partner agrees to buy Life policies on each other - but not themselves.
Earned vs. Unearned premium
Cross Purchase Plan
Dependent coverage
24 Hour Coverage (CA)
50. Process which prevents claim denial as a result of false statement or promise (made by Insurer) - which was relied upon by Insured.
Estoppel
Misstatement of Age/Sex provision
Health Maintenance Organization (HMO)
Equity Indexed annuity