Test your basic knowledge |

CA Life Agent Exam

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. Written contract to transfer risk of premature death from one party to another; pays stated sum upon death; creates instant estate.






2. Group plan initially self-funded by employer (like SIR); after which - group plan Insurer covers (up to policy limit); requires TPA.






3. Allows for Term policy renewal @ higher premium w/out medical exam; guarantees insurability; based on actual/attained age.






4. 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






5. Mortality is the statistical possibility of death @ each age. Morbidity is the statistical possibility & extent of disability @ each age.






6. Savings account for medical expenses; Tax-deductible contributions; tax-deferred growth; tax-free for qualified use; taxable for non-qualified use.






7. Policy owner has right to determine mode of premium payment but Insurer can charge admin. fee if not annual.






8. Earned premium is $ paid for coverage to date. Unearned premium is $ paid & returnable due to coverage not provided.






9. 1: Single (lump sum) premium; 2: Periodic premiums - can be level (fixed $) OR flexible from mth. to mth. (w/ req. min.)






10. PURELY employer-funded account to reimburse employees for qualified medical expenses not covered by group health plan.






11. Same as WL but policy owner can adjust death benefit w/ corresponding premium adjustments; mostly obsolete.






12. IRS allows tax-free transfer of cash values between 2 LIKE policies (i.e. Life to Life - Annuity to Annuity - or Life to Annuity).






13. Palliative - treatment to manage pain; Curative - treatment to cure illness/condition.






14. 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.






15. Benefits automatically increase annually based on inflationary index (i.e. Consumer Price Index) OR flat rate (5% max.).






16. Same as WL but cash value increases @ current interest rates (not set); premium can start low or high & may change.






17. Expands individual WL policy to include Term Life for dependents (spouse - children - etc.).






18. Privately-sold policies to provide benefits not covered by Medicare; divided into 12 plans listed alphabetically A - L; 30-day free look; guaranteed renewable.






19. Grows @ fixed interest rate for set term but cash value may adjust to prevailing rate (+ or -) if fully surrendered before term ends; % w/drawal ok.






20. Financial interest in insured party that must exist @ time of application OR policy issuance. Requires consent (except minors).






21. Same as Universal Life but cash value put in investment vehicles chosen by policy owner (stocks - bonds - munis.); cash value NOT guaranteed.






22. Compensates business for loss due to disability of key employee; premiums not deductible but benefits tax-free.






23. Time extension of benefits based on "qualifying" event. 18 mth. extension if laid off or fired; 36 mth. extension if death - divorce or child leaves home.






24. Identical to Incontestable Clause in Life policy.






25. Disability income is based on "earned income" (salary - bonus - commission) - not unearned income (interest - investment - rents).






26. If total premiums paid w/in 1st 7 yrs. exceed net level premium that should have been paid - policy is an MEC.






27. Allows Insured to increase death benefit w/out medical exam (subject to age max.) w/ additional premium rate determined @ attained age.






28. Premiums determined by target cash values or death benefit; partial cash value w/drawals allowed; transparent policy w/ unbundled premium.






29. The state in which the contract is accepted or delivered is the state that possesses regulatory jurisdiction over Group plan.






30. Prepaid med. benefits for members ONLY w/ approved primary care M.D. (HMO employee); focus on preventative care; low co-pay.






31. A company providing lump sum buyout (50-90% of total) of Life policy; becomes owner & beneficiary & assumes premium payments; usually terminally ill viator.






32. Annuity distributions prior to age 59 1/2 incur a 10% IRS penalty EXCEPT for death - disability - immediate annuity - or rollover.






33. WL policy covering 2 or more Insureds but payable upon death of FIRST Insured - after which policy ends.






34. Policy owner has 90 days from date of loss to submit proof of loss to Insurer; valid claim must be paid immediately upon receipt.






35. Allows policy owner to w/draw set % of death benefit upon verification of terminal illness w/ expectancy 12-24 mths.; generally tax-free.






36. Privately-provided or Medicare-provided (if no private carrier) prescription drug plans for qualified individuals but w/ premium - deductible & co-pay.






37. Provides 24 hr. health coverage both "on" & "off" job - but may cause coverage duplication & coordination challenges.






38. After 2-3 yrs. - Whole Life policy equity builds tax-deferred @ fixed interest rate until it equals death benefit; borrowable but taxable.






39. Treating or mitigating loss exposures through 1: avoidance; 2: retention (deductibles); 3: sharing; 4: reduction; or 5: transfer.






40. Non-qualified Annuity - Non-deductible contributions & tax-deferred growth. At pay-out - tax-free principal but taxable growth.






41. 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.






42. Death benefit determined by Insured's projected lost earnings potential.






43. Prohibited w/ regard to testing for people of same class; test results must remain confidential; coverage may be declined (once discovered).






44. Agents - represent Insurer; Brokers - represent themselves & Insured; Solicitors - represent one agent to solicit leads.






45. Tendency of poorer risks to seek insurance.






46. 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.






47. Covers entire family w/ WL for breadwinner & (convertible) Level Term for spouse & children (until certain age).






48. Facultative - case by case agreements; Automatic/Treaty - automatic acceptance of risk percentage per previous agreement.






49. Death benefit is NOT taxable. Cash value grows tax-deferred but cost basis (base premium) is not taxable - only interest is.






50. Responsible adult trustee designated to manage death benefits for minor child beneficiary until adulthood.