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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. 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)
1035 Exchange
Relation of Earnings to Insurance provision
IRS Penalties for Annuities
2. An irrevocable IRS classification of a policy (determined by the 7 Pay Test) whereby tax advantages are lost for all distributions ONLY.
Modified Endowment Contract (MEC)
Medicaid/Medi-Cal
Enhanced Ordinary (aka Extraordinary) Whole Life policy
Common Life Exclusions
3. Two death benefit options - Option A: death benefit ONLY; Option B: death benefit + cash value; death benefit NOT guaranteed.
Graded Premium Whole Life policy
Types of Renewability provisions
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
Beneficiary provisions
4. Beneficiary has right to leave death benefits / Insurer to protect $ from creditors; interest (taxable) paid on retained funds.
Grace Period provision
Civil Rights/Pregnancy Discrimination Act
Spendthrift provision
Fraud
5. Benefits NOT taxable; employer-paid premiums deductible to employer; individual plans not deductible unless over 7 1/2% of adjusted gross income - then excess deductible.
Accidental Death & Dismemberment (AD&D) Life policy
Tax implications of medical plans
Flexible Spending Account (FSA)
Types of reinsurance
6. Funding mechanism whereby employer & employee share cost of premium. Upon death - benefit is shared between employer & beneficiary.
Medicare
Split Dollar Plan
Types of Term Life policies
Civil Rights/Pregnancy Discrimination Act
7. Provides % of monthly income benefit if Insured becomes disabled due to illness or accident.
Requirements to sell variable life products
Disability Income policy
Market Value Adjusted (aka Modified Guaranteed) annuity
Retrocession
8. Same as WL but w/ Decreasing Term rider; upon death - pays monthly income for REMAINING term AFTER which pays full death benefit.
Blue Cross/Blue Shield
1035 Exchange
Single Pay Whole Life policy
Family Income policy
9. Provides supplemental coverage for physician/surgeon fees if enrolled (during enrollment period ONLY) & pay monthly premium w/ deductible and co-insurance.
Graded Premium Whole Life policy
Legal Action provision
Medicare Part B (aka Supplemental Medical Insurance or SMI)
Common Disaster (Simultaneous Death Act) clause/provision
10. Pre-existing illness/injury; Waiting period; Elimination period; Probationary period; Benefits - Exclusions - Limitations; Underwriting reqs.
Presumptive disability
Tax implications of Dividends - Loans & Interest
Considerations in replacing Health insurance
Employee Retirement Income Security Act (ERISA)
11. 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
Business Overhead Expense (BOE) Disability policy
Accelerated Benefits (aka Terminal Illness or Living Benefits) rider
Entire Contract provision
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
12. 'The inability to perform ANY gainful occupation'.
Types of hazards
Total disability (any-occupational definition)
Market Value Adjusted (aka Modified Guaranteed) annuity
Premium modes
13. Info already known; Info that should have been known; Waived info; Irrelevant info.
Tax implications of medical plans
Concealment exceptions
Types of Insurers (by sector)
Key Employee Disability policy
14. Intentional deception; grounds for rescission.
Policy loans
Fraud
Reinsurance
Annuity Classifications (1 of 5): How premium is paid
15. No-charge annuity w/drawals allowed up to 10% of total - THEN penalized on sliding scale based on # policy yrs.; conditionally waived.
Annuity surrender charges
Adjustable Whole Life policy
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Rescission
16. Death benefit is NOT taxable. Cash value grows tax-deferred but cost basis (base premium) is not taxable - only interest is.
Concealment
Law of Large Numbers
Comprehensive Major Medical plan
Tax implications of Death Benefit & Cash Value
17. Policyholders - Mutual (participating) co. - may pay dividends; Stockholders - Stock (non-participating) co. - no dividends.
Joint Life (aka "First to die") policy
Medical Savings Account (MSA) & Health Savings Account (HSA)
Types of Insurers (by ownership)
Waiver of Premium provision
18. Expands individual WL policy to include Term Life for dependents (spouse - children - etc.).
Recurrent disability clause/provision
Types of Insurers (by domicile)
Current Assumption (aka Interest-Sensitive) Whole Life policy
Family or Dependents rider
19. 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
Return of Premium rider
Reinsurance
Binding receipt (aka Temporary Insurance Agreement)
20. 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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21. Policy owner must notify Insurer of loss either in writing - in person or by phone w/in 20 days.
Beneficiary provisions
Multiple Employer Trust (MET) aka Multiple Employer Welfare Association (MEWA)
Health Insurance Portability and Accountability Act (HIPAA)
Notice of Claim provision
22. Peril is the CAUSE of loss. Hazard is a condition that increases LIKELIHOOD of loss.
Experience vs. Community rating in Group Health plan
Medicare Part A (aka Hospital Insurance or HI)
Peril vs. Hazard
Waiver of Premium provision
23. Financial interest in insured party that must exist @ time of application OR policy issuance. Requires consent (except minors).
Occupational Disability policy
Tax implications of an Annuity (1 of 2)
Insurable interest
Rehabilitation rider
24. Covers disabilities occurring both "on" AND "off" job; "on" job benefits paid in addition to work. comp. - if applicable (i.e. individual plan).
Term Life policy
Payor (aka Waiver of Payor's Premium) rider
Occupational Disability policy
Peril vs. Hazard
25. Must be delivered in person or by certified - registered or 1st-class mail w/ signature - unless waived by Insurance Commissioner.
IRS Penalties for Annuities
Policy delivery
Variable Life policy (1 of 2)
Accidental Death & Dismemberment (AD&D) Life policy
26. 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.
Basic Medical plan
Total disability (any-occupational definition)
COBRA Time Limitations
Rate (as defined by CIC)
27. Monthly; Quarterly; Semi-annually; Annually (cheapest due to less admin cost).
Adverse selection
Premium modes
Single Pay Whole Life policy
Risk management
28. If Insured & primary beneficiary die due to same act (w/in 14 days) - primary assumed 1st to die & contingent beneficiary paid death benefit.
Time Limit on Certain Defenses provision
Common Disaster (Simultaneous Death Act) clause/provision
Factors that determine premium
Payment of Premium provision
29. Written contract that provides INCOME @ high interest rate for fixed period OR for annuitant's lifetime w/ possible death benefit.
Annuity
Equity Indexed annuity
Return of Premium rider
Loss of Earnings Test
30. Permanent - not recoverable (spinal cord injury); Temporary - recoverable (temp. illness/injury - broken limb).
Medicaid/Medi-Cal
Civil Rights/Pregnancy Discrimination Act
Dread Disease policy
Permanent vs. Temporary disability
31. The state in which the contract is accepted or delivered is the state that possesses regulatory jurisdiction over Group plan.
Doctrine of Comity
Types of Accident & Health (A&H) providers
Types of Insurers (miscellaneous)
Loss exposure
32. Privately-sold policies to provide benefits not covered by Medicare; divided into 12 plans listed alphabetically A - L; 30-day free look; guaranteed renewable.
Trusts
Medicare Supplement or Medigap policy
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
Considerations in replacing Health insurance
33. Provides for continued operation of business if partner dies - by allowing surviving partner(s) to buy deceased partner's interest in business.
Civil Rights/Pregnancy Discrimination Act
Business Continuation (aka Buy-Sell) policy
Medicare Part C (aka Medicare Advantage)
Guaranteed Insurability Life rider
34. Same as WL but premium low for 1st 5 yrs. - THEN has annual premium increases for set # yrs. - THEN level premium.
Automatic Premium Loan (APL) provision
Graded Premium Whole Life policy
Life insurance policy
Adjustable Whole Life policy
35. No deductible coverage for: daily room/board; ancillary costs; surgeon &/or physician expense (for added premium).
Blackout Period
Common Life Exclusions
Multiple Employer Trust (MET) aka Multiple Employer Welfare Association (MEWA)
Basic Medical plan
36. Disability policy rider covering "the inability to perform some - but not all of your duties"; pays max. 50% of disability benefit for up to 6 mths.
Convertibility provision
Partial disability rider
Employer-Administered plan
AIDS/HIV discrimination
37. Policy owner has 90 days from date of loss to submit proof of loss to Insurer; valid claim must be paid immediately upon receipt.
Proof of Loss provision
Annuity Classifications (1 of 5): How premium is paid
Parole Pardon Rule
Comprehensive Major Medical plan
38. After 2-3 yrs. - Whole Life policy equity builds tax-deferred @ fixed interest rate until it equals death benefit; borrowable but taxable.
Cash value
Guaranteed Insurability (aka Additional Purchase or Future Increase) Disability rider
Common Disaster (Simultaneous Death Act) clause/provision
Types of reinsurance
39. Coverage for catastrophic loss w/ high limits - front end deductible; co-insurance (80/20%); blanket coverage; stop loss max.
Point of Service plan
Major Medical plan
Trusts
Key Employee Disability policy
40. 1: Fixed - guaranteed fixed monthly income & fixed interest rate; 2: Variable - unguaranteed; monthly income varies based on stocks/bond returns.
Partial disability rider
Errors & Omissions (E&O)
Time Limit on Certain Defenses provision
Annuity Classifications (3 of 5): Source of income
41. A&H - A&S - Sickness only; Medical; Disability; Accident only; Travel accident; LTC; Medicare supplement; AD&D; Dental/Vision/Prescription; Limited.
Types of Accident & Health insurance
Enhanced Ordinary (aka Extraordinary) Whole Life policy
AIDS/HIV discrimination
Medicare
42. Agreement - Offer & acceptance; Consideration - application + premium; Legal capacity - licensed &/or competent; Legal purpose - public good.
Residual disability rider
Recurrent disability clause/provision
Elements to contract
Health Maintenance Organization (HMO)
43. Allows Insured to increase death benefit w/out medical exam (subject to age max.) w/ additional premium rate determined @ attained age.
Insurability Type Conditional receipt
Guaranteed Insurability Life rider
Tax implications of medical plans
Health Insurance Portability and Accountability Act (HIPAA)
44. 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.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Flexible Spending Account (FSA)
Permanent vs. Temporary disability
Multiple Employer Trust (MET) aka Multiple Employer Welfare Association (MEWA)
45. Excludes coverage for suicide during 1st 2 yrs. ONLY but - if it does - all premiums must be returned to beneficiary.
Guaranteed Insurability Life rider
Credit Life policy
Suicide clause/provision
Common Disability Exclusions
46. Specialized policy covering diagnostic & preventative dental care; often no deductible; co-insurance; expensive; may be included w/ medical plan.
Dread Disease policy
Long Term Care (LTC) policy
AIDS/HIV discrimination
Dental Plan
47. Time period preceding each disability during which benefits are not paid; longer elimination periods = cheaper premium.
Return of Cash Value rider
Elimination (aka Waiting) period
Tax implications of Death Benefit & Cash Value
Payor (aka Waiver of Payor's Premium) rider
48. Provides increased death benefit if death occurs w/in 90 days & as result of accident; relatively INexpensive add-on.
Elements to contract
Types of Accident & Health (A&H) providers
Reinsurance
Accidental Death (aka Multiple Indemnity) rider
49. 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;
Dividends
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
Exclusions to Work. Comp.
Annuity
50. Same as WL but premium low for 1st 3-5 yrs. - THEN has one-time premium increase.
Insurance contract characteristics (1 of 2)
Modified Premium Whole Life policy
Tax implications of Dividends - Loans & Interest
Credit Life policy