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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. Domestic - within home state; Foreign - outside home state; Alien - outside home country.
Exclusions to Work. Comp.
1035 Exchange
Family Maintenance policy
Types of Insurers (by domicile)
2. 1: Non-cancelable; 2: Guaranteed renewable; 3: Cancelable; 4: Conditionally renewable; 5: Optionally renewable.
Change of Occupation provision
Phases of an annuity
Spendthrift provision
Types of Renewability provisions
3. Provides usual & customary business expenses (rent - utilities - salaries - mortgage) if owner becomes disabled; premiums deductible - benefits taxable.
Business Overhead Expense (BOE) Disability policy
Tax implications of an Estate
IRS Penalties for Annuities
Convertibility provision
4. Insurer has right to rescind policy & return premium if material misrepresentation in application is found w/in 1st 2 yrs.
Dread Disease policy
Annuity
Incontestability clause/provision
Dividends
5. 4: Funds retained by Insurer until w/drawn - interest ONLY paid monthly (taxable); 5: Paid-up immediate annuity.
Revocable vs. Irrevocable beneficiary
Settlement options for Life policy (2 of 2)
Medi-Cal Share Cost plan
Premium modes
6. Policy owner has right to determine mode of premium payment but Insurer can charge admin. fee if not annual.
Settlement options for Life policy (1 of 2)
24 Hour Coverage (CA)
Tax implications of Disability policy
Payment of Premium provision
7. 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.
Policy delivery
Time Limit on Certain Defenses provision
Tax implications of medical plans
Needs approach (most common)
8. Process whereby a reinsurer reinsures w/ another reinsurer.
Non-Occupational Disability policy
Common Disaster (Simultaneous Death Act) clause/provision
Adverse selection
Retrocession
9. Insurance purchased by other Insurer(s) to spread or diversify risk; promotes industry stability.
Adjustable Whole Life policy
Tax implications of Death Benefit & Cash Value
Point of Service plan
Reinsurance
10. Any person - assoc. - org. - partnership - business trust - LLC - or corp. capable of making an insurance contract.
Insurer (as defined by CIC)
Elements to contract
Penalties for violating AIDS/HIV privacy laws
Experience vs. Community rating in Group Health plan
11. Intentional deception; grounds for rescission.
Medicare Part A (aka Hospital Insurance or HI)
Legal Action provision
Annuity surrender charges
Fraud
12. Periodic return of premium to policy owners from Mutual (Par) Companies; not guaranteed & not taxable as income; may be used in 6 ways.
Split Dollar Plan
Family policy
Peril vs. Hazard
Dividends
13. Provides disability income during surgery recovery from life-threatening condition (& sometimes cosmetic surgery).
Transplant/Cosmetic Surgery rider
Waiver of Premium (Waiver of Cost of Insurance) rider
Supplemental Major Medical plan
Valid life insurance contracts must identify...
14. Privately-sold policies to provide benefits not covered by Medicare; divided into 12 plans listed alphabetically A - L; 30-day free look; guaranteed renewable.
Tax implications of Dividends - Loans & Interest
Loss exposure
Medicare Supplement or Medigap policy
Long Term Care (LTC) policy
15. 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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16. Same as WL but cash value increases @ current interest rates (not set); premium can start low or high & may change.
Current Assumption (aka Interest-Sensitive) Whole Life policy
Reinsurance
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
Indeterminate Premium Whole Life policy
17. Benefits automatically increase annually based on inflationary index (i.e. Consumer Price Index) OR flat rate (5% max.).
Insurer (as defined by CIC)
Law of Large Numbers
Revocable vs. Irrevocable beneficiary
Cost of Living Adjustment (COLA) Disability rider
18. Provides supplemental coverage for physician/surgeon fees if enrolled (during enrollment period ONLY) & pay monthly premium w/ deductible and co-insurance.
Accelerated Benefits (aka Terminal Illness or Living Benefits) rider
Policy delivery
Reinstatement provision
Medicare Part B (aka Supplemental Medical Insurance or SMI)
19. Premiums determined by target cash values or death benefit; partial cash value w/drawals allowed; transparent policy w/ unbundled premium.
Enhanced Ordinary (aka Extraordinary) Whole Life policy
Concealment exceptions
Universal (aka Flexible Premium Adjustable) Life policy (2 of 4)
Variable Life policy (1 of 2)
20. Process which prevents claim denial as a result of false statement or promise (made by Insurer) - which was relied upon by Insured.
Annuity surrender charges
Estoppel
Family or Dependents rider
Limited Pay Whole Life policy
21. 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).
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
Limited Pay Whole Life policy
Medical cost containment (aka Managed care)
Elements to contract
22. Life license + NASD (FINRA) Series 6 or 7.
Requirements to sell variable life products
Annuity Classifications (3 of 5): Source of income
COBRA Time Limitations
Limited Pay Whole Life policy
23. Available for any reason up to full cash value @ fixed (max 8%) OR variable interest rate; loan $ + interest deducted from benefit @ death.
Point of Service plan
Human Life Value approach
Policy loans
Types of hazards
24. Policy must be delivered w/ original (or copy of same) application attached.
Rehabilitation rider
Elimination (aka Waiting) period
Entire Contract provision
Residual disability rider
25. No-cost provision that authorizes Insurer to borrow from cash value to pay unpaid premiums after grace period; must ask for @ app. time.
Common Disability Exclusions
Annuity
Automatic Premium Loan (APL) provision
Common Disaster (Simultaneous Death Act) clause/provision
26. WL policy covering 2 or more Insureds but payable upon death of FIRST Insured - after which policy ends.
Conformity with State Statute provision
Employee Retirement Income Security Act (ERISA)
Errors & Omissions (E&O)
Joint Life (aka "First to die") policy
27. Part of IRS Section 125 cafeteria plan - which allows pre-tax payroll deductions for qualified medical expenses or child/dependent care.
Medi-Cal Share Cost plan
Insurance contract characteristics (1 of 2)
Flexible Spending Account (FSA)
Tax implications of medical plans
28. Non-qualified Annuity - Non-deductible contributions & tax-deferred growth. At pay-out - tax-free principal but taxable growth.
Proof of Loss provision
Policy loans
Tax implications of an Annuity (1 of 2)
Types of Insurers (by authorization)
29. Extreme form of Limited Pay Whole Life whereby entire premium is paid in a single payment.
Single Pay Whole Life policy
Health Maintenance Organization (HMO)
AIDS/HIV discrimination
Supplemental Major Medical plan
30. Same as WL but premium low for set # yrs. - THEN premiums vary (+ or -) based on Insurer's investment returns - w/ Gmax.
Indemnify
Indeterminate Premium Whole Life policy
Trusts
Total disability (as commonly defined)
31. Palliative - treatment to manage pain; Curative - treatment to cure illness/condition.
Credit Life policy
Presumptive disability
Palliative vs. Curative care
Levels of Long Term Care provided
32. An attempt to contain costs by employing various strategies - including wellness programs - preventative testing - outpatient & alternative procedures.
Medical cost containment (aka Managed care)
Variable Universal Life policy
Free Look provision
Guaranteed Insurability (aka Additional Purchase or Future Increase) Disability rider
33. Accumulation or "pay-in" - contributions & interest earned are tax-deferred; Annuity or "pay-out" - monthly annuity (taxable) paid.
Errors & Omissions (E&O)
Phases of an annuity
Departments of an Insurer
Medicare
34. 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.
Reinsurance
Insurance contract characteristics (1 of 2)
Business Continuation (aka Buy-Sell) Disability policy
COBRA Time Limitations
35. Time period preceding each disability during which benefits are not paid; longer elimination periods = cheaper premium.
Permanent vs. Temporary disability
Elimination (aka Waiting) period
Age Discrimination in Employment Act (ADEA)
Entire Contract provision
36. Annuity distributions prior to age 59 1/2 incur a 10% IRS penalty EXCEPT for death - disability - immediate annuity - or rollover.
Law of Large Numbers
Risk management
IRS Penalties for Annuities
Dependent coverage
37. Allows for Term policy renewal @ higher premium w/out medical exam; guarantees insurability; based on actual/attained age.
Annuity Classifications (2 of 5): When benefits begin
Juvenile Life (aka Jumping Juvenile) policy
Accidental Death & Dismemberment (AD&D) Life policy
Renewability provision
38. Prohibited w/ regard to testing for people of same class; test results must remain confidential; coverage may be declined (once discovered).
Free Look provision
AIDS/HIV discrimination
Reinstatement provision
Business Overhead Expense (BOE) Disability policy
39. Provides hospital insurance automatically @ age 65 (if FICA qualified) @ no fee but may have deductible & co-pay.
Family Maintenance policy
Reinstatement provision
Fraud
Medicare Part A (aka Hospital Insurance or HI)
40. Partially state-funded benefits for low-income people whereby cost of care is shared between state & recipient - based on income.
Medi-Cal Share Cost plan
Guaranteed Insurability Life rider
Adjustable Whole Life policy
Types of Accident & Health insurance
41. Generally 10 days after policy delivery to cancel policy w/ full refund - except 30 days for seniors or for replacement policies.
Endowment Life policy
Free Look provision
Factors that determine premium
Primary Insurance Amount (PIA)
42. 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.
Insurance contract characteristics (1 of 2)
Legal Action provision
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Experience vs. Community rating in Group Health plan
43. 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.
Modified Endowment Contract (MEC)
Types of reinsurance
Tax implications of Disability policy
Types of Term Life policies
44. Reappearance of disability w/in 6 mth. period after "recovery" from same disability is considered recurrence - not new disability.
Recurrent disability clause/provision
Types of Agency Authority
Annuity Classifications (5 of 5): # of lives
Errors & Omissions (E&O)
45. Same as WL but w/ Level Term rider; upon death - pays monthly income for FULL term AFTER which pays full death benefit.
Guaranteed Insurability Life rider
Annuity
Family Maintenance policy
AIDS/HIV discrimination
46. 1: Cash (tax-free); 2: Apply to future premiums; 3: Retained by Insurer @ interest; 4: Buy Paid-up WL policy add-ons; 5: Pay-up existing policy; 6: Buy 1-yr. Term policy.
Tax implications of Dividends - Loans & Interest
Dividend options
Graded Premium Whole Life policy
Small Employer Medical Expense plan
47. Upon death - death benefit is paid + the aggregate of premiums paid to date; add-on to Term policy ONLY.
Earned vs. Unearned premium
Graded Premium Whole Life policy
Return of Premium rider
Policy delivery
48. Taxable income (unlike individual plans); can be either short-term - 13-52 wks. max. or long-term - longer than 52 wks.
Convertibility provision
Rehabilitation rider
Reinstatement provision
Group Disability plan
49. Provides 24 hr. health coverage both "on" & "off" job - but may cause coverage duplication & coordination challenges.
24 Hour Coverage (CA)
Trial Application (aka Request for Offer)
Medicare Part A (aka Hospital Insurance or HI)
Types of Insurers (by sector)
50. Same as Comprehensive Major Medical but w/ integrated deductible; much more expensive.
Employee Retirement Income Security Act (ERISA)
Supplemental Major Medical plan
Health Maintenance Organization (HMO)
Elimination (aka Waiting) period