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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. Excludes coverage for suicide during 1st 2 yrs. ONLY but - if it does - all premiums must be returned to beneficiary.
Suicide clause/provision
Binding receipt (aka Temporary Insurance Agreement)
Medicaid/Medi-Cal
Modified Endowment Contract (MEC)
2. Annuity distributions prior to age 59 1/2 incur a 10% IRS penalty EXCEPT for death - disability - immediate annuity - or rollover.
IRS Penalties for Annuities
Occupational Disability policy
Types of Insurers (by authorization)
Loss of Earnings Test
3. Provides accidental death benefit @ full $ of "principal sum". Dismemberment is paid only @ 50% principal sum ("capital sum").
Point of Service plan
Accidental Death & Dismemberment (AD&D) Life policy
Underwriting risk categories
Trial Application (aka Request for Offer)
4. Must be delivered in person or by certified - registered or 1st-class mail w/ signature - unless waived by Insurance Commissioner.
Cost of Living Adjustment (COLA) Disability rider
Common Accident provision
Policy delivery
Exclusions to Work. Comp.
5. A&H - A&S - Sickness only; Medical; Disability; Accident only; Travel accident; LTC; Medicare supplement; AD&D; Dental/Vision/Prescription; Limited.
Medicare Part A (aka Hospital Insurance or HI)
Suicide clause/provision
Types of Accident & Health insurance
Loss exposure
6. Beneficiary has right to leave death benefits / Insurer to protect $ from creditors; interest (taxable) paid on retained funds.
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
Rescission
Spendthrift provision
Whole (aka Permanent or Straight) Life policy
7. Actual/Expressed - written powers; Implied - unwritten but customary practices; Apparent - perceived powers.
Beneficiary provisions
Multiple Employer Trust (MET) aka Multiple Employer Welfare Association (MEWA)
Fraud
Types of Agency Authority
8. Death benefits & premium automatically increase annually based on inflationary index (i.e. Consumer Price Index).
Entire Contract provision
Supplemental Major Medical plan
Key Employee policy
Cost of Living Adjustment (COLA) Life rider
9. Same as WL but cash value increases @ current interest rates (not set); premium can start low or high & may change.
Settlement options for Life policy (1 of 2)
Impairment (Exclusion) rider
Dental Plan
Current Assumption (aka Interest-Sensitive) Whole Life policy
10. Federal law to protect Federal employees' (& their beneficiaries') pension - group insurance - & welfare benefits.
Convertibility provision
Employee Retirement Income Security Act (ERISA)
AIDS/HIV discrimination
Spendthrift provision
11. Provides 24 hr. health coverage both "on" & "off" job - but may cause coverage duplication & coordination challenges.
Estoppel
24 Hour Coverage (CA)
Automatic Premium Loan (APL) provision
Insurance contract characteristics (2 of 2)
12. Provides supplemental coverage for physician/surgeon fees if enrolled (during enrollment period ONLY) & pay monthly premium w/ deductible and co-insurance.
Types of reinsurance
Total disability (more restrictive definition)
Entire Contract provision
Medicare Part B (aka Supplemental Medical Insurance or SMI)
13. Plan A is the CORE benefit & is least expensive; All other plans include Plan A + additional benefits. Plans F & J are high deductible. K & L are both deductible & co-pay plans.
Reinsurance
Plans A-L of Medical Supplement or Medigap
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Beneficiary provisions
14. Receipt whereby coverage incepts immediately upon submission of full consideration - unless declined & premium refunded.
Medical cost containment (aka Managed care)
Binding receipt (aka Temporary Insurance Agreement)
Needs approach (most common)
Errors & Omissions (E&O)
15. Available for any reason up to full cash value @ fixed (max 8%) OR variable interest rate; loan $ + interest deducted from benefit @ death.
Adjustable Whole Life policy
Policy loans
CHAMPUS (aka TriCare)
Requirements to sell variable life products
16. Covers disabilities occurring both "on" AND "off" job; "on" job benefits paid in addition to work. comp. - if applicable (i.e. individual plan).
Modified Endowment Contract (MEC)
Types of Accident & Health insurance
Valid life insurance contracts must identify...
Occupational Disability policy
17. 1: Single (lump sum) premium; 2: Periodic premiums - can be level (fixed $) OR flexible from mth. to mth. (w/ req. min.)
Accidental Death & Dismemberment (AD&D) Disability rider
Enhanced Ordinary (aka Extraordinary) Whole Life policy
Annuity Classifications (1 of 5): How premium is paid
Age Discrimination in Employment Act (ADEA)
18. Part of IRS Section 125 cafeteria plan - which allows pre-tax payroll deductions for qualified medical expenses or child/dependent care.
Exclusions to Work. Comp.
Law of Large Numbers
Flexible Spending Account (FSA)
Key Employee Disability policy
19. Intentional deception; grounds for rescission.
Fraud
Medicare Part B (aka Supplemental Medical Insurance or SMI)
Return of Premium rider
Health Insurance Portability and Accountability Act (HIPAA)
20. Fraternal - non-profit - members only; Reciprocal - unincorp'd org. - members insure each other; Lloyd's Assoc. - groups sharing risks; Surplus lines - special market risks.
Types of Insurers (miscellaneous)
Business Overhead Expense (BOE) Disability policy
Universal (aka Flexible Premium Adjustable) Life policy (3 of 4)
Family or Dependents rider
21. Waives premium upon disability of Insured until return to work; disability must persist for 6 mths. or longer. Cash value & dividends not affected.
Medicare Part C (aka Medicare Advantage)
Basic Medical plan
Waiver of Premium (Waiver of Cost of Insurance) rider
Spendthrift provision
22. Prohibited w/ regard to testing for people of same class; test results must remain confidential; coverage may be declined (once discovered).
Enhanced Ordinary (aka Extraordinary) Whole Life policy
AIDS/HIV discrimination
Factors that determine premium
Spendthrift provision
23. No deductible coverage for: daily room/board; ancillary costs; surgeon &/or physician expense (for added premium).
Basic Medical plan
Limited Pay Whole Life policy
Errors & Omissions (E&O)
Revocable vs. Irrevocable beneficiary
24. 4: Funds retained by Insurer until w/drawn - interest ONLY paid monthly (taxable); 5: Paid-up immediate annuity.
Settlement options for Life policy (2 of 2)
Adverse selection
Common Life Exclusions
Age Discrimination in Employment Act (ADEA)
25. If Insured & primary beneficiary die due to same act (w/in 14 days) - primary assumed 1st to die & contingent beneficiary paid death benefit.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Parole Pardon Rule
Family Income policy
Common Disaster (Simultaneous Death Act) clause/provision
26. 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)
CA Work. Comp. Statutes
Total disability (as commonly defined)
Annuity
27. Permanent - not recoverable (spinal cord injury); Temporary - recoverable (temp. illness/injury - broken limb).
Recurrent disability clause/provision
Permanent vs. Temporary disability
Common Disaster (Simultaneous Death Act) clause/provision
Underwriting risk categories
28. Covers entire family w/ WL for breadwinner & (convertible) Level Term for spouse & children (until certain age).
Family policy
Accidental Death (aka Multiple Indemnity) rider
Health Insurance Portability and Accountability Act (HIPAA)
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
29. Mortality is the statistical possibility of death @ each age. Morbidity is the statistical possibility & extent of disability @ each age.
Family or Dependents rider
Mortality vs. Morbidity tables
Impairment (Exclusion) rider
Insuring clause/provision (aka Insuring Agreement)
30. Same as WL but premium low for 1st 3-5 yrs. - THEN has one-time premium increase.
Modified Premium Whole Life policy
Blue Cross/Blue Shield
Types of Insurers (by sector)
Equity Indexed annuity
31. Provides disability income during surgery recovery from life-threatening condition (& sometimes cosmetic surgery).
Cross Purchase Plan
Blackout Period
Types of Renewability provisions
Transplant/Cosmetic Surgery rider
32. Business continuation funding plan whereby each partner agrees to buy Life policies on each other - but not themselves.
Cross Purchase Plan
Transplant/Cosmetic Surgery rider
COBRA Time Limitations
Small Employer Medical Expense plan
33. Waives premium on Life policy for minor child until age 21 in event premium payor dies or becomes disabled.
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34. Pure risk involves chance of loss ONLY (accident or misfortune). Speculative risk involves chance of loss OR gain (gambling - stock investment).
Settlement options for Life policy (2 of 2)
Levels of Long Term Care provided
Pure risk vs. Speculative risk
Types of Term Life policies
35. Same as WL but premium low for 1st 5 yrs. - THEN has annual premium increases for set # yrs. - THEN level premium.
Medical cost containment (aka Managed care)
Beneficiary provisions
Annuity Classifications (5 of 5): # of lives
Graded Premium Whole Life policy
36. Written contract that provides INCOME @ high interest rate for fixed period OR for annuitant's lifetime w/ possible death benefit.
Split Dollar Plan
Annuity
Mortality vs. Morbidity tables
Types of Term Life policies
37. 1: Tax-free lump sum; 2: Monthly pay-outs for fixed time; 3: Fixed monthly payments until depleted.
Common Life Exclusions
Cost of Living Adjustment (COLA) Disability rider
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Settlement options for Life policy (1 of 2)
38. 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.
Payor (aka Waiver of Payor's Premium) rider
Law of Large Numbers
Tax implications of medical plans
Medi-Cal Share Cost plan
39. Identical to Incontestable Clause in Life policy.
Medicare Part B (aka Supplemental Medical Insurance or SMI)
Claim Form (aka Proof of Loss Form) provision
Time Limit on Certain Defenses provision
Tax implications of Death Benefit & Cash Value
40. Insurer has right to adjust (+ or -) death benefit if age or sex is misstated but normally doesn't void policy.
Basic Medical plan
Misstatement of Age/Sex provision
Elements to contract
Term Life policy
41. IRS allows tax-free transfer of cash values between 2 LIKE policies (i.e. Life to Life - Annuity to Annuity - or Life to Annuity).
Medicaid/Medi-Cal
1035 Exchange
Dread Disease policy
CA Work. Comp. Statutes
42. If Insured changes to: more hazardous job - benefits reduced; less hazardous job - premiums reduce.
Change of Occupation provision
Partial disability rider
Key Employee Disability policy
Health Reimbursement Account (HRA)
43. Refund of 50-80% of premium (minus claims paid) every 5-10 yrs. OR age 65; expensive!
Return of Premium rider
Earned vs. Unearned premium
Reinsurance
Medicare Part C (aka Medicare Advantage)
44. If total premiums paid w/in 1st 7 yrs. exceed net level premium that should have been paid - policy is an MEC.
Law of Large Numbers
Doctrine of Comity
7 Pay Test
Types of hazards
45. Specialized policy covering diagnostic & preventative dental care; often no deductible; co-insurance; expensive; may be included w/ medical plan.
Dental Plan
Key Employee Disability policy
Types of Medical Plans
Change of Occupation provision
46. 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.
Retrocession
Elimination (aka Waiting) period
Equity Indexed annuity
Earned vs. Unearned premium
47. Extreme form of Limited Pay Whole Life whereby entire premium is paid in a single payment.
Revocable vs. Irrevocable beneficiary
Applicant Representations vs. Warranties
Single Pay Whole Life policy
Doctrine of Comity
48. Allows Insured to increase death benefit w/out medical exam (subject to age max.) w/ additional premium rate determined @ attained age.
Medicare Part A (aka Hospital Insurance or HI)
Guaranteed Insurability Life rider
Loss exposure
Return of Premium rider
49. 1: Non-cancelable; 2: Guaranteed renewable; 3: Cancelable; 4: Conditionally renewable; 5: Optionally renewable.
Dental Plan
Transplant/Cosmetic Surgery rider
Types of Renewability provisions
Conformity with State Statute provision
50. Revocable - changeable anytime w/ Change of Beneficiary Form; Irrevocable - not changeable w/out beneficiary permission.
Law of Large Numbers
Revocable vs. Irrevocable beneficiary
Phases of an annuity
Retrocession