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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. Underwriting - determines insurability; Marketing/Sales - determines products; Actuarial - determines rates; Claims - investigates/pays claims.
Departments of an Insurer
Requirements to sell variable life products
Family policy
Insurance contract characteristics (2 of 2)
2. Specialized policy covering diagnostic & preventative dental care; often no deductible; co-insurance; expensive; may be included w/ medical plan.
Tax implications of medical plans
Premium modes
Settlement options for Life policy (2 of 2)
Dental Plan
3. Same as WL but w/ adjustable death benefit (& corresponding premium) & over-fund option but w/ annually renewable term (ART).
Universal (aka Flexible Premium Adjustable) Life policy (1 of 4)
Comprehensive Major Medical plan
Enhanced Ordinary (aka Extraordinary) Whole Life policy
Types of Licensed Producers
4. Beneficiary has right to leave death benefits / Insurer to protect $ from creditors; interest (taxable) paid on retained funds.
Insurance contract characteristics (2 of 2)
Health Insurance Portability and Accountability Act (HIPAA)
Adverse selection
Spendthrift provision
5. No-charge annuity w/drawals allowed up to 10% of total - THEN penalized on sliding scale based on # policy yrs.; conditionally waived.
Free Look provision
Misstatement of Age/Sex provision
Civil Rights/Pregnancy Discrimination Act
Annuity surrender charges
6. 1: Fixed - guaranteed fixed monthly income & fixed interest rate; 2: Variable - unguaranteed; monthly income varies based on stocks/bond returns.
Approval Type Conditional receipt
Types of Renewability provisions
Enhanced Ordinary (aka Extraordinary) Whole Life policy
Annuity Classifications (3 of 5): Source of income
7. Provides accidental death benefit @ full $ of "principal sum". Dismemberment is paid only @ 50% principal sum ("capital sum").
Accidental Death & Dismemberment (AD&D) Disability rider
Factors that determine premium
Tax implications of Dividends - Loans & Interest
Considerations in replacing Health insurance
8. Provides supplemental coverage for physician/surgeon fees if enrolled (during enrollment period ONLY) & pay monthly premium w/ deductible and co-insurance.
Employee Retirement Income Security Act (ERISA)
Medicare Part B (aka Supplemental Medical Insurance or SMI)
Medical cost containment (aka Managed care)
Human Life Value approach
9. Voiding an insurance contract based on fraud - concealment or material misrepresentation; premiums returned; policy treated as never existing.
Flexible Spending Account (FSA)
Business Overhead Expense (BOE) Disability policy
Rescission
Modified Premium Whole Life policy
10. Guaranteed min. interest rate on cash value buildup but possible higher rate if short-term investment returns higher than expected.
Reinsurance
Universal (aka Flexible Premium Adjustable) Life policy (3 of 4)
1035 Exchange
Business Continuation (aka Buy-Sell) Disability policy
11. Representation - oral or written statement made to best of knowledge or belief; Warranty - statement guaranteed/presumed/understood to be true.
Survivorship (aka "Last to die") policy
COBRA Time Limitations
Annuity
Applicant Representations vs. Warranties
12. 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
Penalties for violating AIDS/HIV privacy laws
Supplemental Major Medical plan
CA Work. Comp. Statutes
13. Upon death - death benefit is paid + the aggregate of premiums paid to date; add-on to Term policy ONLY.
Experience vs. Community rating in Group Health plan
Return of Premium rider
Common Disaster (Simultaneous Death Act) clause/provision
Concealment exceptions
14. Agreement - Offer & acceptance; Consideration - application + premium; Legal capacity - licensed &/or competent; Legal purpose - public good.
Common Life Exclusions
Elements to contract
Business Overhead Expense (BOE) Disability policy
Accidental Death & Dismemberment (AD&D) Life policy
15. 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)
Variable Life policy (1 of 2)
Types of Agency Authority
Legal Action provision
16. Insurance purchased by other Insurer(s) to spread or diversify risk; promotes industry stability.
Reinsurance
Elements to contract
Types of Medical Plans
Settlement options for Life policy (1 of 2)
17. Authorized (admitted) - can conduct business in state; Unauthorized (non-admitted) - cannot conduct business in state (w/ one exception).
Reinsurance
Concealment
Supplemental Major Medical plan
Types of Insurers (by authorization)
18. 'The inability to perform your OWN normal occupation or daily duties'.
Accidental Death & Dismemberment (AD&D) Life policy
Waiver of Premium provision
Common Accident provision
Total disability (as commonly defined)
19. Process whereby a reinsurer reinsures w/ another reinsurer.
Multiple Employer Trust (MET) aka Multiple Employer Welfare Association (MEWA)
Common Disaster (Simultaneous Death Act) clause/provision
Retrocession
Approval Type Conditional receipt
20. Life license + NASD (FINRA) Series 6 or 7.
Requirements to sell variable life products
Policy delivery
Limited Pay Whole Life policy
Tax implications of an Annuity (1 of 2)
21. Generally 10 days after policy delivery to cancel policy w/ full refund - except 30 days for seniors or for replacement policies.
Free Look provision
Convertibility provision
Primary Insurance Amount (PIA)
Limited Pay Whole Life policy
22. Death benefit determined by Insured's projected lost earnings potential.
Legal Action provision
Flexible Spending Account (FSA)
Human Life Value approach
Settlement options for Life policy (1 of 2)
23. Application submitted w/out premium; no coverage until submission of full consideration & completed Statement of Continued Good Health.
Flexible Spending Account (FSA)
Key Employee Disability policy
Equity Index Whole Life policy
Trial Application (aka Request for Offer)
24. Federally-sponsored health care for individuals 65+ &/or w/ certain disabilities; may run concurrent w/ group plan but group plan would act primary - THEN Medicare.
Exclusions to Work. Comp.
Medicare
Entire Contract provision
Key Employee policy
25. Permanent - not recoverable (spinal cord injury); Temporary - recoverable (temp. illness/injury - broken limb).
Permanent vs. Temporary disability
Total disability (as commonly defined)
Risk management
Trial Application (aka Request for Offer)
26. Death benefit is NOT taxable. Cash value grows tax-deferred but cost basis (base premium) is not taxable - only interest is.
Graded Premium Whole Life policy
Accidental Death & Dismemberment (AD&D) Disability rider
Adverse selection
Tax implications of Death Benefit & Cash Value
27. Available for any reason up to full cash value @ fixed (max 8%) OR variable interest rate; loan $ + interest deducted from benefit @ death.
Policy loans
Variable Life policy (2 of 2)
Employer-Administered plan
Dividend options
28. 1: Surrender for cash value (taxable); 2: Buy equal-benefit paid-up Level Term policy; 3: Buy reduced-benefit paid-up WL policy.
Limited Pay Whole Life policy
Tax implications of an Estate
Non-forfeiture options for WL policy
Free Look provision
29. Agents - represent Insurer; Brokers - represent themselves & Insured; Solicitors - represent one agent to solicit leads.
Types of Licensed Producers
Premium modes
Errors & Omissions (E&O)
Conformity with State Statute provision
30. Privately-provided or Medicare-provided (if no private carrier) prescription drug plans for qualified individuals but w/ premium - deductible & co-pay.
Return of Premium rider
Medicare Part D
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
Insurance contract characteristics (2 of 2)
31. Domestic - within home state; Foreign - outside home state; Alien - outside home country.
Exclusions for Major Medical plan
Types of Insurers (by domicile)
Needs approach (most common)
Renewability provision
32. War; elective cosmetic surgery; routine dental; work. comp.-covered claims; self-inflicted (intentional); gov't. facility treatment; LTC; private nursing.
CA Work. Comp. Statutes
Experience vs. Community rating in Group Health plan
Exclusions for Major Medical plan
Modified Endowment Contract (MEC)
33. Excludes coverage for specific injury/illness either temporarily or permanently in order to eliminate pre-existing condition.
Business Overhead Expense (BOE) Disability policy
Impairment (Exclusion) rider
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
Types of Accident & Health insurance
34. Upon death - death benefit is paid + the aggregate of cash value accumulated to date; add-on to WL policy ONLY.
Time Limit on Certain Defenses provision
Concealment
Return of Cash Value rider
Insuring clause/provision (aka Insuring Agreement)
35. 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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36. War/Military; Intentional self-inflicted; Aviation (non-commercial); Foreign country; Loss of professional license; Illegal activity; Mental disorders (after 1-2 yrs.).
Common Life Exclusions
Common Disability Exclusions
Return of Cash Value rider
Key Employee policy
37. Prepaid med. benefits for members ONLY w/ approved primary care M.D. (HMO employee); focus on preventative care; low co-pay.
AIDS/HIV discrimination
Pure risk vs. Speculative risk
Medical Savings Account (MSA) & Health Savings Account (HSA)
Health Maintenance Organization (HMO)
38. Prepaid med. benefits for members w/ approved primary care M.D. (independent); low co-pay; non-PPO M.D. can be used at higher cost.
Convertibility provision
Age Discrimination in Employment Act (ADEA)
Non-forfeiture options for WL policy
Preferred Provider Organization (PPO)
39. Federal law which prohibits companies w/ 15+ employees from decreasing coverage benefits for women affected by pregnancy or childbirth.
Civil Rights/Pregnancy Discrimination Act
Insurance contract characteristics (2 of 2)
Viatical Settlement Provider (VSP)
Recurrent disability clause/provision
40. IRS allows tax-free transfer of cash values between 2 LIKE policies (i.e. Life to Life - Annuity to Annuity - or Life to Annuity).
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
Total disability (as commonly defined)
Equity Indexed annuity
1035 Exchange
41. Fixed premium w/ guaranteed min. death benefit that may increase due to higher than expected investment returns.
Palliative vs. Curative care
Variable Life policy (2 of 2)
Common Disaster (Simultaneous Death Act) clause/provision
Dependent coverage
42. 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.
Types of Insurers (by sector)
Reinstatement provision
Tax implications of Disability policy
Modified Endowment Contract (MEC)
43. 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.
Equity Indexed annuity
Workers' Compensation insurance
Payor (aka Waiver of Payor's Premium) rider
Adverse selection
44. Policy covering minor child; premium fixed but death benefit increases by 5 times @ age 18 or 21.
Exclusions to Work. Comp.
Claim Form (aka Proof of Loss Form) provision
Juvenile Life (aka Jumping Juvenile) policy
Entire Contract provision
45. Part of IRS Section 125 cafeteria plan - which allows pre-tax payroll deductions for qualified medical expenses or child/dependent care.
Waiver of Premium (Waiver of Cost of Insurance) rider
Flexible Spending Account (FSA)
CHAMPUS (aka TriCare)
Business Continuation (aka Buy-Sell) policy
46. 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
Dental Plan
Levels of Long Term Care provided
Insurer (as defined by CIC)
47. Provides for continued operation of business if partner dies - by allowing surviving partner(s) to buy deceased partner's interest in business.
Multiple Employer Trust (MET) aka Multiple Employer Welfare Association (MEWA)
Applicant Representations vs. Warranties
Earned vs. Unearned premium
Business Continuation (aka Buy-Sell) policy
48. Period of time following any children's survivor benefit & before benefits are provided to employee's widow/widower.
7 Pay Test
Market Value Adjusted (aka Modified Guaranteed) annuity
Binding receipt (aka Temporary Insurance Agreement)
Blackout Period
49. WL policy covering 2 or more Insureds but payable upon death of FIRST Insured - after which policy ends.
1035 Exchange
Relation of Earnings to Insurance provision
Incontestability clause/provision
Joint Life (aka "First to die") policy
50. Provides % of monthly income benefit if Insured becomes disabled due to illness or accident.
Disability Income policy
Modified Endowment Contract (MEC)
Revocable vs. Irrevocable beneficiary
Cash value