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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. 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)
Tax implications of Disability policy
Reinstatement provision
Settlement options for Life policy (1 of 2)
2. Part of IRS Section 125 cafeteria plan - which allows pre-tax payroll deductions for qualified medical expenses or child/dependent care.
Flexible Spending Account (FSA)
Cost of Living Adjustment (COLA) Life rider
Misstatement of Age/Sex provision
Plans A-L of Medical Supplement or Medigap
3. Provides for continued operation of business if partner becomes disabled - by allowing other partner(s) to buy disabled partner's interest in business.
Proof of Loss provision
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Business Continuation (aka Buy-Sell) Disability policy
Grace Period provision
4. Provides for continued operation of business if partner dies - by allowing surviving partner(s) to buy deceased partner's interest in business.
Types of Agency Authority
Approval Type Conditional receipt
Factors that determine premium
Business Continuation (aka Buy-Sell) policy
5. Employer w/ 25 or less employees must offer all eligible employees @ least 2 medical plan options where pre-existing conditions can't be excluded more than 1 yr.
Supplemental Major Medical plan
Types of Accident & Health (A&H) providers
Medicare Part B (aka Supplemental Medical Insurance or SMI)
Small Employer Medical Expense plan
6. 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.
Dividend options
Types of Insurers (by ownership)
7 Pay Test
AIDS/HIV discrimination
7. Receipt whereby coverage incepts ONLY after underwriting approval.
Approval Type Conditional receipt
Types of Term Life policies
Business Overhead Expense (BOE) Disability policy
Universal (aka Flexible Premium Adjustable) Life policy (1 of 4)
8. 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.
Transplant/Cosmetic Surgery rider
Incontestability clause/provision
Tax implications of an Estate
Single Pay Whole Life policy
9. Govt. organization providing health care benefits for dependents of military personnel.
Cross Purchase Plan
CHAMPUS (aka TriCare)
Health Reimbursement Account (HRA)
Accidental Death & Dismemberment (AD&D) Life policy
10. Funding mechanism whereby employer & employee share cost of premium. Upon death - benefit is shared between employer & beneficiary.
Small Employer Medical Expense plan
Occupational Disability policy
Split Dollar Plan
Settlement options for Life policy (2 of 2)
11. Provides usual & customary business expenses (rent - utilities - salaries - mortgage) if owner becomes disabled; premiums deductible - benefits taxable.
Underwriting risk categories
Business Overhead Expense (BOE) Disability policy
Rescission
Reinsurance
12. Waives premium on Life policy for minor child until age 21 in event premium payor dies or becomes disabled.
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13. After 2-3 yrs. - Whole Life policy equity builds tax-deferred @ fixed interest rate until it equals death benefit; borrowable but taxable.
Cash value
Key Employee Disability policy
Common Accident provision
Tax implications of an Annuity (1 of 2)
14. WL policy covering 2 or more Insureds but ONLY payable upon death of LAST Insured - generally low premium but high death benefit.
Accelerated Benefits (aka Terminal Illness or Living Benefits) rider
Peril vs. Hazard
Survivorship (aka "Last to die") policy
Types of reinsurance
15. Written contract to transfer risk of premature death from one party to another; pays stated sum upon death; creates instant estate.
Modified Endowment Contract (MEC)
Life insurance policy
Employer-Administered plan
Common Accident provision
16. 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;
Tax implications of Dividends - Loans & Interest
Business Continuation (aka Buy-Sell) policy
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
Medical cost containment (aka Managed care)
17. Policy provisions must conform to state regulations where policy is sold.
Parole Pardon Rule
Civil Rights/Pregnancy Discrimination Act
Survivorship (aka "Last to die") policy
Conformity with State Statute provision
18. Death benefit determined by Insured's projected lost earnings potential.
Human Life Value approach
Indemnify
Dread Disease policy
Waiver of Premium (Waiver of Cost of Insurance) rider
19. Unilateral - Insurer provides contract; Adhesion - parties must adhere to terms; Aleatory - benefits may not inure equally.
Permanent vs. Temporary disability
Insurance contract characteristics (1 of 2)
Non-forfeiture options for WL policy
Variable Life policy (1 of 2)
20. Savings account for medical expenses; Tax-deductible contributions; tax-deferred growth; tax-free for qualified use; taxable for non-qualified use.
Medical Savings Account (MSA) & Health Savings Account (HSA)
Business Overhead Expense (BOE) Disability policy
Plans A-L of Medical Supplement or Medigap
Concealment exceptions
21. Waives premium upon disability of Insured until return to work; disability must persist for 90 days or longer; 1st 90 day premiums refunded after 90 days.
Human Life Value approach
Claim Form (aka Proof of Loss Form) provision
Waiver of Premium provision
Employer Liability
22. Period of time following any children's survivor benefit & before benefits are provided to employee's widow/widower.
Peril vs. Hazard
Basic Medical plan
Blackout Period
Insurance contract characteristics (1 of 2)
23. 'The inability to perform ANY gainful occupation'.
Annuity
Earned vs. Unearned premium
Enhanced Ordinary (aka Extraordinary) Whole Life policy
Total disability (any-occupational definition)
24. Allows Insured to increase benefit w/out medical exam (subject to age max.) w/ additional premium rate determined @ attained age; must prove income increase.
Medicare Part D
Guaranteed Insurability (aka Additional Purchase or Future Increase) Disability rider
AIDS/HIV discrimination
Premium modes
25. Provides hospital insurance automatically @ age 65 (if FICA qualified) @ no fee but may have deductible & co-pay.
Medi-Cal Share Cost plan
Medicare Part A (aka Hospital Insurance or HI)
Multiple Employer Trust (MET) aka Multiple Employer Welfare Association (MEWA)
Tax implications of an Annuity (1 of 2)
26. Time period preceding each disability during which benefits are not paid; longer elimination periods = cheaper premium.
Medicare Part C (aka Medicare Advantage)
Medicaid/Medi-Cal
Elimination (aka Waiting) period
Cost of Living Adjustment (COLA) Disability rider
27. Agents - represent Insurer; Brokers - represent themselves & Insured; Solicitors - represent one agent to solicit leads.
Types of Licensed Producers
Insurable interest
Current Assumption (aka Interest-Sensitive) Whole Life policy
7 Pay Test
28. Dividends are NOT taxable but interest is. Loan interest is NOT tax-deductible. Interest paid by Insurer on retained funds is taxable.
Business Continuation (aka Buy-Sell) Disability policy
Exclusions for Major Medical plan
Annuity Classifications (1 of 5): How premium is paid
Tax implications of Dividends - Loans & Interest
29. Fixed premium w/ guaranteed min. death benefit that may increase due to higher than expected investment returns.
Factors that determine premium
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
Variable Life policy (2 of 2)
Medical Savings Account (MSA) & Health Savings Account (HSA)
30. Dependent children are covered until 19 or 23 (full-time student only) or until self-sufficient (if handicapped).
Types of Agency Authority
Types of reinsurance
Dependent coverage
Cost of Living Adjustment (COLA) Life rider
31. Receipt whereby coverage incepts conditionally upon submission of full consideration and that all underwriting reqs. are met.
Tax implications of an Annuity (1 of 2)
Rehabilitation rider
Waiver of Premium (Waiver of Cost of Insurance) rider
Insurability Type Conditional receipt
32. Non-qualified Annuity - Non-deductible contributions & tax-deferred growth. At pay-out - tax-free principal but taxable growth.
Family Income policy
Dependent coverage
Non-Occupational Disability policy
Tax implications of an Annuity (1 of 2)
33. Same as Universal Life but cash value put in investment vehicles chosen by policy owner (stocks - bonds - munis.); cash value NOT guaranteed.
Concealment
Reinsurance
Premium modes
Variable Universal Life policy
34. Privately-provided or Medicare-provided (if no private carrier) prescription drug plans for qualified individuals but w/ premium - deductible & co-pay.
Medicare Part D
Levels of Long Term Care provided
Trusts
Payor (aka Waiver of Payor's Premium) rider
35. 1: Individual; 2: Joint - multiple annuitants paid until 1st dies; 3: Joint & Survivor - multiple annuitants paid until 1st dies THEN survivors paid but @ reduced $.
Annuity Classifications (5 of 5): # of lives
Medicare Part A & B "Gaps"
Factors that determine premium
Rehabilitation rider
36. If 2 or more family members are injured in the same accident - only payment of a single deductible is required.
Policy loans
Common Accident provision
Primary Insurance Amount (PIA)
Common Disaster (Simultaneous Death Act) clause/provision
37. 'The inability to perform your OWN normal occupation or daily duties'.
CHAMPUS (aka TriCare)
Accidental Death (aka Multiple Indemnity) rider
Medicare Part A (aka Hospital Insurance or HI)
Total disability (as commonly defined)
38. Extreme form of Limited Pay Whole Life whereby entire premium is paid in a single payment.
Juvenile Life (aka Jumping Juvenile) policy
Free Look provision
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
Single Pay Whole Life policy
39. Same as WL but cash value put in investment vehicles chosen by policy owner (stocks - bonds - munis.); cash value NOT guaranteed.
CHAMPUS (aka TriCare)
Variable Life policy (1 of 2)
Tax implications of Death Benefit & Cash Value
Comprehensive Major Medical plan
40. Palliative - treatment to manage pain; Curative - treatment to cure illness/condition.
Adjustable Whole Life policy
Family Maintenance policy
Palliative vs. Curative care
Types of Medical Plans
41. Same as WL but w/ Decreasing Term rider; upon death - pays monthly income for REMAINING term AFTER which pays full death benefit.
Spendthrift provision
Applicant Representations vs. Warranties
Universal (aka Flexible Premium Adjustable) Life policy (1 of 4)
Family Income policy
42. No-charge annuity w/drawals allowed up to 10% of total - THEN penalized on sliding scale based on # policy yrs.; conditionally waived.
AIDS/HIV discrimination
Time Limit on Certain Defenses provision
Annuity surrender charges
IRS Penalties for Annuities
43. Provides medical & personal services for people needing extended assistance w/ Activities of Daily Living (ADL). Other benefits include: assisted living care; respite care; hospice care; adult day care.
Payment of Premium provision
Long Term Care (LTC) policy
Common Disaster (Simultaneous Death Act) clause/provision
Impairment (Exclusion) rider
44. Premiums determined by target cash values or death benefit; partial cash value w/drawals allowed; transparent policy w/ unbundled premium.
Cost of Living Adjustment (COLA) Disability rider
Types of hazards
Law of Large Numbers
Universal (aka Flexible Premium Adjustable) Life policy (2 of 4)
45. Allows for use of HMO/PPO or other private carrier to provide expanded benefits @ additional premium & if enrolled in BOTH Parts A & B.
Medicare Part C (aka Medicare Advantage)
1035 Exchange
Guaranteed Insurability (aka Additional Purchase or Future Increase) Disability rider
Tax implications of an Annuity (1 of 2)
46. Death benefit is NOT taxable. Cash value grows tax-deferred but cost basis (base premium) is not taxable - only interest is.
AIDS/HIV discrimination
Joint Life (aka "First to die") policy
Tax implications of Death Benefit & Cash Value
Spendthrift provision
47. Pre-existing illness/injury; Waiting period; Elimination period; Probationary period; Benefits - Exclusions - Limitations; Underwriting reqs.
Residual disability rider
Considerations in replacing Health insurance
Pure risk vs. Speculative risk
Change of Occupation provision
48. Business continuation funding plan whereby each partner agrees to buy Life policies on each other - but not themselves.
Types of Renewability provisions
Concealment
Cross Purchase Plan
Endowment Life policy
49. Two death benefit options - Option A: death benefit ONLY; Option B: death benefit + cash value; death benefit NOT guaranteed.
Loss of Earnings Test
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
Valid life insurance contracts must identify...
Needs approach (most common)
50. Annuity distributions prior to age 59 1/2 incur a 10% IRS penalty EXCEPT for death - disability - immediate annuity - or rollover.
Medicare Part B (aka Supplemental Medical Insurance or SMI)
Common Accident provision
IRS Penalties for Annuities
Modified Premium Whole Life policy