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Test your basic knowledge |
CA Life Agent Exam
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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. PURELY employer-funded account to reimburse employees for qualified medical expenses not covered by group health plan.
Health Reimbursement Account (HRA)
Total disability (any-occupational definition)
Types of reinsurance
Non-Occupational Disability policy
2. Hybrid of HMO & PPO w/ greater flexibility on choosing specialists outside network w/ benefits still provided but @ higher co-pay.
Tax implications of an Estate
Point of Service plan
Experience vs. Community rating in Group Health plan
Equity Index Whole Life policy
3. Authorized (admitted) - can conduct business in state; Unauthorized (non-admitted) - cannot conduct business in state (w/ one exception).
Types of Insurers (by authorization)
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Types of Accident & Health insurance
Time Limit on Certain Defenses provision
4. Info already known; Info that should have been known; Waived info; Irrelevant info.
Limited Pay Whole Life policy
Time Limit on Certain Defenses provision
Concealment exceptions
Waiver of Premium provision
5. Two death benefit options - Option A: death benefit ONLY; Option B: death benefit + cash value; death benefit NOT guaranteed.
Errors & Omissions (E&O)
Rescission
Departments of an Insurer
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
6. Unintentional - up to $1 -000 + legal $; Intentional - $1 -000-5 -000 + legal $; If harmful - misdemeanor + up to 1 yr. prison + up to $10 -000.
Penalties for violating AIDS/HIV privacy laws
Applicant Representations vs. Warranties
Insuring clause/provision (aka Insuring Agreement)
Types of reinsurance
7. Primary - if 2 or more - equally shared; Contingent (Secondary) - only if primary dead; Tertiary - only if both primary & secondary dead. If none listed - goes to estate.
Point of Service plan
Blackout Period
Beneficiary provisions
Parole Pardon Rule
8. 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)
Common Life Exclusions
Employer Liability
Equity Indexed annuity
9. Federally-funded but state-run program for truly indigent individuals & families providing medical care at Federal clinic.
Business Continuation (aka Buy-Sell) policy
Considerations in replacing Health insurance
Medicaid/Medi-Cal
Disability Income policy
10. Same as WL but death benefit increases annually - linked to Consumer Price Index; premium increases annually OR is set high from start.
Valid life insurance contracts must identify...
Types of Insurers (miscellaneous)
Total disability (more restrictive definition)
Equity Index Whole Life policy
11. Req. by CA statute & may provide workers coverage for action-over claims.
Permanent vs. Temporary disability
Employer Liability
Common Accident provision
Consolidated Omnibus Budget Reconciliation Act (COBRA)
12. Provides professional services - rehabilitation - training/re-training & related costs to assist Insured in returning to work.
Whole (aka Permanent or Straight) Life policy
Rehabilitation rider
Joint Life (aka "First to die") policy
Applicant Representations vs. Warranties
13. Private sector (Commercial) - provides LA&H - P&C - & LTC; Public sector (Gov't) - provides flood - work. comp. - Medicare/Medicaid - Group Life (SGLI/FEGLI).
Types of Insurers (by sector)
Grace Period provision
Single Pay Whole Life policy
Health Maintenance Organization (HMO)
14. Same as Universal Life but cash value put in investment vehicles chosen by policy owner (stocks - bonds - munis.); cash value NOT guaranteed.
Variable Universal Life policy
Annuity Classifications (5 of 5): # of lives
Pure risk vs. Speculative risk
Rescission
15. Upon death - death benefit is paid + the aggregate of cash value accumulated to date; add-on to WL policy ONLY.
Universal (aka Flexible Premium Adjustable) Life policy (3 of 4)
Return of Cash Value rider
Types of Medical Plans
Revocable vs. Irrevocable beneficiary
16. Provides 24 hr. health coverage both "on" & "off" job - but may cause coverage duplication & coordination challenges.
Premium modes
Dental Plan
Rescission
24 Hour Coverage (CA)
17. Experience - rates impacted by actual prior claim experience of actual group; Community - identical rates used for entire community - regardless of experience.
Variable Life policy (1 of 2)
Types of Insurers (by ownership)
Experience vs. Community rating in Group Health plan
Loss exposure
18. 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.
Transplant/Cosmetic Surgery rider
Variable Life policy (1 of 2)
Guaranteed Insurability Life rider
Consolidated Omnibus Budget Reconciliation Act (COBRA)
19. Same as WL but w/ adjustable death benefit (& corresponding premium) & over-fund option but w/ annually renewable term (ART).
Types of Agency Authority
Health Insurance Portability and Accountability Act (HIPAA)
Universal (aka Flexible Premium Adjustable) Life policy (1 of 4)
Errors & Omissions (E&O)
20. 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).
Limited Pay Whole Life policy
Health Maintenance Organization (HMO)
Viatical Settlement Provider (VSP)
Fraud
21. Same as WL but policy owner can adjust death benefit w/ corresponding premium adjustments; mostly obsolete.
Medicaid/Medi-Cal
Variable Universal Life policy
Rate (as defined by CIC)
Adjustable Whole Life policy
22. Policy owner has right to determine mode of premium payment but Insurer can charge admin. fee if not annual.
Common Disaster (Simultaneous Death Act) clause/provision
Family Maintenance policy
Whole (aka Permanent or Straight) Life policy
Payment of Premium provision
23. Compensates business for loss due to disability of key employee; premiums not deductible but benefits tax-free.
Legal Action provision
Key Employee Disability policy
Considerations in replacing Health insurance
Human Life Value approach
24. Waives premium upon disability of Insured until return to work; disability must persist for 6 mths. or longer. Cash value & dividends not affected.
Key Employee policy
Health Insurance Portability and Accountability Act (HIPAA)
Waiver of Premium (Waiver of Cost of Insurance) rider
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
25. Allows Insured to increase benefit w/out medical exam (subject to age max.) w/ additional premium rate determined @ attained age; must prove income increase.
Non-forfeiture options for WL policy
Guaranteed Insurability (aka Additional Purchase or Future Increase) Disability rider
Settlement options for Life policy (2 of 2)
Premium modes
26. Provides accidental death benefit @ full $ of "principal sum". Dismemberment is paid only @ 50% principal sum ("capital sum").
Accidental Death & Dismemberment (AD&D) Disability rider
Reinstatement provision
Dependent coverage
Cross Purchase Plan
27. Domestic - within home state; Foreign - outside home state; Alien - outside home country.
Guaranteed Insurability (aka Additional Purchase or Future Increase) Disability rider
Modified Endowment Contract (MEC)
Types of Insurers (by domicile)
Underwriting risk categories
28. No-cost provision that authorizes Insurer to borrow from cash value to pay unpaid premiums after grace period; must ask for @ app. time.
Revocable vs. Irrevocable beneficiary
Automatic Premium Loan (APL) provision
Medicare Part A & B "Gaps"
Errors & Omissions (E&O)
29. Financial interest in insured party that must exist @ time of application OR policy issuance. Requires consent (except minors).
Health Insurance Portability and Accountability Act (HIPAA)
Adverse selection
Insurable interest
Types of Renewability provisions
30. Periodic return of premium to policy owners from Mutual (Par) Companies; not guaranteed & not taxable as income; may be used in 6 ways.
Dividends
Group Disability plan
Misstatement of Age/Sex provision
Employer Liability
31. Peril is the CAUSE of loss. Hazard is a condition that increases LIKELIHOOD of loss.
Phases of an annuity
Insurable interest
Joint Life (aka "First to die") policy
Peril vs. Hazard
32. Allows policy owner to w/draw set % of death benefit upon verification of terminal illness w/ expectancy 12-24 mths.; generally tax-free.
Indeterminate Premium Whole Life policy
Tax implications of Dividends - Loans & Interest
Accelerated Benefits (aka Terminal Illness or Living Benefits) rider
Types of Accident & Health (A&H) providers
33. No-charge annuity w/drawals allowed up to 10% of total - THEN penalized on sliding scale based on # policy yrs.; conditionally waived.
Misstatement of Age/Sex provision
Annuity surrender charges
Peril vs. Hazard
Recurrent disability clause/provision
34. Refund of 50-80% of premium (minus claims paid) every 5-10 yrs. OR age 65; expensive!
Convertibility provision
Equity Index Whole Life policy
Return of Premium rider
Trusts
35. Premiums determined by target cash values or death benefit; partial cash value w/drawals allowed; transparent policy w/ unbundled premium.
Universal (aka Flexible Premium Adjustable) Life policy (2 of 4)
Employer Liability
Employer-Administered plan
Renewability provision
36. Dependent children are covered until 19 or 23 (full-time student only) or until self-sufficient (if handicapped).
Blue Cross/Blue Shield
Cost of Living Adjustment (COLA) Disability rider
Dependent coverage
Policy delivery
37. Provides usual & customary business expenses (rent - utilities - salaries - mortgage) if owner becomes disabled; premiums deductible - benefits taxable.
Retrocession
Survivorship (aka "Last to die") policy
Business Overhead Expense (BOE) Disability policy
Primary Insurance Amount (PIA)
38. Govt. organization providing health care benefits for dependents of military personnel.
CHAMPUS (aka TriCare)
Types of Insurers (miscellaneous)
Binding receipt (aka Temporary Insurance Agreement)
Occupational Disability policy
39. 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.
Term Life policy
Legal Action provision
Total disability (as commonly defined)
Guaranteed Insurability (aka Additional Purchase or Future Increase) Disability rider
40. 1: mortality probability charge; 2: Insurer's investment return; 3: expenses (admin costs - commissions). 1 - 2 = net; 1 - 2 + 3 = gross.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Tax implications of an Annuity (1 of 2)
Factors that determine premium
Parole Pardon Rule
41. Extreme form of Limited Pay Whole Life whereby entire premium is paid in a single payment.
Proof of Loss provision
Concealment exceptions
Accidental Death & Dismemberment (AD&D) Disability rider
Single Pay Whole Life policy
42. Intentional deception; grounds for rescission.
Insurance contract characteristics (1 of 2)
Types of reinsurance
Fraud
Viatical Settlement Provider (VSP)
43. Commercial (private) companies; HMOs; PPOs; Blue Cross/Blue Shield; Employer-sponsored plans; Government.
Types of Accident & Health (A&H) providers
Health Maintenance Organization (HMO)
Waiver of Premium provision
Doctrine of Comity
44. Basic Medical; Major Medical; Comprehensive Major Medical
Employer Liability
Types of Medical Plans
Return of Premium rider
Law of Large Numbers
45. Coverage for catastrophic loss w/ high limits - front end deductible; co-insurance (80/20%); blanket coverage; stop loss max.
Free Look provision
Civil Rights/Pregnancy Discrimination Act
Rescission
Major Medical plan
46. WL policy covering 2 or more Insureds but ONLY payable upon death of LAST Insured - generally low premium but high death benefit.
Major Medical plan
Credit Life policy
Insuring clause/provision (aka Insuring Agreement)
Survivorship (aka "Last to die") policy
47. Temp. coverage for set duration w/ death benefit ONLY (no cash value) - offers largest $ for lowest premium; renewable; convertible.
Claim Form (aka Proof of Loss Form) provision
Medical cost containment (aka Managed care)
Settlement options for Life policy (1 of 2)
Term Life policy
48. Benefits automatically increase annually based on inflationary index (i.e. Consumer Price Index) OR flat rate (5% max.).
Social Security Benefit (Supplement) rider
Cost of Living Adjustment (COLA) Disability rider
Cash value
Total disability (as commonly defined)
49. Same as WL but premium low for set # yrs. - THEN premiums vary (+ or -) based on Insurer's investment returns - w/ Gmax.
Exclusions to Work. Comp.
Automatic Premium Loan (APL) provision
Indeterminate Premium Whole Life policy
Misstatement of Age/Sex provision
50. Pays death benefit until age 100 or death; builds equity (cash value); may be transferred or sold; generally level premium.
Types of Accident & Health (A&H) providers
Medicare Part A (aka Hospital Insurance or HI)
Whole (aka Permanent or Straight) Life policy
Misstatement of Age/Sex provision
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