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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. No-cost provision that authorizes Insurer to borrow from cash value to pay unpaid premiums after grace period; must ask for @ app. time.
Employer-Administered plan
Grace Period provision
Automatic Premium Loan (APL) provision
Elimination (aka Waiting) period
2. Written contract to transfer risk of premature death from one party to another; pays stated sum upon death; creates instant estate.
Spendthrift provision
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Annuity Classifications (2 of 5): When benefits begin
Life insurance policy
3. Fixed premium w/ guaranteed min. death benefit that may increase due to higher than expected investment returns.
Variable Life policy (2 of 2)
Occupational Disability policy
Family or Dependents rider
CA Work. Comp. Statutes
4. An attempt to contain costs by employing various strategies - including wellness programs - preventative testing - outpatient & alternative procedures.
Indeterminate Premium Whole Life policy
Medical cost containment (aka Managed care)
Cash value
Retrocession
5. Disability income is based on "earned income" (salary - bonus - commission) - not unearned income (interest - investment - rents).
Penalties for violating AIDS/HIV privacy laws
Payment of Premium provision
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
Loss of Earnings Test
6. Taxable income (unlike individual plans); can be either short-term - 13-52 wks. max. or long-term - longer than 52 wks.
Exclusions to Work. Comp.
Group Disability plan
Civil Rights/Pregnancy Discrimination Act
Types of Accident & Health (A&H) providers
7. Excludes coverage for suicide during 1st 2 yrs. ONLY but - if it does - all premiums must be returned to beneficiary.
Permanent vs. Temporary disability
Suicide clause/provision
Universal (aka Flexible Premium Adjustable) Life policy (1 of 4)
Trial Application (aka Request for Offer)
8. 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.
Tax implications of Death Benefit & Cash Value
Experience vs. Community rating in Group Health plan
Tax implications of medical plans
Suicide clause/provision
9. Premiums determined by target cash values or death benefit; partial cash value w/drawals allowed; transparent policy w/ unbundled premium.
Age Discrimination in Employment Act (ADEA)
Universal (aka Flexible Premium Adjustable) Life policy (1 of 4)
Universal (aka Flexible Premium Adjustable) Life policy (2 of 4)
Time Limit on Certain Defenses provision
10. An unintentional mistake committed by an insurance representative; may be covered by E&O insurance.
Modified Premium Whole Life policy
Insurer (as defined by CIC)
Residual disability rider
Errors & Omissions (E&O)
11. Summary of coverage including premium & mode of payment - death benefit - beneficiary(ies) - exclusions - & promise to pay.
Accidental Death & Dismemberment (AD&D) Life policy
Adverse selection
Insuring clause/provision (aka Insuring Agreement)
Rescission
12. Same as WL but premium low for 1st 3-5 yrs. - THEN has one-time premium increase.
Modified Premium Whole Life policy
Types of Accident & Health (A&H) providers
Waiver of Premium provision
Universal (aka Flexible Premium Adjustable) Life policy (1 of 4)
13. 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.
Family or Dependents rider
Legal Action provision
Business Continuation (aka Buy-Sell) Disability policy
Elements to contract
14. Responsible adult trustee designated to manage death benefits for minor child beneficiary until adulthood.
Trusts
Cross Purchase Plan
Guaranteed Insurability Life rider
Universal (aka Flexible Premium Adjustable) Life policy (1 of 4)
15. Federal law which allows health coverage portability when changing jobs - so long as previous coverage was in effect 63+ days; allows some tax deductibility for LTC.
Types of Insurers (miscellaneous)
Preferred Provider Organization (PPO)
Health Insurance Portability and Accountability Act (HIPAA)
Accelerated Benefits (aka Terminal Illness or Living Benefits) rider
16. WL policy covering 2 or more Insureds but payable upon death of FIRST Insured - after which policy ends.
Considerations in replacing Health insurance
Joint Life (aka "First to die") policy
Payment of Premium provision
Types of Accident & Health (A&H) providers
17. 1: Req. - unless self-employed; 2: 7-day wait for disability benefits; 3: Premium based on ex-mod; 4: Rates approved by CDI; 5: to sell - must satisfy education reqs.
Common Disaster (Simultaneous Death Act) clause/provision
Rescission
CA Work. Comp. Statutes
Medicare Part A & B "Gaps"
18. Intentional OR unintentional failure to disclose material underwriting facts that should have been disclosed; grounds for policy rescission.
Types of Term Life policies
Medicare
Concealment
Employee Retirement Income Security Act (ERISA)
19. An irrevocable IRS classification of a policy (determined by the 7 Pay Test) whereby tax advantages are lost for all distributions ONLY.
Insurer (as defined by CIC)
Modified Endowment Contract (MEC)
Partial disability rider
Notice of Claim provision
20. Prohibited w/ regard to testing for people of same class; test results must remain confidential; coverage may be declined (once discovered).
Annuity Classifications (1 of 5): How premium is paid
AIDS/HIV discrimination
Types of Accident & Health (A&H) providers
Rehabilitation rider
21. Privately-sold policies to provide benefits not covered by Medicare; divided into 12 plans listed alphabetically A - L; 30-day free look; guaranteed renewable.
Workers' Compensation insurance
Cross Purchase Plan
Accidental Death (aka Multiple Indemnity) rider
Medicare Supplement or Medigap policy
22. Hybrid of HMO & PPO w/ greater flexibility on choosing specialists outside network w/ benefits still provided but @ higher co-pay.
Tax implications of an Annuity (1 of 2)
Payor (aka Waiver of Payor's Premium) rider
Point of Service plan
Palliative vs. Curative care
23. Beneficiary has right to leave death benefits / Insurer to protect $ from creditors; interest (taxable) paid on retained funds.
Spendthrift provision
Family Maintenance policy
Universal (aka Flexible Premium Adjustable) Life policy (1 of 4)
Medical cost containment (aka Managed care)
24. Policyholders - Mutual (participating) co. - may pay dividends; Stockholders - Stock (non-participating) co. - no dividends.
Modified Endowment Contract (MEC)
Types of Insurers (by ownership)
Notice of Claim provision
Experience vs. Community rating in Group Health plan
25. Policy owner has 90 days from date of loss to submit proof of loss to Insurer; valid claim must be paid immediately upon receipt.
Rate (as defined by CIC)
Total disability (as commonly defined)
Proof of Loss provision
Types of Agency Authority
26. Pays death benefit until age 100 or death; builds equity (cash value); may be transferred or sold; generally level premium.
Medicare Part B (aka Supplemental Medical Insurance or SMI)
Flexible Spending Account (FSA)
Reinsurance
Whole (aka Permanent or Straight) Life policy
27. A lapsed policy may be reinstated if not longer than 3-5 yrs. - & proof of insurability re-established - & back premiums + interest paid.
Impairment (Exclusion) rider
Reinstatement provision
Medical Savings Account (MSA) & Health Savings Account (HSA)
Renewability provision
28. If Insured & primary beneficiary die due to same act (w/in 14 days) - primary assumed 1st to die & contingent beneficiary paid death benefit.
Recurrent disability clause/provision
Common Disaster (Simultaneous Death Act) clause/provision
Tax implications of medical plans
1035 Exchange
29. Allows policy owner to w/draw set % of death benefit upon verification of terminal illness w/ expectancy 12-24 mths.; generally tax-free.
Insurable interest
Accelerated Benefits (aka Terminal Illness or Living Benefits) rider
Types of Insurers (by domicile)
COBRA Time Limitations
30. Death benefits & premium automatically increase annually based on inflationary index (i.e. Consumer Price Index).
Disability Income policy
Cost of Living Adjustment (COLA) Life rider
Trusts
Binding receipt (aka Temporary Insurance Agreement)
31. 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;
Types of Insurers (by sector)
Total disability (more restrictive definition)
Flexible Spending Account (FSA)
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
32. Must be delivered in person or by certified - registered or 1st-class mail w/ signature - unless waived by Insurance Commissioner.
Policy delivery
Split Dollar Plan
Human Life Value approach
Employee Retirement Income Security Act (ERISA)
33. Mathematical calculation based on overall FICA contributions used to determine retirement/disability/survivorship benefit.
Relation of Earnings to Insurance provision
Requirements to sell variable life products
Variable Life policy (2 of 2)
Primary Insurance Amount (PIA)
34. Upon notice - Insurer must provide Claim Form (Proof of Loss Form) to Insured w/in 15 days.
Risk management
Reinstatement provision
Claim Form (aka Proof of Loss Form) provision
Spendthrift provision
35. Prevents overinsuring in order to profit from disability by coordinating benefits between Insurers.
Market Value Adjusted (aka Modified Guaranteed) annuity
Needs approach (most common)
Major Medical plan
Relation of Earnings to Insurance provision
36. 1: Fixed - guaranteed fixed monthly income & fixed interest rate; 2: Variable - unguaranteed; monthly income varies based on stocks/bond returns.
Types of Accident & Health (A&H) providers
Total disability (as commonly defined)
Business Continuation (aka Buy-Sell) Disability policy
Annuity Classifications (3 of 5): Source of income
37. No-charge annuity w/drawals allowed up to 10% of total - THEN penalized on sliding scale based on # policy yrs.; conditionally waived.
Trial Application (aka Request for Offer)
Annuity surrender charges
CA Work. Comp. Statutes
Palliative vs. Curative care
38. 1: Straight aka Pure Life - lifetime income but no survivorship refund; 2: Life w/ Period Certain - lifetime income w/ death benefit of monthly annuity for remaining predetermined term. 3: Annuity Certain - monthly income paid for predetermined term
Multiple Employer Trust (MET) aka Multiple Employer Welfare Association (MEWA)
Return of Premium rider
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
Valid life insurance contracts must identify...
39. 'The inability to perform ANY gainful occupation'.
Total disability (any-occupational definition)
Total disability (as commonly defined)
Partial disability rider
Departments of an Insurer
40. Written contract that provides INCOME @ high interest rate for fixed period OR for annuitant's lifetime w/ possible death benefit.
CA Work. Comp. Statutes
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
Elimination (aka Waiting) period
Annuity
41. Expands individual WL policy to include Term Life for dependents (spouse - children - etc.).
Rate (as defined by CIC)
Types of Accident & Health insurance
Family or Dependents rider
Primary Insurance Amount (PIA)
42. If total premiums paid w/in 1st 7 yrs. exceed net level premium that should have been paid - policy is an MEC.
7 Pay Test
Conformity with State Statute provision
Split Dollar Plan
Family Maintenance policy
43. PURELY employer-funded account to reimburse employees for qualified medical expenses not covered by group health plan.
Rescission
IRS Penalties for Annuities
Basic Medical plan
Health Reimbursement Account (HRA)
44. Actual/Expressed - written powers; Implied - unwritten but customary practices; Apparent - perceived powers.
Needs approach (most common)
Types of Agency Authority
Presumptive disability
Annuity
45. Provides for continued operation of business if partner becomes disabled - by allowing other partner(s) to buy disabled partner's interest in business.
Business Continuation (aka Buy-Sell) Disability policy
Tax implications of Death Benefit & Cash Value
Residual disability rider
Small Employer Medical Expense plan
46. 1: Immediate benefits rec'd w/in 30 days but premium must be paid by lump sum; 2: Deferred - usually until retirement.
Types of Insurers (by sector)
Variable Life policy (2 of 2)
Annuity Classifications (2 of 5): When benefits begin
Types of reinsurance
47. Permanent disability due to total loss of sight - hearing - speech or use of 2 + limbs; benefits paid even while continuing to work.
Presumptive disability
Accidental Death & Dismemberment (AD&D) Life policy
Spendthrift provision
Blue Cross/Blue Shield
48. Financial interest in insured party that must exist @ time of application OR policy issuance. Requires consent (except minors).
Whole (aka Permanent or Straight) Life policy
Insurable interest
Social Security Benefit (Supplement) rider
Concealment exceptions
49. Policy owner must notify Insurer of loss either in writing - in person or by phone w/in 20 days.
Workers' Compensation insurance
Tax implications of an Estate
Notice of Claim provision
Human Life Value approach
50. Pre-existing illness/injury; Waiting period; Elimination period; Probationary period; Benefits - Exclusions - Limitations; Underwriting reqs.
Long Term Care (LTC) policy
Experience vs. Community rating in Group Health plan
Considerations in replacing Health insurance
Tax implications of an Annuity (1 of 2)