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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. IRS allows tax-free transfer of cash values between 2 LIKE policies (i.e. Life to Life - Annuity to Annuity - or Life to Annuity).
Errors & Omissions (E&O)
Total disability (any-occupational definition)
Fraud
1035 Exchange
2. Benefits automatically increase annually based on inflationary index (i.e. Consumer Price Index) OR flat rate (5% max.).
Health Insurance Portability and Accountability Act (HIPAA)
Cost of Living Adjustment (COLA) Disability rider
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
Concealment exceptions
3. Death benefit determined by Insured's financial goals & needs (minus assets).
Tax implications of an Annuity (1 of 2)
Needs approach (most common)
AIDS/HIV discrimination
Types of Agency Authority
4. Accumulation or "pay-in" - contributions & interest earned are tax-deferred; Annuity or "pay-out" - monthly annuity (taxable) paid.
Medicare Part A & B "Gaps"
Non-Occupational Disability policy
Types of Term Life policies
Phases of an annuity
5. Taxable income (unlike individual plans); can be either short-term - 13-52 wks. max. or long-term - longer than 52 wks.
Errors & Omissions (E&O)
Insurability Type Conditional receipt
Group Disability plan
Trial Application (aka Request for Offer)
6. Earned premium is $ paid for coverage to date. Unearned premium is $ paid & returnable due to coverage not provided.
Annuity surrender charges
Earned vs. Unearned premium
Reinsurance
Medicare Part A & B "Gaps"
7. Actual/Expressed - written powers; Implied - unwritten but customary practices; Apparent - perceived powers.
Types of Agency Authority
Types of hazards
Insurance contract characteristics (1 of 2)
Risk management
8. 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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9. Excludes coverage for suicide during 1st 2 yrs. ONLY but - if it does - all premiums must be returned to beneficiary.
Types of reinsurance
Suicide clause/provision
Insurability Type Conditional receipt
Tax implications of an Annuity (1 of 2)
10. Written contract that provides INCOME @ high interest rate for fixed period OR for annuitant's lifetime w/ possible death benefit.
Presumptive disability
Medicare Part B (aka Supplemental Medical Insurance or SMI)
Annuity
Group Disability plan
11. Upon death - death benefit is paid + the aggregate of premiums paid to date; add-on to Term policy ONLY.
Tax implications of Disability policy
Return of Premium rider
COBRA Time Limitations
Grace Period provision
12. No-charge annuity w/drawals allowed up to 10% of total - THEN penalized on sliding scale based on # policy yrs.; conditionally waived.
Split Dollar Plan
Annuity surrender charges
Accidental Death & Dismemberment (AD&D) Life policy
Cross Purchase Plan
13. 1: Surrender for cash value (taxable); 2: Buy equal-benefit paid-up Level Term policy; 3: Buy reduced-benefit paid-up WL policy.
Non-forfeiture options for WL policy
Group Disability plan
Policy loans
Proof of Loss provision
14. Compensates business for loss due to disability of key employee; premiums not deductible but benefits tax-free.
Credit Life policy
Elimination (aka Waiting) period
Return of Cash Value rider
Key Employee Disability policy
15. An irrevocable IRS classification of a policy (determined by the 7 Pay Test) whereby tax advantages are lost for all distributions ONLY.
Fraud
AIDS/HIV discrimination
Legal Action provision
Modified Endowment Contract (MEC)
16. Fixed premium w/ guaranteed min. death benefit that may increase due to higher than expected investment returns.
Loss exposure
Viatical Settlement Provider (VSP)
Variable Life policy (2 of 2)
Employer-Administered plan
17. Same as WL but premium low for set # yrs. - THEN premiums vary (+ or -) based on Insurer's investment returns - w/ Gmax.
Payor (aka Waiver of Payor's Premium) rider
Indeterminate Premium Whole Life policy
Medicare Part B (aka Supplemental Medical Insurance or SMI)
Employee Retirement Income Security Act (ERISA)
18. Generally 10 days after policy delivery to cancel policy w/ full refund - except 30 days for seniors or for replacement policies.
Health Maintenance Organization (HMO)
Elimination (aka Waiting) period
Free Look provision
Total disability (as commonly defined)
19. Same as WL but death benefit increases annually - linked to Consumer Price Index; premium increases annually OR is set high from start.
Multiple Employer Trust (MET) aka Multiple Employer Welfare Association (MEWA)
Equity Index Whole Life policy
Medical Savings Account (MSA) & Health Savings Account (HSA)
Variable Life policy (2 of 2)
20. 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.
Total disability (any-occupational definition)
Variable Universal Life policy
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Insuring clause/provision (aka Insuring Agreement)
21. Provides increased death benefit if death occurs w/in 90 days & as result of accident; relatively INexpensive add-on.
Accidental Death (aka Multiple Indemnity) rider
Cost of Living Adjustment (COLA) Disability rider
Suicide clause/provision
Insurable interest
22. Covers disabilities occurring ONLY "off" job; benefits do not overlap work. comp. (i.e. Group plan).
Non-Occupational Disability policy
Health Reimbursement Account (HRA)
CHAMPUS (aka TriCare)
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
23. Death benefits & premium automatically increase annually based on inflationary index (i.e. Consumer Price Index).
Elements to contract
Cost of Living Adjustment (COLA) Life rider
Tax implications of an Estate
Non-Occupational Disability policy
24. 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.
Medicaid/Medi-Cal
CA Work. Comp. Statutes
Rehabilitation rider
Tax implications of Disability policy
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.
Comprehensive Major Medical plan
Elimination (aka Waiting) period
Total disability (as commonly defined)
Proof of Loss provision
26. Guaranteed min. interest rate on cash value buildup but possible higher rate if short-term investment returns higher than expected.
Universal (aka Flexible Premium Adjustable) Life policy (3 of 4)
Peril vs. Hazard
Comprehensive Major Medical plan
Waiver of Premium provision
27. 'The inability to perform your OWN normal occupation or daily duties'.
Peril vs. Hazard
Joint Life (aka "First to die") policy
Types of hazards
Total disability (as commonly defined)
28. Physical - slippery floor; Moral - dishonest acts; Morale - carelessness or recklessness.
Types of hazards
Cost of Living Adjustment (COLA) Disability rider
Parole Pardon Rule
Occupational Disability policy
29. Allows Insured to increase death benefit w/out medical exam (subject to age max.) w/ additional premium rate determined @ attained age.
Tax implications of Disability policy
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
Guaranteed Insurability Life rider
Family or Dependents rider
30. 1: parties to contract; 2: insured party or life; 3: insurable interest - if 3rd party; 4: risks insured against; 5: policy period (term); 6: premium & mode.
Valid life insurance contracts must identify...
Tax implications of an Annuity (1 of 2)
Dependent coverage
Dental Plan
31. Policy must be delivered w/ original (or copy of same) application attached.
Insurance contract characteristics (1 of 2)
Rate (as defined by CIC)
Entire Contract provision
Human Life Value approach
32. Federal law to protect Federal employees' (& their beneficiaries') pension - group insurance - & welfare benefits.
Primary Insurance Amount (PIA)
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
Employee Retirement Income Security Act (ERISA)
Employer-Administered plan
33. Commercial (private) companies; HMOs; PPOs; Blue Cross/Blue Shield; Employer-sponsored plans; Government.
Elements to contract
Renewability provision
Penalties for violating AIDS/HIV privacy laws
Types of Accident & Health (A&H) providers
34. Responsible adult trustee designated to manage death benefits for minor child beneficiary until adulthood.
Peril vs. Hazard
Adverse selection
Indeterminate Premium Whole Life policy
Trusts
35. Identical to Incontestable Clause in Life policy.
Types of hazards
Time Limit on Certain Defenses provision
Entire Contract provision
Endowment Life policy
36. Provides professional services - rehabilitation - training/re-training & related costs to assist Insured in returning to work.
Insurable interest
Mortality vs. Morbidity tables
Rehabilitation rider
Settlement options for Life policy (2 of 2)
37. Allows for use of HMO/PPO or other private carrier to provide expanded benefits @ additional premium & if enrolled in BOTH Parts A & B.
Change of Occupation provision
Blackout Period
Medicare Part C (aka Medicare Advantage)
Joint Life (aka "First to die") policy
38. War; elective cosmetic surgery; routine dental; work. comp.-covered claims; self-inflicted (intentional); gov't. facility treatment; LTC; private nursing.
Loss exposure
Types of Insurers (by ownership)
24 Hour Coverage (CA)
Exclusions for Major Medical plan
39. 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
Insuring clause/provision (aka Insuring Agreement)
Peril vs. Hazard
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
Medicare Part B (aka Supplemental Medical Insurance or SMI)
40. WL policy covering 2 or more Insureds but payable upon death of FIRST Insured - after which policy ends.
Joint Life (aka "First to die") policy
Renewability provision
Return of Premium rider
Concealment
41. Beneficiary has right to leave death benefits / Insurer to protect $ from creditors; interest (taxable) paid on retained funds.
Trusts
Reinsurance
Return of Premium rider
Spendthrift provision
42. 1: mortality probability charge; 2: Insurer's investment return; 3: expenses (admin costs - commissions). 1 - 2 = net; 1 - 2 + 3 = gross.
Factors that determine premium
Requirements to sell variable life products
Major Medical plan
Blue Cross/Blue Shield
43. No deductible coverage for: daily room/board; ancillary costs; surgeon &/or physician expense (for added premium).
Retrocession
Proof of Loss provision
Residual disability rider
Basic Medical plan
44. An attempt to contain costs by employing various strategies - including wellness programs - preventative testing - outpatient & alternative procedures.
Equity Indexed annuity
Medical cost containment (aka Managed care)
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Tax implications of Dividends - Loans & Interest
45. Mortality is the statistical possibility of death @ each age. Morbidity is the statistical possibility & extent of disability @ each age.
Mortality vs. Morbidity tables
Small Employer Medical Expense plan
Beneficiary provisions
Health Maintenance Organization (HMO)
46. No-cost provision that authorizes Insurer to borrow from cash value to pay unpaid premiums after grace period; must ask for @ app. time.
Automatic Premium Loan (APL) provision
Proof of Loss provision
Retrocession
Adjustable Whole Life policy
47. Provides benefit during Social Security "black-out" period - up to 1 yr.
Social Security Benefit (Supplement) rider
Annuity Classifications (1 of 5): How premium is paid
Cross Purchase Plan
Variable Life policy (2 of 2)
48. 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.
Types of Insurers (by authorization)
Medicare Part B (aka Supplemental Medical Insurance or SMI)
Beneficiary provisions
Factors that determine premium
49. No coverage for injuries while: 1: @ voluntary social event; 2: self-inflicted (intentional); 3: under alcohol/drug influence; 4: committing criminal act; 5: aggressor in workplace fight; 6: participating in athletic event (non-pro. athletes) 7: par
Exclusions to Work. Comp.
Waiver of Premium (Waiver of Cost of Insurance) rider
Common Disaster (Simultaneous Death Act) clause/provision
Health Reimbursement Account (HRA)
50. Same as WL but cash value put in investment vehicles chosen by policy owner (stocks - bonds - munis.); cash value NOT guaranteed.
Relation of Earnings to Insurance provision
Age Discrimination in Employment Act (ADEA)
Variable Life policy (1 of 2)
Equity Index Whole Life policy