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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. Funding mechanism whereby employer & employee share cost of premium. Upon death - benefit is shared between employer & beneficiary.
Major Medical plan
Split Dollar Plan
Modified Endowment Contract (MEC)
Family or Dependents rider
2. Hybrid of HMO & PPO w/ greater flexibility on choosing specialists outside network w/ benefits still provided but @ higher co-pay.
Point of Service plan
Medical cost containment (aka Managed care)
Dental Plan
Current Assumption (aka Interest-Sensitive) Whole Life policy
3. Financial interest in insured party that must exist @ time of application OR policy issuance. Requires consent (except minors).
Credit Life policy
Insurable interest
Equity Index Whole Life policy
Non-Occupational Disability policy
4. Agents - represent Insurer; Brokers - represent themselves & Insured; Solicitors - represent one agent to solicit leads.
Health Maintenance Organization (HMO)
Tax implications of an Annuity (1 of 2)
Annuity Classifications (3 of 5): Source of income
Types of Licensed Producers
5. Extreme form of Limited Pay Whole Life whereby entire premium is paid in a single payment.
Limited Pay Whole Life policy
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Payor (aka Waiver of Payor's Premium) rider
Single Pay Whole Life policy
6. No deductible coverage for: daily room/board; ancillary costs; surgeon &/or physician expense (for added premium).
Basic Medical plan
Employer Liability
Settlement options for Life policy (2 of 2)
Types of Licensed Producers
7. Peril is the CAUSE of loss. Hazard is a condition that increases LIKELIHOOD of loss.
Types of Medical Plans
Medicare
Peril vs. Hazard
IRS Penalties for Annuities
8. Private sector (Commercial) - provides LA&H - P&C - & LTC; Public sector (Gov't) - provides flood - work. comp. - Medicare/Medicaid - Group Life (SGLI/FEGLI).
Variable Life policy (2 of 2)
Misstatement of Age/Sex provision
Types of Insurers (by sector)
Phases of an annuity
9. Coverage for catastrophic loss w/ high limits - front end deductible; co-insurance (80/20%); blanket coverage; stop loss max.
Factors that determine premium
Tax implications of Dividends - Loans & Interest
Rescission
Major Medical plan
10. Prohibited w/ regard to testing for people of same class; test results must remain confidential; coverage may be declined (once discovered).
Renewability provision
Reinsurance
AIDS/HIV discrimination
Business Continuation (aka Buy-Sell) Disability policy
11. Provides coverage for specific disease(s) - such as cancer or leukemia.
Variable Universal Life policy
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
Dread Disease policy
7 Pay Test
12. Earned premium is $ paid for coverage to date. Unearned premium is $ paid & returnable due to coverage not provided.
Dependent coverage
Spendthrift provision
Earned vs. Unearned premium
Binding receipt (aka Temporary Insurance Agreement)
13. Allows Term policy conversion to Permanent policy w/out medical exam; must be identical or lower death benefit; based on either attained OR original age.
IRS Penalties for Annuities
Convertibility provision
Cross Purchase Plan
Phases of an annuity
14. Two death benefit options - Option A: death benefit ONLY; Option B: death benefit + cash value; death benefit NOT guaranteed.
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
Survivorship (aka "Last to die") policy
Elimination (aka Waiting) period
Return of Cash Value rider
15. 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.
Return of Premium rider
Valid life insurance contracts must identify...
Annuity Classifications (5 of 5): # of lives
Dividend options
16. Pays death benefit until age 100 or death; builds equity (cash value); may be transferred or sold; generally level premium.
Whole (aka Permanent or Straight) Life policy
24 Hour Coverage (CA)
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
Split Dollar Plan
17. Allows for Term policy renewal @ higher premium w/out medical exam; guarantees insurability; based on actual/attained age.
Blue Cross/Blue Shield
Loss exposure
Comprehensive Major Medical plan
Renewability provision
18. An irrevocable IRS classification of a policy (determined by the 7 Pay Test) whereby tax advantages are lost for all distributions ONLY.
Modified Endowment Contract (MEC)
Loss of Earnings Test
Convertibility provision
Automatic Premium Loan (APL) provision
19. Voiding an insurance contract based on fraud - concealment or material misrepresentation; premiums returned; policy treated as never existing.
Human Life Value approach
Rescission
Group Disability plan
IRS Penalties for Annuities
20. Agreement - Offer & acceptance; Consideration - application + premium; Legal capacity - licensed &/or competent; Legal purpose - public good.
Proof of Loss provision
Elements to contract
Graded Premium Whole Life policy
Business Continuation (aka Buy-Sell) policy
21. War; elective cosmetic surgery; routine dental; work. comp.-covered claims; self-inflicted (intentional); gov't. facility treatment; LTC; private nursing.
Rehabilitation rider
Policy delivery
Disability Income policy
Exclusions for Major Medical plan
22. Identical to Incontestable Clause in Life policy.
Time Limit on Certain Defenses provision
Family Income policy
Return of Premium rider
CHAMPUS (aka TriCare)
23. Level - fixed death benefit - premium fixed until renewal; Decreasing - death benefit decreases over term - premium fixed until renewal; Increasing - death benefit increases over term - premium fixed until renewal.
Types of Term Life policies
Family Maintenance policy
Renewability provision
Impairment (Exclusion) rider
24. Covers disabilities occurring both "on" AND "off" job; "on" job benefits paid in addition to work. comp. - if applicable (i.e. individual plan).
Policy loans
Types of Insurers (by domicile)
Settlement options for Life policy (2 of 2)
Occupational Disability policy
25. Same as WL but premium low for 1st 3-5 yrs. - THEN has one-time premium increase.
Modified Premium Whole Life policy
Dental Plan
Universal (aka Flexible Premium Adjustable) Life policy (1 of 4)
Social Security Benefit (Supplement) rider
26. Responsible adult trustee designated to manage death benefits for minor child beneficiary until adulthood.
Trusts
Indemnify
Universal (aka Flexible Premium Adjustable) Life policy (3 of 4)
Incontestability clause/provision
27. Guaranteed min. interest rate on cash value buildup but possible higher rate if short-term investment returns higher than expected.
Suicide clause/provision
Types of reinsurance
Peril vs. Hazard
Universal (aka Flexible Premium Adjustable) Life policy (3 of 4)
28. Non-qualified Annuity - Non-deductible contributions & tax-deferred growth. At pay-out - tax-free principal but taxable growth.
Tax implications of an Annuity (1 of 2)
Limited Pay Whole Life policy
Recurrent disability clause/provision
Total disability (as commonly defined)
29. Benefits automatically increase annually based on inflationary index (i.e. Consumer Price Index) OR flat rate (5% max.).
Types of Accident & Health insurance
Types of Insurers (by ownership)
Types of reinsurance
Cost of Living Adjustment (COLA) Disability rider
30. 1: Fixed - guaranteed fixed monthly income & fixed interest rate; 2: Variable - unguaranteed; monthly income varies based on stocks/bond returns.
Annuity Classifications (3 of 5): Source of income
Types of Insurers (by domicile)
Spendthrift provision
Consolidated Omnibus Budget Reconciliation Act (COBRA)
31. Privately-sold policies to provide benefits not covered by Medicare; divided into 12 plans listed alphabetically A - L; 30-day free look; guaranteed renewable.
Medicare Supplement or Medigap policy
Dividends
Accidental Death (aka Multiple Indemnity) rider
Grace Period provision
32. 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
Binding receipt (aka Temporary Insurance Agreement)
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
Types of Renewability provisions
Types of Medical Plans
33. Receipt whereby coverage incepts immediately upon submission of full consideration - unless declined & premium refunded.
Binding receipt (aka Temporary Insurance Agreement)
Levels of Long Term Care provided
Rescission
Premium modes
34. Time extension of benefits based on "qualifying" event. 18 mth. extension if laid off or fired; 36 mth. extension if death - divorce or child leaves home.
COBRA Time Limitations
Limited Pay Whole Life policy
Law of Large Numbers
Health Maintenance Organization (HMO)
35. Palliative - treatment to manage pain; Curative - treatment to cure illness/condition.
Small Employer Medical Expense plan
Accidental Death & Dismemberment (AD&D) Disability rider
Reinstatement provision
Palliative vs. Curative care
36. Type of partial disability rider - which pays fluctuating % of lost income w/out time limit.
Non-forfeiture options for WL policy
24 Hour Coverage (CA)
Residual disability rider
Accidental Death & Dismemberment (AD&D) Life policy
37. War/Military; Intentional self-inflicted; Aviation (non-commercial); Foreign country; Loss of professional license; Illegal activity; Mental disorders (after 1-2 yrs.).
Policy loans
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
Common Disability Exclusions
Joint Life (aka "First to die") policy
38. Premiums determined by target cash values or death benefit; partial cash value w/drawals allowed; transparent policy w/ unbundled premium.
Transplant/Cosmetic Surgery rider
Universal (aka Flexible Premium Adjustable) Life policy (2 of 4)
Insurance contract characteristics (2 of 2)
Doctrine of Comity
39. Annuity distributions prior to age 59 1/2 incur a 10% IRS penalty EXCEPT for death - disability - immediate annuity - or rollover.
Common Disability Exclusions
Key Employee Disability policy
IRS Penalties for Annuities
Medicare Part D
40. 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.
CA Work. Comp. Statutes
Types of Licensed Producers
Flexible Spending Account (FSA)
Waiver of Premium (Waiver of Cost of Insurance) rider
41. Policy owner has 90 days from date of loss to submit proof of loss to Insurer; valid claim must be paid immediately upon receipt.
Proof of Loss provision
Primary Insurance Amount (PIA)
Exclusions to Work. Comp.
Civil Rights/Pregnancy Discrimination Act
42. Provides professional services - rehabilitation - training/re-training & related costs to assist Insured in returning to work.
Claim Form (aka Proof of Loss Form) provision
Pure risk vs. Speculative risk
Long Term Care (LTC) policy
Rehabilitation rider
43. Intentional OR unintentional failure to disclose material underwriting facts that should have been disclosed; grounds for policy rescission.
Concealment
Whole (aka Permanent or Straight) Life policy
Long Term Care (LTC) policy
Types of Accident & Health insurance
44. After 2-3 yrs. - Whole Life policy equity builds tax-deferred @ fixed interest rate until it equals death benefit; borrowable but taxable.
Settlement options for Life policy (2 of 2)
Medical Savings Account (MSA) & Health Savings Account (HSA)
Cash value
Employer Liability
45. Underwriting - determines insurability; Marketing/Sales - determines products; Actuarial - determines rates; Claims - investigates/pays claims.
Departments of an Insurer
Split Dollar Plan
Family policy
Dread Disease policy
46. Pure risk involves chance of loss ONLY (accident or misfortune). Speculative risk involves chance of loss OR gain (gambling - stock investment).
Beneficiary provisions
Cash value
Rescission
Pure risk vs. Speculative risk
47. Same as Comprehensive Major Medical but w/ integrated deductible; much more expensive.
Supplemental Major Medical plan
Cross Purchase Plan
Automatic Premium Loan (APL) provision
Revocable vs. Irrevocable beneficiary
48. 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
Transplant/Cosmetic Surgery rider
Accidental Death & Dismemberment (AD&D) Life policy
AIDS/HIV discrimination
Exclusions to Work. Comp.
49. Prepaid med. benefits for "subscribers" @ approved facilities; many non-profit; Blue Cross - Hospital stays; Blue Shield - M.D. costs.
Blue Cross/Blue Shield
Adverse selection
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Conformity with State Statute provision
50. Upon death - death benefit is paid + the aggregate of premiums paid to date; add-on to Term policy ONLY.
Misstatement of Age/Sex provision
Small Employer Medical Expense plan
Impairment (Exclusion) rider
Return of Premium rider