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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. Guaranteed min. interest rate on cash value buildup but possible higher rate if short-term investment returns higher than expected.
Applicant Representations vs. Warranties
Universal (aka Flexible Premium Adjustable) Life policy (3 of 4)
Medi-Cal Share Cost plan
Supplemental Major Medical plan
2. Same as Universal Life but cash value put in investment vehicles chosen by policy owner (stocks - bonds - munis.); cash value NOT guaranteed.
Accidental Death & Dismemberment (AD&D) Disability rider
Return of Cash Value rider
Small Employer Medical Expense plan
Variable Universal Life policy
3. Specialized policy covering diagnostic & preventative dental care; often no deductible; co-insurance; expensive; may be included w/ medical plan.
Types of Insurers (by domicile)
Rehabilitation rider
Dental Plan
Dependent coverage
4. Fixed premium w/ guaranteed min. death benefit that may increase due to higher than expected investment returns.
Medicaid/Medi-Cal
Common Disaster (Simultaneous Death Act) clause/provision
Variable Life policy (2 of 2)
Medi-Cal Share Cost plan
5. Combination of Basic Medical & Major Medical in one policy; Basic pays 1st - then Major Medical w/ corridor deductible.
Suicide clause/provision
Experience vs. Community rating in Group Health plan
Comprehensive Major Medical plan
Universal (aka Flexible Premium Adjustable) Life policy (2 of 4)
6. Provides accidental death benefit @ full $ of "principal sum". Dismemberment is paid only @ 50% principal sum ("capital sum").
Proof of Loss provision
Common Accident provision
Tax implications of medical plans
Accidental Death & Dismemberment (AD&D) Life policy
7. 1: Fixed - guaranteed fixed monthly income & fixed interest rate; 2: Variable - unguaranteed; monthly income varies based on stocks/bond returns.
Annuity
Annuity Classifications (3 of 5): Source of income
Errors & Omissions (E&O)
Guaranteed Insurability (aka Additional Purchase or Future Increase) Disability rider
8. Term Life policy w/ decreasing death benefit; usually used to secure credit (loan) w/ lender as beneficiary & borrower as Insured.
Annuity surrender charges
Annuity
Credit Life policy
Variable Universal Life policy
9. 1: mortality probability charge; 2: Insurer's investment return; 3: expenses (admin costs - commissions). 1 - 2 = net; 1 - 2 + 3 = gross.
Accidental Death & Dismemberment (AD&D) Disability rider
Change of Occupation provision
Factors that determine premium
Parole Pardon Rule
10. Policy owner has 90 days from date of loss to submit proof of loss to Insurer; valid claim must be paid immediately upon receipt.
Common Disability Exclusions
Types of Insurers (miscellaneous)
Types of Accident & Health insurance
Proof of Loss provision
11. Pure risk involves chance of loss ONLY (accident or misfortune). Speculative risk involves chance of loss OR gain (gambling - stock investment).
Pure risk vs. Speculative risk
Time Limit on Certain Defenses provision
Life insurance policy
Elements to contract
12. Same as WL but premium low for 1st 5 yrs. - THEN has annual premium increases for set # yrs. - THEN level premium.
Age Discrimination in Employment Act (ADEA)
Types of Agency Authority
Rate (as defined by CIC)
Graded Premium Whole Life policy
13. Both Contributory & Non-contributory Group policies are deductible to employer (not employee) but benefits are taxable. Individual policy premium is NOT deductible but benefit is received tax-free.
Doctrine of Comity
Tax implications of Disability policy
Insurance contract characteristics (2 of 2)
Dental Plan
14. 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.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Types of hazards
Spendthrift provision
Trusts
15. War/Military; Intentional self-inflicted; Aviation (non-commercial); Foreign country; Loss of professional license; Illegal activity; Mental disorders (after 1-2 yrs.).
Common Disability Exclusions
IRS Penalties for Annuities
Reinstatement provision
Non-Occupational Disability policy
16. Pre-existing illness/injury; Waiting period; Elimination period; Probationary period; Benefits - Exclusions - Limitations; Underwriting reqs.
Factors that determine premium
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Waiver of Premium provision
Considerations in replacing Health insurance
17. 1: Surrender for cash value (taxable); 2: Buy equal-benefit paid-up Level Term policy; 3: Buy reduced-benefit paid-up WL policy.
Common Disaster (Simultaneous Death Act) clause/provision
Applicant Representations vs. Warranties
Types of Insurers (by sector)
Non-forfeiture options for WL policy
18. 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.
Transplant/Cosmetic Surgery rider
Valid life insurance contracts must identify...
Departments of an Insurer
Premium modes
19. Dividends are NOT taxable but interest is. Loan interest is NOT tax-deductible. Interest paid by Insurer on retained funds is taxable.
Point of Service plan
Accidental Death & Dismemberment (AD&D) Disability rider
Tax implications of Dividends - Loans & Interest
Disability Income policy
20. Intentional deception; grounds for rescission.
Fraud
Common Life Exclusions
Basic Medical plan
Family Income policy
21. Same as WL but policy owner can adjust death benefit w/ corresponding premium adjustments; mostly obsolete.
Annuity Classifications (2 of 5): When benefits begin
Term Life policy
1035 Exchange
Adjustable Whole Life policy
22. Treating or mitigating loss exposures through 1: avoidance; 2: retention (deductibles); 3: sharing; 4: reduction; or 5: transfer.
Conformity with State Statute provision
Primary Insurance Amount (PIA)
Risk management
Departments of an Insurer
23. Part of IRS Section 125 cafeteria plan - which allows pre-tax payroll deductions for qualified medical expenses or child/dependent care.
Concealment exceptions
Trial Application (aka Request for Offer)
Flexible Spending Account (FSA)
Medicare Part A & B "Gaps"
24. Periodic return of premium to policy owners from Mutual (Par) Companies; not guaranteed & not taxable as income; may be used in 6 ways.
Reinsurance
Tax implications of medical plans
Dividends
Applicant Representations vs. Warranties
25. Privately-sold policies to provide benefits not covered by Medicare; divided into 12 plans listed alphabetically A - L; 30-day free look; guaranteed renewable.
Accidental Death (aka Multiple Indemnity) rider
Return of Premium rider
Tax implications of Death Benefit & Cash Value
Medicare Supplement or Medigap policy
26. Compensates business for loss due to death or disability of key employee; premiums not deductible but benefits tax-free.
Key Employee policy
Types of Agency Authority
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
Modified Premium Whole Life policy
27. Representation - oral or written statement made to best of knowledge or belief; Warranty - statement guaranteed/presumed/understood to be true.
Annuity Classifications (2 of 5): When benefits begin
Endowment Life policy
Variable Life policy (2 of 2)
Applicant Representations vs. Warranties
28. IRS allows tax-free transfer of cash values between 2 LIKE policies (i.e. Life to Life - Annuity to Annuity - or Life to Annuity).
IRS Penalties for Annuities
1035 Exchange
Common Disability Exclusions
Loss exposure
29. Provides supplemental coverage for physician/surgeon fees if enrolled (during enrollment period ONLY) & pay monthly premium w/ deductible and co-insurance.
Medicare Part B (aka Supplemental Medical Insurance or SMI)
Variable Life policy (2 of 2)
Needs approach (most common)
Common Life Exclusions
30. Policyholders - Mutual (participating) co. - may pay dividends; Stockholders - Stock (non-participating) co. - no dividends.
Tax implications of an Annuity (1 of 2)
Presumptive disability
Types of Term Life policies
Types of Insurers (by ownership)
31. Conditional - coverage is conditional; Personal - parties are people; Good faith - honesty/integrity; Fiduciary - req's financial trust.
Annuity
Insurance contract characteristics (2 of 2)
Common Disability Exclusions
Business Continuation (aka Buy-Sell) policy
32. A lapsed policy may be reinstated if not longer than 3-5 yrs. - & proof of insurability re-established - & back premiums + interest paid.
Reinstatement provision
Insuring clause/provision (aka Insuring Agreement)
Annuity Classifications (5 of 5): # of lives
Annuity Classifications (2 of 5): When benefits begin
33. Allows Insured to increase benefit w/out medical exam (subject to age max.) w/ additional premium rate determined @ attained age; must prove income increase.
Current Assumption (aka Interest-Sensitive) Whole Life policy
Age Discrimination in Employment Act (ADEA)
Concealment exceptions
Guaranteed Insurability (aka Additional Purchase or Future Increase) Disability rider
34. Permanent disability due to total loss of sight - hearing - speech or use of 2 + limbs; benefits paid even while continuing to work.
Presumptive disability
Concealment
Dividends
Time Limit on Certain Defenses provision
35. Policy must be delivered w/ original (or copy of same) application attached.
Key Employee policy
Relation of Earnings to Insurance provision
Comprehensive Major Medical plan
Entire Contract provision
36. 1: Single (lump sum) premium; 2: Periodic premiums - can be level (fixed $) OR flexible from mth. to mth. (w/ req. min.)
Employer Liability
Tax implications of an Annuity (1 of 2)
Variable Life policy (1 of 2)
Annuity Classifications (1 of 5): How premium is paid
37. Covers entire family w/ WL for breadwinner & (convertible) Level Term for spouse & children (until certain age).
Trusts
Guaranteed Insurability Life rider
Family policy
Social Security Benefit (Supplement) rider
38. Same as Term Life but provides living benefit (endowment) to policy owner if Insured survives entire term.
Types of Insurers (miscellaneous)
Rescission
Cross Purchase Plan
Endowment Life policy
39. Federal law which prohibits companies w/ 15+ employees from decreasing coverage benefits for women affected by pregnancy or childbirth.
Civil Rights/Pregnancy Discrimination Act
Rate (as defined by CIC)
Business Continuation (aka Buy-Sell) policy
Loss exposure
40. Unilateral - Insurer provides contract; Adhesion - parties must adhere to terms; Aleatory - benefits may not inure equally.
Revocable vs. Irrevocable beneficiary
Insurance contract characteristics (1 of 2)
Residual disability rider
Insurability Type Conditional receipt
41. Excludes coverage for specific injury/illness either temporarily or permanently in order to eliminate pre-existing condition.
Blackout Period
Settlement options for Life policy (2 of 2)
Pure risk vs. Speculative risk
Impairment (Exclusion) rider
42. Intentional OR unintentional failure to disclose material underwriting facts that should have been disclosed; grounds for policy rescission.
Plans A-L of Medical Supplement or Medigap
Concealment
Modified Premium Whole Life policy
Employee Retirement Income Security Act (ERISA)
43. Provides coverage for specific disease(s) - such as cancer or leukemia.
Experience vs. Community rating in Group Health plan
Annuity Classifications (2 of 5): When benefits begin
Valid life insurance contracts must identify...
Dread Disease policy
44. Financial interest in insured party that must exist @ time of application OR policy issuance. Requires consent (except minors).
Renewability provision
Medi-Cal Share Cost plan
Needs approach (most common)
Insurable interest
45. Tendency of poorer risks to seek insurance.
Reinstatement provision
Medicare Supplement or Medigap policy
Adverse selection
Business Continuation (aka Buy-Sell) policy
46. Provides for continued operation of business if partner dies - by allowing surviving partner(s) to buy deceased partner's interest in business.
Business Continuation (aka Buy-Sell) policy
Relation of Earnings to Insurance provision
Juvenile Life (aka Jumping Juvenile) policy
Modified Premium Whole Life policy
47. Allows for Term policy renewal @ higher premium w/out medical exam; guarantees insurability; based on actual/attained age.
Insurable interest
Renewability provision
Health Insurance Portability and Accountability Act (HIPAA)
Notice of Claim provision
48. Same as WL but premium low for set # yrs. - THEN premiums vary (+ or -) based on Insurer's investment returns - w/ Gmax.
Dividend options
COBRA Time Limitations
Indeterminate Premium Whole Life policy
Accidental Death & Dismemberment (AD&D) Disability rider
49. 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
Accidental Death & Dismemberment (AD&D) Life policy
Medicare Part D
Presumptive disability
50. Potential circumstance that could cause a loss; measured in dollars.
Point of Service plan
Loss exposure
Total disability (any-occupational definition)
Total disability (more restrictive definition)