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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. Taxable income (unlike individual plans); can be either short-term - 13-52 wks. max. or long-term - longer than 52 wks.
Group Disability plan
Beneficiary provisions
Tax implications of Disability policy
Insurable interest
2. Federal law which prohibits companies w/ 20+ employees from denying work & medical benefits to employees due to age.
Partial disability rider
Age Discrimination in Employment Act (ADEA)
Cash value
Levels of Long Term Care provided
3. 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.
Accidental Death (aka Multiple Indemnity) rider
Whole (aka Permanent or Straight) Life policy
Business Continuation (aka Buy-Sell) policy
Consolidated Omnibus Budget Reconciliation Act (COBRA)
4. Upon death - death benefit is paid + the aggregate of premiums paid to date; add-on to Term policy ONLY.
Variable Universal Life policy
Conformity with State Statute provision
Key Employee Disability policy
Return of Premium rider
5. 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
Medicare Part D
Blue Cross/Blue Shield
Health Maintenance Organization (HMO)
6. Provides % of monthly income benefit if Insured becomes disabled due to illness or accident.
Types of Licensed Producers
Concealment
Key Employee policy
Disability Income policy
7. Authorized (admitted) - can conduct business in state; Unauthorized (non-admitted) - cannot conduct business in state (w/ one exception).
Considerations in replacing Health insurance
Types of Insurers (by authorization)
Disability Income policy
COBRA Time Limitations
8. Prepaid med. benefits for members ONLY w/ approved primary care M.D. (HMO employee); focus on preventative care; low co-pay.
Insurance contract characteristics (1 of 2)
Types of Insurers (by domicile)
Health Maintenance Organization (HMO)
Occupational Disability policy
9. Revocable - changeable anytime w/ Change of Beneficiary Form; Irrevocable - not changeable w/out beneficiary permission.
Credit Life policy
Revocable vs. Irrevocable beneficiary
Modified Endowment Contract (MEC)
Enhanced Ordinary (aka Extraordinary) Whole Life policy
10. Prohibited w/ regard to testing for people of same class; test results must remain confidential; coverage may be declined (once discovered).
Settlement options for Life policy (2 of 2)
AIDS/HIV discrimination
IRS Penalties for Annuities
Cash value
11. Provides disability income during surgery recovery from life-threatening condition (& sometimes cosmetic surgery).
Concealment
Transplant/Cosmetic Surgery rider
Types of Insurers (by sector)
Dread Disease policy
12. Privately-provided or Medicare-provided (if no private carrier) prescription drug plans for qualified individuals but w/ premium - deductible & co-pay.
Transplant/Cosmetic Surgery rider
Cost of Living Adjustment (COLA) Life rider
Time Limit on Certain Defenses provision
Medicare Part D
13. Compensates business for loss due to disability of key employee; premiums not deductible but benefits tax-free.
Medicare Supplement or Medigap policy
Dread Disease policy
Medicaid/Medi-Cal
Key Employee Disability policy
14. Provides accidental death benefit @ full $ of "principal sum". Dismemberment is paid only @ 50% principal sum ("capital sum").
Total disability (any-occupational definition)
Notice of Claim provision
Accidental Death & Dismemberment (AD&D) Disability rider
Indemnify
15. Written contract to transfer risk of premature death from one party to another; pays stated sum upon death; creates instant estate.
Rate (as defined by CIC)
Annuity Classifications (5 of 5): # of lives
Life insurance policy
Equity Indexed annuity
16. Upon death - death benefit is paid + the aggregate of cash value accumulated to date; add-on to WL policy ONLY.
Term Life policy
Return of Cash Value rider
Types of Medical Plans
Accidental Death & Dismemberment (AD&D) Life policy
17. Time period preceding each disability during which benefits are not paid; longer elimination periods = cheaper premium.
Conformity with State Statute provision
Elimination (aka Waiting) period
Family policy
Dread Disease policy
18. Permanent - not recoverable (spinal cord injury); Temporary - recoverable (temp. illness/injury - broken limb).
Conformity with State Statute provision
Permanent vs. Temporary disability
Blue Cross/Blue Shield
Medicare Part B (aka Supplemental Medical Insurance or SMI)
19. PURELY employer-funded account to reimburse employees for qualified medical expenses not covered by group health plan.
Departments of an Insurer
Health Reimbursement Account (HRA)
Relation of Earnings to Insurance provision
Payor (aka Waiver of Payor's Premium) rider
20. War - 2 types; Suicide (1st 2 yrs.); Aviation (non-commercial); Hazardous hobbies; Criminal acts; Alcohol/Drug influenced.
Considerations in replacing Health insurance
Supplemental Major Medical plan
Common Life Exclusions
Fraud
21. Same as WL but death benefit decreases each yr. w/ dividends paid annually to offset decrease.
Enhanced Ordinary (aka Extraordinary) Whole Life policy
Palliative vs. Curative care
Medicare Part A & B "Gaps"
Guaranteed Insurability (aka Additional Purchase or Future Increase) Disability rider
22. Employer w/ 25 or less employees must offer all eligible employees @ least 2 medical plan options where pre-existing conditions can't be excluded more than 1 yr.
Small Employer Medical Expense plan
Medicare Part A & B "Gaps"
Basic Medical plan
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
23. If Insured changes to: more hazardous job - benefits reduced; less hazardous job - premiums reduce.
Types of hazards
Equity Index Whole Life policy
Indemnify
Change of Occupation provision
24. Same as Universal Life but cash value put in investment vehicles chosen by policy owner (stocks - bonds - munis.); cash value NOT guaranteed.
Tax implications of Disability policy
Cost of Living Adjustment (COLA) Life rider
Variable Universal Life policy
Fraud
25. Policy owner has right to determine mode of premium payment but Insurer can charge admin. fee if not annual.
Valid life insurance contracts must identify...
Payment of Premium provision
Basic Medical plan
Adjustable Whole Life policy
26. Potential circumstance that could cause a loss; measured in dollars.
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
Loss exposure
Tax implications of an Estate
Medicare
27. Funding mechanism whereby employer & employee share cost of premium. Upon death - benefit is shared between employer & beneficiary.
Legal Action provision
1035 Exchange
Split Dollar Plan
Employer-Administered plan
28. Insurance purchased by other Insurer(s) to spread or diversify risk; promotes industry stability.
Family policy
Reinsurance
Conformity with State Statute provision
Credit Life policy
29. Summary of coverage including premium & mode of payment - death benefit - beneficiary(ies) - exclusions - & promise to pay.
Waiver of Premium provision
Exclusions for Major Medical plan
Insuring clause/provision (aka Insuring Agreement)
Loss exposure
30. 1: Immediate benefits rec'd w/in 30 days but premium must be paid by lump sum; 2: Deferred - usually until retirement.
Annuity Classifications (2 of 5): When benefits begin
Employer Liability
Cross Purchase Plan
Rescission
31. Waives premium upon disability of Insured until return to work; disability must persist for 6 mths. or longer. Cash value & dividends not affected.
Spendthrift provision
Waiver of Premium (Waiver of Cost of Insurance) rider
Medicaid/Medi-Cal
Loss exposure
32. 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;
Trusts
Time Limit on Certain Defenses provision
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
Term Life policy
33. An irrevocable IRS classification of a policy (determined by the 7 Pay Test) whereby tax advantages are lost for all distributions ONLY.
Medicare Supplement or Medigap policy
Common Disaster (Simultaneous Death Act) clause/provision
Modified Endowment Contract (MEC)
Requirements to sell variable life products
34. Federally-funded but state-run program for truly indigent individuals & families providing medical care at Federal clinic.
Return of Premium rider
Disability Income policy
Annuity Classifications (3 of 5): Source of income
Medicaid/Medi-Cal
35. Federal law which prohibits companies w/ 15+ employees from decreasing coverage benefits for women affected by pregnancy or childbirth.
Civil Rights/Pregnancy Discrimination Act
Family Maintenance policy
Disability Income policy
Split Dollar Plan
36. Grows @ fixed interest rate for set term but cash value may adjust to prevailing rate (+ or -) if fully surrendered before term ends; % w/drawal ok.
Recurrent disability clause/provision
Market Value Adjusted (aka Modified Guaranteed) annuity
Pure risk vs. Speculative risk
Business Continuation (aka Buy-Sell) Disability policy
37. Mathematical law stating the larger # of occurrences - the more predictable the losses; used to calculate premiums.
Rescission
Plans A-L of Medical Supplement or Medigap
Non-forfeiture options for WL policy
Law of Large Numbers
38. Premiums determined by target cash values or death benefit; partial cash value w/drawals allowed; transparent policy w/ unbundled premium.
Accidental Death (aka Multiple Indemnity) rider
Universal (aka Flexible Premium Adjustable) Life policy (2 of 4)
Disability Income policy
Adverse selection
39. Provides supplemental coverage for physician/surgeon fees if enrolled (during enrollment period ONLY) & pay monthly premium w/ deductible and co-insurance.
Settlement options for Life policy (2 of 2)
Medicare Part B (aka Supplemental Medical Insurance or SMI)
Types of Insurers (miscellaneous)
Transplant/Cosmetic Surgery rider
40. Excludes coverage for specific injury/illness either temporarily or permanently in order to eliminate pre-existing condition.
Approval Type Conditional receipt
Impairment (Exclusion) rider
Annuity Classifications (3 of 5): Source of income
Tax implications of Dividends - Loans & Interest
41. Group plan initially self-funded by employer (like SIR); after which - group plan Insurer covers (up to policy limit); requires TPA.
Legal Action provision
Employer-Administered plan
Whole (aka Permanent or Straight) Life policy
Notice of Claim provision
42. Same as WL but policy owner can adjust death benefit w/ corresponding premium adjustments; mostly obsolete.
Family or Dependents rider
Loss exposure
Dental Plan
Adjustable Whole Life policy
43. Same as Comprehensive Major Medical but w/ integrated deductible; much more expensive.
Permanent vs. Temporary disability
Requirements to sell variable life products
Medicare Part D
Supplemental Major Medical plan
44. 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
Policy delivery
24 Hour Coverage (CA)
Term Life policy
45. Policy covering minor child; premium fixed but death benefit increases by 5 times @ age 18 or 21.
Dependent coverage
Juvenile Life (aka Jumping Juvenile) policy
Indemnify
Concealment
46. 1: Cash (tax-free); 2: Apply to future premiums; 3: Retained by Insurer @ interest; 4: Buy Paid-up WL policy add-ons; 5: Pay-up existing policy; 6: Buy 1-yr. Term policy.
Departments of an Insurer
Types of Agency Authority
Common Accident provision
Dividend options
47. Multiple small employers w/ common affiliation (trade assoc. OR Chamber of Commerce) band together to purchase group plan.
Experience vs. Community rating in Group Health plan
Types of Agency Authority
Multiple Employer Trust (MET) aka Multiple Employer Welfare Association (MEWA)
Universal (aka Flexible Premium Adjustable) Life policy (3 of 4)
48. Req. by CA statute & may provide workers coverage for action-over claims.
Workers' Compensation insurance
Insurability Type Conditional receipt
Employer Liability
Types of Insurers (miscellaneous)
49. Same as WL but premium low for set # yrs. - THEN premiums vary (+ or -) based on Insurer's investment returns - w/ Gmax.
Notice of Claim provision
Indeterminate Premium Whole Life policy
Blackout Period
Types of Renewability provisions
50. Hybrid of HMO & PPO w/ greater flexibility on choosing specialists outside network w/ benefits still provided but @ higher co-pay.
Variable Universal Life policy
Risk management
Social Security (aka Old Age Survivors Disability Health Insurance or OASDHI)
Point of Service plan