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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. Policy covering minor child; premium fixed but death benefit increases by 5 times @ age 18 or 21.
Major Medical plan
Juvenile Life (aka Jumping Juvenile) policy
Business Continuation (aka Buy-Sell) Disability policy
Tax implications of Dividends - Loans & Interest
2. 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.
Loss of Earnings Test
Valid life insurance contracts must identify...
Civil Rights/Pregnancy Discrimination Act
Renewability provision
3. If 2 or more family members are injured in the same accident - only payment of a single deductible is required.
Medicare Part A (aka Hospital Insurance or HI)
Types of Insurers (by authorization)
Entire Contract provision
Common Accident provision
4. 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
Residual disability rider
Return of Premium rider
Insuring clause/provision (aka Insuring Agreement)
5. 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
Point of Service plan
Earned vs. Unearned premium
Medicaid/Medi-Cal
6. Any person - assoc. - org. - partnership - business trust - LLC - or corp. capable of making an insurance contract.
Binding receipt (aka Temporary Insurance Agreement)
Total disability (more restrictive definition)
Universal (aka Flexible Premium Adjustable) Life policy (2 of 4)
Insurer (as defined by CIC)
7. Covers disabilities occurring ONLY "off" job; benefits do not overlap work. comp. (i.e. Group plan).
Reinsurance
Key Employee Disability policy
Non-Occupational Disability policy
Impairment (Exclusion) rider
8. Hybrid of HMO & PPO w/ greater flexibility on choosing specialists outside network w/ benefits still provided but @ higher co-pay.
Trial Application (aka Request for Offer)
Insurer (as defined by CIC)
Point of Service plan
Convertibility provision
9. Prohibited w/ regard to testing for people of same class; test results must remain confidential; coverage may be declined (once discovered).
Common Life Exclusions
Loss exposure
CA Work. Comp. Statutes
AIDS/HIV discrimination
10. Same as WL but death benefit decreases each yr. w/ dividends paid annually to offset decrease.
Enhanced Ordinary (aka Extraordinary) Whole Life policy
Automatic Premium Loan (APL) provision
Adjustable Whole Life policy
Plans A-L of Medical Supplement or Medigap
11. Mortality is the statistical possibility of death @ each age. Morbidity is the statistical possibility & extent of disability @ each age.
Underwriting risk categories
Insurer (as defined by CIC)
Insurable interest
Mortality vs. Morbidity tables
12. Receipt whereby coverage incepts ONLY after underwriting approval.
Underwriting risk categories
Approval Type Conditional receipt
Settlement options for Life policy (2 of 2)
Proof of Loss provision
13. A company providing lump sum buyout (50-90% of total) of Life policy; becomes owner & beneficiary & assumes premium payments; usually terminally ill viator.
Enhanced Ordinary (aka Extraordinary) Whole Life policy
Suicide clause/provision
Viatical Settlement Provider (VSP)
Accidental Death & Dismemberment (AD&D) Life policy
14. Provides % of monthly income benefit if Insured becomes disabled due to illness or accident.
Disability Income policy
Rescission
Employer-Administered plan
Medicare Part C (aka Medicare Advantage)
15. Private sector (Commercial) - provides LA&H - P&C - & LTC; Public sector (Gov't) - provides flood - work. comp. - Medicare/Medicaid - Group Life (SGLI/FEGLI).
Automatic Premium Loan (APL) provision
Types of Insurers (by sector)
Annuity
Medicare Part A (aka Hospital Insurance or HI)
16. 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.
Revocable vs. Irrevocable beneficiary
Market Value Adjusted (aka Modified Guaranteed) annuity
Modified Endowment Contract (MEC)
Dental Plan
17. Provides disability income during surgery recovery from life-threatening condition (& sometimes cosmetic surgery).
Transplant/Cosmetic Surgery rider
Enhanced Ordinary (aka Extraordinary) Whole Life policy
7 Pay Test
Medical cost containment (aka Managed care)
18. Periodic return of premium to policy owners from Mutual (Par) Companies; not guaranteed & not taxable as income; may be used in 6 ways.
Dividends
Common Disability Exclusions
Tax implications of an Annuity (1 of 2)
Residual disability rider
19. Prepaid med. benefits for members w/ approved primary care M.D. (independent); low co-pay; non-PPO M.D. can be used at higher cost.
Tax implications of Death Benefit & Cash Value
Preferred Provider Organization (PPO)
Insurable interest
Health Insurance Portability and Accountability Act (HIPAA)
20. Covers entire family w/ WL for breadwinner & (convertible) Level Term for spouse & children (until certain age).
Entire Contract provision
Family policy
Annuity
Dental Plan
21. IRS allows tax-free transfer of cash values between 2 LIKE policies (i.e. Life to Life - Annuity to Annuity - or Life to Annuity).
Medicare Part A & B "Gaps"
Disability Income policy
Types of Insurers (by ownership)
1035 Exchange
22. 'The inability to perform your OWN normal occupation or daily duties'.
Total disability (as commonly defined)
Types of Accident & Health (A&H) providers
Accidental Death & Dismemberment (AD&D) Life policy
Annuity
23. Same as WL but w/ Decreasing Term rider; upon death - pays monthly income for REMAINING term AFTER which pays full death benefit.
Equity Index Whole Life policy
Payor (aka Waiver of Payor's Premium) rider
Equity Indexed annuity
Family Income policy
24. Same as WL but cash value increases @ current interest rates (not set); premium can start low or high & may change.
Adjustable Whole Life policy
Cost of Living Adjustment (COLA) Life rider
Current Assumption (aka Interest-Sensitive) Whole Life policy
Parole Pardon Rule
25. Allows for use of HMO/PPO or other private carrier to provide expanded benefits @ additional premium & if enrolled in BOTH Parts A & B.
Universal (aka Flexible Premium Adjustable) Life policy (2 of 4)
Medicare Part C (aka Medicare Advantage)
AIDS/HIV discrimination
Risk management
26. Domestic - within home state; Foreign - outside home state; Alien - outside home country.
Legal Action provision
Types of Insurers (by domicile)
Total disability (as commonly defined)
Comprehensive Major Medical plan
27. Savings account for medical expenses; Tax-deductible contributions; tax-deferred growth; tax-free for qualified use; taxable for non-qualified use.
Considerations in replacing Health insurance
Tax implications of an Estate
Legal Action provision
Medical Savings Account (MSA) & Health Savings Account (HSA)
28. Permanent - not recoverable (spinal cord injury); Temporary - recoverable (temp. illness/injury - broken limb).
Permanent vs. Temporary disability
Medicare Part A (aka Hospital Insurance or HI)
Loss exposure
Tax implications of Death Benefit & Cash Value
29. Death benefit is NOT taxable. Cash value grows tax-deferred but cost basis (base premium) is not taxable - only interest is.
Cross Purchase Plan
Exclusions for Major Medical plan
Medicare Part C (aka Medicare Advantage)
Tax implications of Death Benefit & Cash Value
30. Upon death - death benefit is paid + the aggregate of cash value accumulated to date; add-on to WL policy ONLY.
Term Life policy
Insurability Type Conditional receipt
Return of Cash Value rider
Types of Accident & Health (A&H) providers
31. Two death benefit options - Option A: death benefit ONLY; Option B: death benefit + cash value; death benefit NOT guaranteed.
Common Disability Exclusions
Peril vs. Hazard
Age Discrimination in Employment Act (ADEA)
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
32. 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
Viatical Settlement Provider (VSP)
Rehabilitation rider
Universal (aka Flexible Premium Adjustable) Life policy (4 of 4)
33. Monthly; Quarterly; Semi-annually; Annually (cheapest due to less admin cost).
Health Reimbursement Account (HRA)
Civil Rights/Pregnancy Discrimination Act
Cross Purchase Plan
Premium modes
34. Death benefits & premium automatically increase annually based on inflationary index (i.e. Consumer Price Index).
Levels of Long Term Care provided
Cost of Living Adjustment (COLA) Life rider
Medicaid/Medi-Cal
Equity Indexed annuity
35. Excludes coverage for suicide during 1st 2 yrs. ONLY but - if it does - all premiums must be returned to beneficiary.
Suicide clause/provision
Dividends
Policy loans
Guaranteed Insurability Life rider
36. Group plan initially self-funded by employer (like SIR); after which - group plan Insurer covers (up to policy limit); requires TPA.
Employer-Administered plan
Tax implications of Dividends - Loans & Interest
IRS Penalties for Annuities
Blackout Period
37. 1: Surrender for cash value (taxable); 2: Buy equal-benefit paid-up Level Term policy; 3: Buy reduced-benefit paid-up WL policy.
Free Look provision
Accidental Death & Dismemberment (AD&D) Disability rider
Accelerated Benefits (aka Terminal Illness or Living Benefits) rider
Non-forfeiture options for WL policy
38. Provides for continued operation of business if partner becomes disabled - by allowing other partner(s) to buy disabled partner's interest in business.
Family Maintenance policy
Business Continuation (aka Buy-Sell) Disability policy
Accidental Death & Dismemberment (AD&D) Life policy
Penalties for violating AIDS/HIV privacy laws
39. Death benefit determined by Insured's projected lost earnings potential.
Human Life Value approach
Partial disability rider
Trial Application (aka Request for Offer)
Cash value
40. Policy owner has right to determine mode of premium payment but Insurer can charge admin. fee if not annual.
Payment of Premium provision
Recurrent disability clause/provision
Retrocession
Mortality vs. Morbidity tables
41. Provides accidental death benefit @ full $ of "principal sum". Dismemberment is paid only @ 50% principal sum ("capital sum").
Trusts
Accidental Death & Dismemberment (AD&D) Life policy
Limited Pay Whole Life policy
Insurer (as defined by CIC)
42. 1: Single (lump sum) premium; 2: Periodic premiums - can be level (fixed $) OR flexible from mth. to mth. (w/ req. min.)
Penalties for violating AIDS/HIV privacy laws
Annuity Classifications (1 of 5): How premium is paid
Loss exposure
Medical cost containment (aka Managed care)
43. 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
Types of Term Life policies
Disability Income policy
Claim Form (aka Proof of Loss Form) provision
44. 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.
Tax implications of Disability policy
Types of Renewability provisions
Common Disability Exclusions
Key Employee Disability policy
45. After 2-3 yrs. - Whole Life policy equity builds tax-deferred @ fixed interest rate until it equals death benefit; borrowable but taxable.
Dental Plan
Cash value
Reinstatement provision
Insurance contract characteristics (2 of 2)
46. 1: Individual; 2: Joint - multiple annuitants paid until 1st dies; 3: Joint & Survivor - multiple annuitants paid until 1st dies THEN survivors paid but @ reduced $.
Annuity Classifications (5 of 5): # of lives
Graded Premium Whole Life policy
Revocable vs. Irrevocable beneficiary
Employer Liability
47. Insurer has right to adjust (+ or -) death benefit if age or sex is misstated but normally doesn't void policy.
Misstatement of Age/Sex provision
Phases of an annuity
Modified Endowment Contract (MEC)
Total disability (any-occupational definition)
48. Unintentional - up to $1 -000 + legal $; Intentional - $1 -000-5 -000 + legal $; If harmful - misdemeanor + up to 1 yr. prison + up to $10 -000.
Types of reinsurance
Whole (aka Permanent or Straight) Life policy
Penalties for violating AIDS/HIV privacy laws
Types of Agency Authority
49. Pre-existing illness/injury; Waiting period; Elimination period; Probationary period; Benefits - Exclusions - Limitations; Underwriting reqs.
Rate (as defined by CIC)
Health Reimbursement Account (HRA)
Considerations in replacing Health insurance
Health Maintenance Organization (HMO)
50. Annuity distributions prior to age 59 1/2 incur a 10% IRS penalty EXCEPT for death - disability - immediate annuity - or rollover.
Annuity Classifications (4 of 5): Disposition "pay-out" of proceeds
Cost of Living Adjustment (COLA) Life rider
IRS Penalties for Annuities
Business Overhead Expense (BOE) Disability policy