CA State Life Insurance Practice Exam A
Already Passed
An annuity that is purchased with a slump sum premium and whose benefits begin after 12
month is called a ✔✔Single premium deferred annuity
A technique used to d
...
CA State Life Insurance Practice Exam A
Already Passed
An annuity that is purchased with a slump sum premium and whose benefits begin after 12
month is called a ✔✔Single premium deferred annuity
A technique used to determine the amount of life insurance needed by focusing on the projected
earning potential of an insured is called the ✔✔Human Life Value Approach
When replacing a policy the producer must present the applicant with a Notice Regarding
Replacement of Life Insurance ✔✔At the time of taking the application
The possibility of a financial loss incurred by a life insurance company for the premature death
of an insured is known as a ✔✔Risk
The Medical Information Bureau (MIB) is a nonprofit trade association that maintains
✔✔Medical information on applicants for life and health insurance
A person who signs a fraudulent claim form may be found guilty of ✔✔Perjury
Which policy is a combination of annual renewable term insurance and interest-sensitive cash
value? ✔✔Universal life
The right to a full refund of premiums for insureds age 60 or older is ✔✔30 Days
The premium modes can be best described as the ✔✔Frequency of premium payment
Intentionally omitting a history of heart problems on an application is ✔✔Concealment
A tax-sheltered annuity (TSA) is a qualified plan available for ✔✔Nonprofit organizations
The intent of replacement regulations is to protect the ✔✔Policy owner
Which provision allows a lapsed policy to be put back in force? ✔✔Reinstatement
According to the California Department of Insurance, an insurer whose articles of incorporation
are registered in Oslo, Norway is considered a/an ✔✔Alien Insurer
Mortality is defined as the ✔✔Rate of Death
Which of the following is NOT a characteristic of group life insurance? ✔✔A group may exist
for the purpose of purchasing insurance.
When a producer collects the initial premium and issues a conditional receipt, the receipt
✔✔May allow life insurance companies to start coverage before policy delivery
The law of large numbers allows an insurance company to predict the expected losses among
✔✔Members of a group of individuals with similar risks.
If an insurer's legal reserve funds are found to be less than the minimum required by aw, the
insurer is considered ✔✔Insolvent
Which type of policy would be suitable to protect the balance of a home mortgage?
✔✔Decreasing term
When must insurable interest exist? ✔✔At the time of application
The rider that provides for partial payment of the death benefit in advance to help with nursing or
convalescent home expenses is the ✔✔Long-term care
Which annuity payout options guarantees the return of all the principal invested in the contract?
✔✔Refund life annuity
Which of the following statements is NOT true about participating policies? ✔✔They pay
dividends to stockholders
Insurance contracts are based upon a doctrine which requires all parties to the contract to be
honest. This is known as the doctrine of ✔✔Utmost good faith
According to the California Insurance Code, life-only producers must keep records of their
transactions for at least ✔✔5 years
Which of these is NOT an element of a legal contract? ✔✔Unilateral
Which statement is INCORRECT about a fixed annuity? ✔✔Income payments vary from month
to month
In a group policy, the employer receives ✔✔Master contract
The risk of a loss to an insurance company is also referred to as a/an ✔✔Exposure
With a modified premium whole life contract, premium payments are ✔✔Lower in the early
years of the contract
If a mistreatment of age is discovered during the processing of a life insurance claim, the insurer
will ✔✔Adjust the death benefit
The pay-in time for deferred annuities is known as the ✔✔Accumulation period
Statements made by an applicant on an application for insurance are considered to be
✔✔Representations
The cause of a loss is known as a/an ✔✔Peril
When a producer, broker, or solicitor handles premiums for an insurer, they are acting in which
of the following capacities? ✔✔Fiduciary
What is the risk classification for those who are insurable but have a higher than average risk?
✔✔Substandard
The option that pays a specified amount to the annuitant with no remaining value payable to a
beneficiary is ✔✔Life only
Money borrowed from a life insurance policy's cash value is ✔✔Not taxable
An insured who submits a fraudulent claim to an insurer is an example of a/an ✔✔Moral hazard
Selling which of the following policies would require a license issues by FINRA? ✔✔Variable
universal life
The transfer of a possible financial loss to another party refers to ✔✔Insurance
The type of whole life insurance where premiums are payable over the whole life of the insured
to age 100 is called ✔✔Ordinary (straight) life
Which of the following is NOT a risk management technique? ✔✔Exposure
Social Security benefits do NOT include ✔✔Workers Compensation
To be insurable, a risk must NOT be ✔✔Catastrophic
A life insurance death benefit paid in a lump sum to a beneficiary is ✔✔Not subject to any taxes
Two business partners own life insurance on each other. If one partner dies which contract will
allow the surviving partner to use the death benefit to purchase the deceased's business interests?
✔✔Buy-sell agreement
The type of policy that can be changed from one that does not have cash value to one that does is
a ✔✔Convertible term policy
Which document describes the specific features and elements of a policy? ✔✔Policy Summary
The attempt that an insurer makes to keep its existing insurance policy in force after receipt of a
notice of replacement from another company is called ✔✔Conservation
A private and civil wrong for which a remedy may be sought through legal action is known as a
✔✔Tort
If an annuitant dies before the annuitization period, what proceeds will the beneficiary receive?
✔✔Accumulation value of the premiums paid, whichever is greater
Life-only agents may transact all of the following types of insurance EXCEPT ✔✔24-hour care
coverage
Which of the following is NOT a characteristic of the Accelerated Benefit (living needs) rider?
✔✔Usually requires additional premium
If the cash value exceeds the premiums paid in a whole life policy, what are the tax
consequences if the policy is surrendered? ✔✔The portion that exceeds the premiums paid is
taxable.
When one party prepares the contract and the other party either accepts of rejects the contract, it
is a(n) ✔✔Contract of adhesion
Which of the following policies could be expected to have the lowest premium? ✔✔Straight life
Which rider may increase the value of the policy due to an increase in the Consumer Price Index
(CPI) ✔✔Cost of living
When completing an application for life insurance, a producer should do which of the following?
✔✔Witness the applicants signature
Which of the following characterizes a speculative risk? ✔✔Having the possibility for loss of
gain
Which policy provision includes the application and the first premium from the insured and the
promise to pay from the insurer? ✔✔Consideration
The guaranteed insurability rider allows the policy owner to purchase additional insurance at the
insured's ✔✔Attained are
A life policy that covers two lives and provides for payment of the death benefit upon the death
of the first insured is called ✔✔Joint life
Whose signature is required to make changes to a written application for a life insurance policy?
✔✔Applicant
A producer who knowingly misrepresents material information for the purpose of inducing a
client to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an
illegal practice known as ✔✔Twisting
Underwriting is the process of ✔✔Determining the company's risk regarding a proposed insured
An arrangement where the employer and employee agree to purchase and fund life insurance on
an employee is known as a ✔✔Split Dollar Plans
Which of the following is TRUE about a joint and survivor life annuity? ✔✔Benefits will stop
when the last annuitant dies
A contract's agreement for life insurance is composed of a(n) ✔✔Offer & acceptance
Term limit on liability refers to the ✔✔Death benefit of a life insurance policy
A policy that combines whole life on the breadwinner and term on the spouse and children is
called a ✔✔Family policy
Which nonforfeiture values maintains the original face value of the contract but sacrifices the
length of the contract? ✔✔Extended term
Which method of handling risk is self-insurance? ✔✔Retention
When must insurable interest exist? ✔✔At the time of application
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