California Life Insurance Practice Exam

150 Questions  I  By Selidron
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Life Insurance Quizzes & Trivia
Practice examination for Life Insurance Licensing in California. Combines exams A, B, and C with 125 questions.

  
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1.  Candee owns a participating whole life policy and uses her policy dividends to buy more of the same type of coverage for herself. Candee has chosen the:
A.
B.
C.
D.
2.  Under the terms of the 10-day free-look period, a claim will be paid
A.
B.
C.
D.
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3.  The Commissioner can deny an applicant for a license after a hearing:
A.
B.
C.
D.
4.  The Roth and Traditional IRAs have some similarities. Which of the following is not true?
A.
B.
C.
D.
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5.  Which type of insurer requires an attorney-in-fact overseen by an advisory committee of subscribers?
A.
B.
C.
D.
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6.  Which of the following characteristics would not stop an insurance company from accepting an insurance risk? The item to be insured:
A.
B.
C.
D.
7.  Which statement is an accurate description of life insurance policy dividends?
A.
B.
C.
D.
8.  A policyowner who cannot borrow the equity, change beneficiaries, assign a policy or stop paying premiums without the beneficiary’s written consent has designated the beneficiary as a(n):
A.
B.
C.
D.
9.  Which of the following cannot be used in a policy illustration if nonguaranteed elements are intended to pay future premiums?
A.
B.
C.
D.
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10.  Tommy Greene has a CLU certification. Which of th following names would automatically approve for use as his agency's name?
A.
B.
C.
D.
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11.  For an insurance contract, utmost good faith means:
A.
B.
C.
D.
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12.  Which of the following can be written as a group policy?
A.
B.
C.
D.
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13.  Sam has a $200,000 convertible life insurance policy. If he chooses, he can:
A.
B.
C.
D.
Discuss this Question
14.  Pete, who is 35 years old, has a life insurance policy with a death benefit of $150,000. At the age of 65 the cash value of his policy will be $150,000. What policy does he have?
A.
B.
C.
D.
15.  An agent 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:
A.
B.
C.
D.
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16.  In comparing the purchase of individual life insurance to acquiring group life, which statement is not true?
A.
B.
C.
D.
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17.  Your policy contains the guaranteed insurability rider. When can you purchase additional insurance on you policy?
A.
B.
C.
D.
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18.  Variable insurance and variable annuity products are regulated by:
A.
B.
C.
D.
19.  Which statement is false concerning insurance company regulations?
A.
B.
C.
D.
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20.  A partial payment of proceeds to cover final expenses is paid to someone not designated as a beneficiary but acting in a legal or fiduciary capacity. This is provided in which provision?
A.
B.
C.
D.
21.  In the insurance planning processes, the blackout period is:
A.
B.
C.
D.
22.  A policy pays the face amount if the insured dies before a specified date, or lives to that specified date. This best describes:
A.
B.
C.
D.
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23.  Which insurance is known for having a level premium with a fixed rate of return resulting in guaranteed cash value?
A.
B.
C.
D.
Discuss this Question
24.  To authorize the release of an attending physician’s report, the applicant must:
A.
B.
C.
D.
25.  After 12 years, the policyowner decides she no longer needs the large death benefit on her whole life policy. She calls you, her agent, and you tell her she can use the reduced paid-up non-forfeiture option. Which of the following is not true about the new policy?
A.
B.
C.
D.
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26.  California rules for annuity sales require all agents to present a specific disclosure document in advance to any senior citizen who is not already a client whenever a sales appointment will be conducted in the person’s home. How far in advance must the prospect receive the written notice?
A.
B.
C.
D.
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27.  Which pair are Activities of Daily Living (ADLs)?
A.
B.
C.
D.
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28.  In order to be financially solvent, an insurer must accomplish all of the following, except:
A.
B.
C.
D.
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29.  Which party has the legal authority to name or change the beneficiary?
A.
B.
C.
D.
30.  Per the Code, the best definitions of "shall" and "may" are:
A.
B.
C.
D.
31.  Which of the following statements is not included in the Entire Contract clause?
A.
B.
C.
D.
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32.  All of the following statements about assignments are not false, except:
A.
B.
C.
D.
33.  Which of the following statements about the process of replacement is incorrect?
A.
B.
C.
D.
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34.  After the insured passes away, it is discovered that the policy was rated based upon an incorrect age. The client lied about their age when filling out the application 8 years earlier. What effect will this have on the benefit?
A.
B.
C.
D.
35.  How many hours of continuing education are required per renewal for a life-only agent?
A.
B.
C.
D.
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36.  What is not likely to happen with a return of premium policy?
A.
B.
C.
D.
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37.  All of the following statements about agents are true, except:
A.
B.
C.
D.
38.  A client receives a lump-sum inheritance. He'd like to use some of the money to create a lifetime income since he'll be retiring soon. He purchases an annuity and wishes to receive payments beginning in 2 months. What did he buy?
A.
B.
C.
D.
39.  A policy illustration may not include:
A.
B.
C.
D.
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40.  Which of the following is most likely to have a TSA?
A.
B.
C.
D.
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41.  E&O coverage
A.
B.
C.
D.
42.  What is the usual federal income tax treatment of individual life insurance?
A.
B.
C.
D.
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43.  All of the following are dividend options, except:
A.
B.
C.
D.
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44.  In a group life policy with a death benefit of more than $50,000:
A.
B.
C.
D.
Discuss this Question
45.  All of the following statements about mutual insurance companies are correct, except:
A.
B.
C.
D.
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46.  Which of the following would not be considered a speculative risk?
A.
B.
C.
D.
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47.  In disability insurance, the period of time between when the disability started and the commencement of benefits is the:
A.
B.
C.
D.
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48.  Of the following, which is not one of the three major loss exposures faced by insured?
A.
B.
C.
D.
49.  In a seven year vesting schedule, what percentage of employer contributions is vested after seven years?
A.
B.
C.
D.
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50.  The person who will receive the benefit of an annuity and whose life the payout is based upon when the contract is purchased is the:
A.
B.
C.
D.
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51.  Which of the following statements is false in regard to a Life Paid-up at-65 whole life policy?
A.
B.
C.
D.
52.  The insured dies 6 months after the policy issue date. Upon death of the insured, it is determined that the applicant made a material misstatement on the application. What is the most likely course of action for the insurer?
A.
B.
C.
D.
Discuss this Question
53.  Starting from lowest to highest, rank the initial premium paid by the client for these insurance policies below:
A.
B.
C.
D.
54.  Any person who misappropriates fiuciary funds for personal use is guilty of:
A.
B.
C.
D.
55.  Which statement below is least correct regarding the type of insurance that fits best with the applicant’s needs?
A.
B.
C.
D.
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56.  Concerning qualified plans, which statement is false?
A.
B.
C.
D.
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57.  Which of the following is considered ordinary insurance?
A.
B.
C.
D.
58.  Under which life settlement option does the insurer retain the death benefit but pays the beneficiary the earnings on the death benefit?
A.
B.
C.
D.
Discuss this Question
59.  The future account value of the annuity Alex purchased is connected to the S&P500 index. What type of annuity did he purchase?
A.
B.
C.
D.
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60.  The term aleatory is best defined by which of the following?
A.
B.
C.
D.
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61.  How does the incontestability clause benefit the insured?
A.
B.
C.
D.
62.  What type of insurance would a person select as the most efficient method of paying the outstanding debt on their home in the event of death?
A.
B.
C.
D.
Discuss this Question
63.  A client's flexible premium is invested into a seperate account. What type of insurance product did he purchase?
A.
B.
C.
D.
64.  All of these statements about life insurance settlement options are false, except:
A.
B.
C.
D.
Discuss this Question
65.  Which of the following is an incorrect statement about a client’s privacy rights?
A.
B.
C.
D.
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66.  Which rider pays a multiple of the original face amount?
A.
B.
C.
D.
Discuss this Question
67.  When a client is declined after submitting a prepaid application for life insurance:
A.
B.
C.
D.
68.  The beneficiary chooses to receive the policy proceeds in the form of monthly income at the rate of $3,000 per month, until principal and interest are exhausted. What settlement option did the beneficiary select?
A.
B.
C.
D.
69.  Which of the following riders would provide for an insured to increase the face amount of their life insurance policy without proof of insurability?
A.
B.
C.
D.
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70.  Which of the following statements about a resident life-only agent licensing is incorrect?
A.
B.
C.
D.
Discuss this Question
71.  Members of the MIB are required to report
A.
B.
C.
D.
72.  In which type of policy does the insurer apply flexible premium to pay for the cost of insurance and expenses and then uses the remaining balance plus interest to build the cash value account?
A.
B.
C.
D.
Discuss this Question
73.  Premiums paid into a variable annuity purchase which of the following?
A.
B.
C.
D.
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74.  Which of the following are characteristics of renewable term?
A.
B.
C.
D.
Discuss this Question
75.  Situations where the risk is increased by slippery floors, a habit of lying, or reckless drunk driving are best described by which of the following?
A.
B.
C.
D.
76.  An employee has lost access to their group term life insurance plan, but they are allowed to convert to a new plan. Which best describes this new plan?
A.
B.
C.
D.
Discuss this Question
77.  Of the following, which best descirbes the difference between life insuracne and annuities?
A.
B.
C.
D.
78.  When an applicant makes a material statement believed to be true to the best of their knowledge, the statement is considered to be a/an
A.
B.
C.
D.
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79.  All of the following statements about a policy grace period are false, except:
A.
B.
C.
D.
Discuss this Question
80.  All of the following are characteristics of the social insurance program known as Social Security, except:
A.
B.
C.
D.
Discuss this Question
81.  Which of the following is not an acceptable underwriting classification?
A.
B.
C.
D.
82.  Which action by an insurer, or its representatives, is not considered an unfair claims violation?
A.
B.
C.
D.
83.  Every admitted insurer in California must maintain a unit, or department, responsible for investigating which of the following?
A.
B.
C.
D.
84.  Which of the following is not a personal use of life insurance?
A.
B.
C.
D.
Discuss this Question
85.  In contrasting stock insurers with mutual insurers, which statement is not false?
A.
B.
C.
D.
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86.  Which qualified plan is characterized by having a non-deductible contribution and tax-free distribution?
A.
B.
C.
D.
87.  The definition of mortality and morbidity:
A.
B.
C.
D.
Discuss this Question
88.  All of the following describe differences between binding receipts and conditional receipts, except:
A.
B.
C.
D.
89.  At age 72, Mrs. Smith is considering applying for Medi-Cal so she can afford her medical bills. Today Agent Charles is visiting her home and wanting to sell her an annuity product. Which of the following is true?
A.
B.
C.
D.
Discuss this Question
90.  All of the following statements about survivorship life are true, except:
A.
B.
C.
D.
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91.  The provision that protects the proceeds of a life insurance policy from attachment by the beneficiary’s creditors after the insured’s death is known as the:
A.
B.
C.
D.
92.  Which statement best describes “agreement” as it relates to contracts?
A.
B.
C.
D.
93.  A client has purchased an annuity with an annual bonus she received at the end of last year. She has requested annual benefit payments to start at the end of this year. What type of annuity did she purchase?
A.
B.
C.
D.
Discuss this Question
94.  How does the IRS classify the two different types of retirement accounts?
A.
B.
C.
D.
95.  In life insurance, beneficiary succession is the method used to determine who will receive death proceeds. If the primary beneficiary is not living upon the death of the insured who will receive the payment?
A.
B.
C.
D.
Discuss this Question
96.  The entire contract can include many components. Which of the following cannot be a part of the entire contract.
A.
B.
C.
D.
Discuss this Question
97.  Bob and Neal are partners in a law firm together. If one of them were to pass away, the want to make sure that their surviving family will receive a fair value for their stake in the business. What life insurance arrangement would be most suited for transitioning the business during this time of loss?
A.
B.
C.
D.
98.  Upon the death of a primary breadwinner who is fully insured under Social Security, a dependent child is eligible to receive an income benefit until the age of
A.
B.
C.
D.
Discuss this Question
99.  While collecting underwriting information, certain rules must be followed. Which of the following is incorrect?
A.
B.
C.
D.
100.  In insurance, the agents have authorization to represent the company. The producers may exercise this relationship through:
A.
B.
C.
D.
Discuss this Question
101.  A forty-five year old investor has been laid off from his job. In order to pay bills he takes a premature distribution from his traditional IRA account. What tax penalties, if any, will he face?
A.
B.
C.
D.
102.  All of the following statements about policy provisions are true, except:
A.
B.
C.
D.
Discuss this Question
103.  All of the following needs to be included on an application for life insurance except:
A.
B.
C.
D.
104.  According to the California Insurance Code, what information is the agent required to include on their business card?
A.
B.
C.
D.
Discuss this Question
105.  All of the following are true about key person insurance, except:
A.
B.
C.
D.
Discuss this Question
106.  Any person to whom the commissioner has issued a seizure order and who refuses to deliver any books, records, or assets of an insurer faces:
A.
B.
C.
D.
Discuss this Question
107.  A client has missed her premium payment on her cash value policy, and the grace period has also lapsed. The policy is still in force because her insurer has been deducting the cost of the premium from her cash value. What provision allows this?
A.
B.
C.
D.
108.  Which statement about life insurance code and ethics is not true?
A.
B.
C.
D.
Discuss this Question
109.  Under the cost of living adjustment rider, the policy:
A.
B.
C.
D.
Discuss this Question
110.  Which is a false statement? The California Insurance Commissioner is:
A.
B.
C.
D.
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111.  All of the following statements about life insurance policy illustrations and the senior market are correct, except:
A.
B.
C.
D.
Discuss this Question
112.  According to the CIC, life-only agents must keep records of their transactions for:
A.
B.
C.
D.
Discuss this Question
113.  A life settlement broker
A.
B.
C.
D.
Discuss this Question
114.  What nonforfeiture option allows a policyowner to use the existing cash value to purchase a policy of the same face amount as the original policy but for a reduced amount of time?
A.
B.
C.
D.
Discuss this Question
115.  Who submits a request for life insurance to a company?
A.
B.
C.
D.
116.  The applicant works 2 different jobs. The underwriter will rate him according to which job?
A.
B.
C.
D.
117.  A beneficiary decides to take the option that will the largest amount per payment, knowing after death no monies will be paid out to any descendants. The settlement option is:
A.
B.
C.
D.
Discuss this Question
118.  Which of the following are common provisions found within many life insurance policies?
A.
B.
C.
D.
Discuss this Question
119.  Which of the following transactions would most likely be declined due to lack of insurable interest?
A.
B.
C.
D.
120.  Which of the following becomes part of the contract, is guaranteed to be true, and if untrue, may be grounds for rescinding the policy?
A.
B.
C.
D.
Discuss this Question
121.  For a flexible premium deferred annuity, the time during which the owner makes premium payments and the time before benefit payments begin is known as the:
A.
B.
C.
D.
122.  Roger, who is 35 years old, has a whole life insurance policy with a death benefit of $150,000. At the age of 65 he will no longer make premium payments. When will the cash value of his policy be $150,000?
A.
B.
C.
D.
Discuss this Question
123.  What is the minimum number of members required for group life insurance?
A.
B.
C.
D.
Discuss this Question
124.  According to the California DOI, an insurer whose articles of incorporation are registered in Oslo, Norway, is considered:
A.
B.
C.
D.
Discuss this Question
125.  At what age does Social Security Medicare program Part B start providing benefits?
A.
B.
C.
D.
126.  Rank from lowest to highest, the amount of monthly income that would result from the following annuity settlement options:
A.
B.
C.
D.
Discuss this Question
127.  Which best describes industrial insurance?
A.
B.
C.
D.
Discuss this Question
128.  Agent Darren offers life insurance for no cost to people buying property in a local development. When the Commissioner investigates his actions, which of the following is not a likely consequence?
A.
B.
C.
D.
Discuss this Question
129.  Profit Sharing Plans:
A.
B.
C.
D.
130.  Which statement about reinstatement is false?
A.
B.
C.
D.
Discuss this Question
131.  An insurer invests the cash value of a fixed annuity in which of the following assets?
A.
B.
C.
D.
Discuss this Question
132.  Ashley, the policy owner and insured, named Wendell as primary beneficiary and Barbara as contingent beneficiary. Just six (6) weeks prior to Ashley’s death, Wendell and Barbara are killed in a common disaster. The insurance proceeds will be received by whom?
A.
B.
C.
D.
133.  In a non-contributory group policy:
A.
B.
C.
D.
Discuss this Question
134.  Term insurance is best described by which of the following?
A.
B.
C.
D.
Discuss this Question
135.  An agent follows the rules and terms of his agent contract. He is excersising his _______ authority.
A.
B.
C.
D.
136.  Which of the following is not excluded from the California Life and Annuity Replacement Law?
A.
B.
C.
D.
Discuss this Question
137.  A life-only agent issues a binding receipt to his client since the client did include a check for the initial premium with his completed application. Which is true?
A.
B.
C.
D.
Discuss this Question
138.  An insured has a terminal illness and needs to access 1/3 of his death benefit to pay mounting medical expenses. Which rider would meet the insured's current needs?
A.
B.
C.
D.
Discuss this Question
139.  When a policy continues because of a payor benefit clause, it means
A.
B.
C.
D.
Discuss this Question
140.  Gloria owns an annuity in which she has invested $5,000 a year for 10 years. She is currently receiving $8,000 annually from her annuity. By the time all of the principal and interest is paid out, Gloria will have been paid $100,000. How much of the annual benefit is taxable?
A.
B.
C.
D.
Discuss this Question
141.  All of the following statements are true about participating and nonparticipating policies, except:
A.
B.
C.
D.
Discuss this Question
142.  Brian purchased a variable life policy and died 25 months after the issue date. It is then discovered that Brian understated his age on the application. What will the insurer do in regard to the payment of the death benefit to the beneficiary?
A.
B.
C.
D.
143.  Which statement is not true about insurance sales?
A.
B.
C.
D.
Discuss this Question
144.  An applicant for an insurance license has had a previous application for a professional license denied for cause within the last five years. The insurance commissioner will:
A.
B.
C.
D.
Discuss this Question
145.  An applicant has the right to know that the insurance company will collect certain personal information about their credit, character and reputation. The insurer may gain such information from:
A.
B.
C.
D.
146.  Which of the following is not a qualified 1035 exchange?
A.
B.
C.
D.
147.  Mrs. Anderson need to invest the proceeds from her late husband's life insurance. She invests a portion of the money into an annuity. Since she is 62, and is still working, she decides to purchase a single premium deferred annuity. She won' t need an income for a few more years. What should the agent make sure Mrs. Anderson understands?
A.
B.
C.
D.
148.  A client has a history of DUIs. To his insurer, they see him as a ________ hazard.
A.
B.
C.
D.
149.  A universal life policy may be surrendered for its cash value:
A.
B.
C.
D.
150.  According to the code, any person legally capable of making an insurance policy is considered:
A.
B.
C.
D.
Discuss this Question
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