California Life Insurance Practice Exam

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

  
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1.  Which of the following is not a qualified 1035 exchange?
A.
B.
C.
D.
2.  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.
3.  Which of the following are common provisions found within many life insurance policies?
A.
B.
C.
D.
4.  Which statement is an accurate description of life insurance policy dividends?
A.
B.
C.
D.
5.  Every admitted insurer in California must maintain a unit, or department, responsible for investigating which of the following?
A.
B.
C.
D.
6.  Which of the following is most likely to have a TSA?
A.
B.
C.
D.
7.  All of the following statements about assignments are not false, except:
A.
B.
C.
D.
8.  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.
9.  According to the CIC, life-only agents must keep records of their transactions for:
A.
B.
C.
D.
10.  A policy illustration may not include:
A.
B.
C.
D.
11.  According to the California DOI, an insurer whose articles of incorporation are registered in Oslo, Norway, is considered:
A.
B.
C.
D.
12.  Which of the following would not be considered a speculative risk?
A.
B.
C.
D.
13.  Which of the following cannot be used in a policy illustration if nonguaranteed elements are intended to pay future premiums?
A.
B.
C.
D.
14.  In a seven year vesting schedule, what percentage of employer contributions is vested after seven years?
A.
B.
C.
D.
15.  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.
16.  An agent follows the rules and terms of his agent contract. He is excersising his _______ authority.
A.
B.
C.
D.
17.  While collecting underwriting information, certain rules must be followed. Which of the following is incorrect?
A.
B.
C.
D.
18.  Which of the following transactions would most likely be declined due to lack of insurable interest?
A.
B.
C.
D.
19.  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.
20.  The entire contract can include many components. Which of the following cannot be a part of the entire contract.
A.
B.
C.
D.
21.  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.
22.  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.
23.  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.
24.  Which of the following is an incorrect statement about a client’s privacy rights?
A.
B.
C.
D.
25.  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.
26.  Which statement about life insurance code and ethics is not true?
A.
B.
C.
D.
27.  Any person who misappropriates fiuciary funds for personal use is guilty of:
A.
B.
C.
D.
28.  Which of the following is not an acceptable underwriting classification?
A.
B.
C.
D.
29.  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.
30.  Term insurance is best described by which of the following?
A.
B.
C.
D.
31.  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.
32.  Which of the following are characteristics of renewable term?
A.
B.
C.
D.
33.  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.
34.  In the insurance planning processes, the blackout period is:
A.
B.
C.
D.
35.  A client has a history of DUIs. To his insurer, they see him as a ________ hazard.
A.
B.
C.
D.
36.  A life settlement broker
A.
B.
C.
D.
37.  All of the following statements about mutual insurance companies are correct, except:
A.
B.
C.
D.
38.  Which of the following is not excluded from the California Life and Annuity Replacement Law?
A.
B.
C.
D.
39.  Which of the following statements is not included in the Entire Contract clause?
A.
B.
C.
D.
40.  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.
41.  To authorize the release of an attending physician’s report, the applicant must:
A.
B.
C.
D.
42.  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.
43.  Which action by an insurer, or its representatives, is not considered an unfair claims violation?
A.
B.
C.
D.
44.  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.
45.  Which rider pays a multiple of the original face amount?
A.
B.
C.
D.
46.  The definition of mortality and morbidity:
A.
B.
C.
D.
47.  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.
48.  Which statement best describes “agreement” as it relates to contracts?
A.
B.
C.
D.
49.  At what age does Social Security Medicare program Part B start providing benefits?
A.
B.
C.
D.
50.  Variable insurance and variable annuity products are regulated by:
A.
B.
C.
D.
51.  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.
52.  The Commissioner can deny an applicant for a license after a hearing:
A.
B.
C.
D.
53.  In insurance, the agents have authorization to represent the company. The producers may exercise this relationship through:
A.
B.
C.
D.
54.  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.
55.  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.
56.  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.
57.  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.
58.  What is not likely to happen with a return of premium policy?
A.
B.
C.
D.
59.  All of the following describe differences between binding receipts and conditional receipts, except:
A.
B.
C.
D.
60.  All of the following statements about a policy grace period are false, except:
A.
B.
C.
D.
61.  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.
62.  Which type of insurer requires an attorney-in-fact overseen by an advisory committee of subscribers?
A.
B.
C.
D.
63.  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.
64.  Which qualified plan is characterized by having a non-deductible contribution and tax-free distribution?
A.
B.
C.
D.
65.  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.
66.  Which party has the legal authority to name or change the beneficiary?
A.
B.
C.
D.
67.  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.
68.  Which of the following statements about the process of replacement is incorrect?
A.
B.
C.
D.
69.  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.
70.  How does the incontestability clause benefit the insured?
A.
B.
C.
D.
71.  All of the following are characteristics of the social insurance program known as Social Security, except:
A.
B.
C.
D.
72.  The applicant works 2 different jobs. The underwriter will rate him according to which job?
A.
B.
C.
D.
73.  How many hours of continuing education are required per renewal for a life-only agent?
A.
B.
C.
D.
74.  Premiums paid into a variable annuity purchase which of the following?
A.
B.
C.
D.
75.  Your policy contains the guaranteed insurability rider. When can you purchase additional insurance on you policy?
A.
B.
C.
D.
76.  For an insurance contract, utmost good faith means:
A.
B.
C.
D.
1 comment
77.  All of the following statements about survivorship life are true, except:
A.
B.
C.
D.
78.  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.
79.  All of the following statements are true about participating and nonparticipating policies, except:
A.
B.
C.
D.
80.  Which of the following can be written as a group policy?
A.
B.
C.
D.
81.  When a policy continues because of a payor benefit clause, it means
A.
B.
C.
D.
82.  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.
83.  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.
84.  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.
85.  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.
86.  All of the following statements about agents are true, except:
A.
B.
C.
D.
87.  A client's flexible premium is invested into a seperate account. What type of insurance product did he purchase?
A.
B.
C.
D.
88.  Which statement is false concerning insurance company regulations?
A.
B.
C.
D.
89.  Of the following, which best descirbes the difference between life insuracne and annuities?
A.
B.
C.
D.
90.  All of the following are true about key person insurance, except:
A.
B.
C.
D.
91.  According to the California Insurance Code, what information is the agent required to include on their business card?
A.
B.
C.
D.
92.  Rank from lowest to highest, the amount of monthly income that would result from the following annuity settlement options:
A.
B.
C.
D.
93.  Profit Sharing Plans:
A.
B.
C.
D.
94.  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.
95.  In contrasting stock insurers with mutual insurers, which statement is not false?
A.
B.
C.
D.
96.  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.
97.  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.
98.  An insurer invests the cash value of a fixed annuity in which of the following assets?
A.
B.
C.
D.
99.  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.
100.  Which is a false statement? The California Insurance Commissioner is:
A.
B.
C.
D.
1 comment
101.  Under the cost of living adjustment rider, the policy:
A.
B.
C.
D.
102.  All of the following needs to be included on an application for life insurance except:
A.
B.
C.
D.
103.  All of the following statements about policy provisions are true, except:
A.
B.
C.
D.
104.  According to the code, any person legally capable of making an insurance policy is considered:
A.
B.
C.
D.
105.  When a client is declined after submitting a prepaid application for life insurance:
A.
B.
C.
D.
106.  Under the terms of the 10-day free-look period, a claim will be paid
A.
B.
C.
D.
107.  Which statement below is least correct regarding the type of insurance that fits best with the applicant’s needs?
A.
B.
C.
D.
108.  The term aleatory is best defined by which of the following?
A.
B.
C.
D.
109.  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.
110.  Which of the following is not a personal use of life insurance?
A.
B.
C.
D.
111.  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.
112.  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.
113.  The Roth and Traditional IRAs have some similarities. Which of the following is not true?
A.
B.
C.
D.
114.  Which of the following statements is false in regard to a Life Paid-up at-65 whole life policy?
A.
B.
C.
D.
115.  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.
116.  E&O coverage
A.
B.
C.
D.
117.  Which of the following is considered ordinary insurance?
A.
B.
C.
D.
118.  Which pair are Activities of Daily Living (ADLs)?
A.
B.
C.
D.
119.  Who submits a request for life insurance to a company?
A.
B.
C.
D.
120.  Sam has a $200,000 convertible life insurance policy. If he chooses, he can:
A.
B.
C.
D.
121.  How does the IRS classify the two different types of retirement accounts?
A.
B.
C.
D.
122.  In disability insurance, the period of time between when the disability started and the commencement of benefits is the:
A.
B.
C.
D.
123.  Which of the following statements about a resident life-only agent licensing is incorrect?
A.
B.
C.
D.
124.  Which best describes industrial insurance?
A.
B.
C.
D.
125.  In a non-contributory group policy:
A.
B.
C.
D.
126.  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.
127.  A universal life policy may be surrendered for its cash value:
A.
B.
C.
D.
128.  In comparing the purchase of individual life insurance to acquiring group life, which statement is not true?
A.
B.
C.
D.
129.  In order to be financially solvent, an insurer must accomplish all of the following, except:
A.
B.
C.
D.
130.  All of these statements about life insurance settlement options are false, except:
A.
B.
C.
D.
131.  What is the usual federal income tax treatment of individual life insurance?
A.
B.
C.
D.
132.  Which statement is not true about insurance sales?
A.
B.
C.
D.
133.  What is the minimum number of members required for group life insurance?
A.
B.
C.
D.
134.  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.
135.  Starting from lowest to highest, rank the initial premium paid by the client for these insurance policies below:
A.
B.
C.
D.
136.  In a group life policy with a death benefit of more than $50,000:
A.
B.
C.
D.
137.  All of the following are dividend options, except:
A.
B.
C.
D.
138.  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.
139.  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.
1 comment
140.  Which statement about reinstatement is false?
A.
B.
C.
D.
141.  Of the following, which is not one of the three major loss exposures faced by insured?
A.
B.
C.
D.
142.  Per the Code, the best definitions of "shall" and "may" are:
A.
B.
C.
D.
143.  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.
144.  Members of the MIB are required to report
A.
B.
C.
D.
145.  Which insurance is known for having a level premium with a fixed rate of return resulting in guaranteed cash value?
A.
B.
C.
D.
146.  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.
147.  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.
148.  All of the following statements about life insurance policy illustrations and the senior market are correct, except:
A.
B.
C.
D.
149.  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.
150.  Concerning qualified plans, which statement is false?
A.
B.
C.
D.
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