California Life Insurance Practice Exam A

75 Questions  I  By Selidron
California Life Insurance Practice Exam A
Practice examination for Life Insurance Licensing in California

  
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1.  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.
2.  Members of the MIB are required to report
A.
B.
C.
D.
3.  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.
4.  Which statement about life insurance code and ethics is not true?
A.
B.
C.
D.
5.  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.
6.  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.
7.  A life settlement broker
A.
B.
C.
D.
8.  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.
9.  Which of the following would not be considered a speculative risk?
A.
B.
C.
D.
10.  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.
11.  Which statement is an accurate description of life insurance policy dividends?
A.
B.
C.
D.
12.  Which of the following statements about a resident life-only agent licensing is incorrect?
A.
B.
C.
D.
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13.  When a client is declined after submitting a prepaid application for life insurance:
A.
B.
C.
D.
14.  The term aleatory is best defined by which of the following?
A.
B.
C.
D.
15.  According to the code, any person legally capable of making an insurance policy is considered:
A.
B.
C.
D.
16.  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.
17.  How does the incontestability clause benefit the insured?
A.
B.
C.
D.
18.  According to the California Insurance Code, what information is the agent required to include on their business card?
A.
B.
C.
D.
19.  Of the following, which is not one of the three major loss exposures faced by insured?
A.
B.
C.
D.
20.  In disability insurance, the period of time between when the disability started and the commencement of benefits is the:
A.
B.
C.
D.
21.  Which pair are Activities of Daily Living (ADLs)?
A.
B.
C.
D.
22.  Which of the following can be written as a group policy?
A.
B.
C.
D.
23.  Which of the following are common provisions found within many life insurance policies?
A.
B.
C.
D.
24.  Rank from lowest to highest, the amount of monthly income that would result from the following annuity settlement options:
A.
B.
C.
D.
25.  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.
26.  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.
27.  Under the cost of living adjustment rider, the policy:
A.
B.
C.
D.
28.  A policy illustration may not include:
A.
B.
C.
D.
29.  In order to be financially solvent, an insurer must accomplish all of the following, except:
A.
B.
C.
D.
30.  Per the Code, the best definitions of "shall" and "may" are:
A.
B.
C.
D.
31.  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.
32.  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.
33.  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.
34.  All of the following are characteristics of the social insurance program known as Social Security, except:
A.
B.
C.
D.
35.  When a policy continues because of a payor benefit clause, it means
A.
B.
C.
D.
36.  Which rider pays a multiple of the original face amount?
A.
B.
C.
D.
37.  Which is a false statement? The California Insurance Commissioner is:
A.
B.
C.
D.
38.  The definition of mortality and morbidity:
A.
B.
C.
D.
39.  What is not likely to happen with a return of premium policy?
A.
B.
C.
D.
40.  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.
41.  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.
42.  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.
43.  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.
44.  What is the usual federal income tax treatment of individual life insurance?
A.
B.
C.
D.
45.  All of the following statements about mutual insurance companies are correct, except:
A.
B.
C.
D.
46.  Starting from lowest to highest, rank the initial premium paid by the client for these insurance policies below:
A.
B.
C.
D.
47.  Sam has a $200,000 convertible life insurance policy. If he chooses, he can:
A.
B.
C.
D.
48.  All of the following statements about survivorship life are true, except:
A.
B.
C.
D.
49.  Which of the following statements about the process of replacement is incorrect?
A.
B.
C.
D.
50.  In the insurance planning processes, the blackout period is:
A.
B.
C.
D.
51.  Which qualified plan is characterized by having a non-deductible contribution and tax-free distribution?
A.
B.
C.
D.
52.  In contrasting stock insurers with mutual insurers, which statement is not false?
A.
B.
C.
D.
53.  Under the terms of the 10-day free-look period, a claim will be paid
A.
B.
C.
D.
54.  Your policy contains the guaranteed insurability rider. When can you purchase additional insurance on you policy?
A.
B.
C.
D.
55.  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.
56.  Concerning qualified plans, which statement is false?
A.
B.
C.
D.
57.  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.
58.  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.
59.  A universal life policy may be surrendered for its cash value:
A.
B.
C.
D.
60.  The entire contract can include many components. Which of the following cannot be a part of the entire contract.
A.
B.
C.
D.
61.  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.
62.  How does the IRS classify the two different types of retirement accounts?
A.
B.
C.
D.
63.  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.
64.  The applicant works 2 different jobs. The underwriter will rate him according to which job?
A.
B.
C.
D.
65.  E&O coverage
A.
B.
C.
D.
66.  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.
67.  A client's flexible premium is invested into a seperate account. What type of insurance product did he purchase?
A.
B.
C.
D.
68.  In a non-contributory group policy:
A.
B.
C.
D.
69.  An agent follows the rules and terms of his agent contract. He is excersising his _______ authority.
A.
B.
C.
D.
70.  Every admitted insurer in California must maintain a unit, or department, responsible for investigating which of the following?
A.
B.
C.
D.
71.  Which best describes industrial insurance?
A.
B.
C.
D.
72.  Of the following, which best descirbes the difference between life insuracne and annuities?
A.
B.
C.
D.
73.  All of the following are dividend options, except:
A.
B.
C.
D.
74.  Any person who misappropriates fiuciary funds for personal use is guilty of:
A.
B.
C.
D.
75.  In a seven year vesting schedule, what percentage of employer contributions is vested after seven years?
A.
B.
C.
D.
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