California Life Insurance Practice Exam A

75 Questions  I  By Selidron on October 7, 2012
Practice examination for Life Insurance Licensing in California

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