Practice examination for Life Insurance Licensing in California
Insurers may not advertise their membership in the Guarantee Association.
An insurer suffering from an impairment of their minimum required paid-in capital is labeled solvent.
The commissioner may begin conservation proceedings against companies who cannot meet solvency regulations.
An insurer may be liquidated if conservation proves to be futile.
A parent buys insurance on their adult child
An employee insures their employer in the fear of losing their job
A spouse insures the other spouse
A local hospital insures its chief of surgery
Death during the grace period results in a full death benefit being paid.
Suicide during the policy’s first two years results in policy rescission.
The insuring clause states the insurer’s promise to pay a death benefit if premiums are paid, and proof of death is received.
The automatic premium loan can keep a policy in force when payments are missed and there is sufficient cash value to pay the premium.
Reinstatement usually requires an application with underwriting questions, but may not require any physical exams.
Reinstatement requires payment of past due premium plus interest.
A reinstated policy’s premium is based upon the insured’s original age.
The reinstated policy is incontestable if the first time it was in force it already passed the two year mark.
Both have penalties for early withdrawal
Both grow tax deferred
Both are tax deductible to the investor
Both allow the investor to invest for themselves and their non-income earning spouse
An endowment policy
Guaranteed elements must be emphasized in bold print.
To be understandable, policy illustrations must follow certain formats so the insured can make informed buying decisions.
Illustrations must note that they are only an illustration.
The illustration will note that both guaranteed and non-guaranteed elements will remain unchanged for the years illustrated.
Independent agents can be appointed by multiple insurers.
If an agent submits business to an insurer that the agent is not appointed with, the insurer can submit a notice of appointment within 14 days to validate the relationship.
Exclusive agents work for themselves.
Agents need to complete 4 hours of ethics continuing education every license renewal as a part of their regular CE hours.
Mass marketing techniques usually involve selling insurance without the use of an agent.
Brokers represent insurers in negotiating coverage with various insureds.
Insurance agents are not authorized to sell life insurance.
An agent or broker must exercise care when using apparent authority during the sales process.
Group insurance is automatic and requires less medical information than the individual coverage.
Group life tends to have a lower premium per person than individual life.
Both provide a tax free death benefit.
Group insurance has a non-deductible premium while individual insurance has a tax deductible premium to the payor.
A client buys cash value insurance to fund their children’s college education.
A client buys insurance to pay off their mortgage should they pass away prematurely.
A client buys insurance to fund a buy-sell agreement.
A client buys insurance to provide future income to a surviving spouse.
Fixed amount is the default option when no option is selected.
Life income payments are income tax free.
Life income with 10 years certain provides at least 120 months of payments.
Settlement options like fixed period are good ways to provide an income to a beneficiary who cannot handle large sums of money.
Interest only option
Accumulate with interest option
Life income option
A felony punishable by a fine up to $1,000, a year in prison, or both.
A misdemeanor punishable by a fine up to $1,000, a year in jail, or both.
A misdemeanor punishable by a $5,000 fine, if unintentional, or $10,000, if intentional.
Administrative fines only.
Rescind the policy
An administrative hearing by the DOI
A hearing by a court of law to determine the appropriate actions
No course of action allowed since the policy has already been issued
Conditional receipts are commonly used for life insurance applications.
No claim is paid with either receipt until a policy is issued
The binding receipt always provides immediate coverage from the date of the receipt
The conditional receipt can provide coverage from the date of application once the application is later approved by underwriting
A domestic insurer
A foreign insurer
An alien insurer
An admitted insurer
Guaranteed insurability/future purchase option
Waiver of premium
Accelerated death benefit
Double indemnity rider
Reduced paid-up insurance
Cash surrender value
Extended term insurance
Extended paid-up insurance
A whole life policy exchanged for a variable life policy.
A variable annuity exchanged for a variable universal life policy.
A variable annuity exchanged for a fixed annuity.
A universal life policy exchanged for a whole life policy.
Spendthrift (Trust) Clause.
Common Disaster Clause.
The Beneficiary Protection Clause.
Here's an interesting quiz for you.