Examinicion De Vida Practica B

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1/75 Questions

All of the following statements about policy provisions are true, Except
- Death during the grace period results in a full death benefit being paid
- Suicide during the policy's first two years results in policy rescession.
- 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.

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Examinacion de vida practica B

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2.

Which of the following is Not an acceptable underwriting classification?
- Sub-standard.
- Preferred
- Declined.
- Standard.
Correct Answer

A. Declined.

Explanation

The correct answer is "Declined" because it refers to a classification where an applicant is denied coverage due to high risk factors. Underwriting classifications typically include sub-standard (high risk), preferred (low risk), and standard (average risk), but declined is not a classification as it signifies a denial of coverage.

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3.

. 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?
- It's permissible for Agent Charles to visit Mrs Smith for the first time.
- Agent Charles cannot allow Mrs. Smith to purchase an annuity if after the purchase, Mrs. Smith wouldn’t qualify for Medi-Cal.
- Mrs Smith must agree to meet with Agent Charles alone.
- Agent Charles should recomnend the annuity purchase to assure he receives the greatest commission possible from the visit.
Correct Answer

A. Agent Charles cannot allow Mrs. Smith to purchase an annuity if after the purchase, Mrs. Smith wouldn’t qualify for Medi-Cal.

Explanation

Agent Charles cannot allow Mrs. Smith to purchase an annuity if after the purchase, Mrs. Smith wouldn’t qualify for Medi-Cal. This is because Medi-Cal is a government program that provides medical assistance to individuals with low income and limited resources. If Mrs. Smith purchases an annuity, it could potentially increase her income or assets, which may disqualify her from receiving Medi-Cal benefits. Therefore, it is important for Agent Charles to consider Mrs. Smith's eligibility for Medi-Cal before recommending the annuity purchase.

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4.

Which action by an insurer, or its representatives, is Not considered an unfair claims violation?
- A claims adjustor misrepresents pertinents facts or policy provisions to dissuade a client from making a claim.
- An agent does not respond to a claimant's communication concerning a claim where a response is required.
- The claims department fails to affirm or deny coverage within a reasonable period of time after proof of loss has been submitted.
- An agent advises a claimant to obtain the services of an attorney.
Correct Answer

A. An agent advises a claimant to obtain the services of an attorney.

Explanation

An agent advising a claimant to obtain the services of an attorney is not considered an unfair claims violation because it is within the claimant's rights to seek legal representation for their claim. This action does not involve any misrepresentation, lack of response, or failure to affirm or deny coverage, which would be considered unfair claims violations.

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5.

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?
- None. Distribution during times of unemployement are not penalized,
- None. Distributions before the age of 59 1/2 are penalty-free.
- He will be required to pay a 10% tax penalty on the amount withdrawn.
- Since traditional IRA's are often tax deductible, the client owes the normal taxes they avoided when they made their contribution.
Correct Answer

A. He will be required to pay a 10% tax penalty on the amount withdrawn.

Explanation

The answer states that the investor will be required to pay a 10% tax penalty on the amount withdrawn. This is because premature distributions from a Traditional IRA account before the age of 59 1/2 are subject to a 10% penalty unless certain exceptions apply. In this case, being laid off from his job does not qualify as an exception, so the investor will face the penalty.

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6.

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:
- Concealment.
- Misrepresentation.
- Twisting.
- Fraud.
Correct Answer

A. Twisting.

Explanation

Twisting refers to the illegal practice of an insurance agent intentionally misrepresenting material information to a client in order to convince them to surrender, lapse, forfeit, or change their life insurance policy or annuity. This practice is considered fraudulent as it deceives the client and can lead to financial loss or inadequate coverage.

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7.

For an insurance contract, utmost good faith means:
- The policyowner will be indemnified in case of loss.
- Each party relies upon the truthfulness of the other.
- The contract just involves the policyowner and the insurer.
- Each party is equally responsible for the value of the policy.
Correct Answer

A. Each party relies upon the truthfulness of the other.

Explanation

Utmost good faith in an insurance contract refers to the principle that both the policyowner and the insurer must rely on the truthfulness and honesty of each other. This means that both parties are expected to provide accurate and complete information during the application process and throughout the duration of the policy. By relying on each other's truthfulness, both parties can ensure that the contract is fair and that the insurer can accurately assess the risk and provide appropriate coverage.

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8.

In insurance, the agents have authorization to represent the company. The producers may exercise this relationship through:
- Express authority, implied authority and apparent authority.
- Domestic authority, foreign authority and alien authority.
- Underwriting department, actuarial department and claims department.
- Reciprocal authority, risk retention and reinsurance.
Correct Answer

A. Express authority, implied authority and apparent authority.
9.

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?
- Ashley's survivors
- Ashley’s estate.
- Split equally between the estates of Wendell and Barbara.
- Wendell's estate.
Correct Answer

A. Ashley’s estate.

Explanation

In this scenario, Ashley, the policy owner and insured, named Wendell as the primary beneficiary and Barbara as the contingent beneficiary. However, both Wendell and Barbara were killed in a common disaster just six weeks prior to Ashley's death. In such a case, if the primary and contingent beneficiaries predecease the insured, the insurance proceeds will be received by the insured's estate. Therefore, the correct answer is Ashley's estate.

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10.

Who submits a request for life insurance to a company?
- The beneficiary
- The underwriter.
- The applicant.
- The agent.
Correct Answer

A. The applicant.

Explanation

The applicant is the person who submits a request for life insurance to a company. They are the individual seeking to obtain life insurance coverage and are responsible for providing all the necessary information and completing the application process. The beneficiary is the person who receives the benefits of the life insurance policy upon the death of the insured. The underwriter is the person who assesses the risk and determines the terms and conditions of the insurance policy. The agent is the representative of the insurance company who assists the applicant in the process of obtaining life insurance.

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11.

A policy owner 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/an?
- Revocable beneficiary.
- Irrevocable beneficiary.
- Defined beneficiary
- Primary Beneficiary.
Correct Answer

A. Irrevocable beneficiary.

Explanation

The policy owner in this scenario has designated the beneficiary as an irrevocable beneficiary. This means that the beneficiary cannot be changed or revoked without their written consent. The policy owner cannot borrow the equity, change beneficiaries, assign the policy, or stop paying premiums without the beneficiary's permission. This indicates that the beneficiary has a permanent and unchangeable interest in the policy.

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12.

The Roth and Traditional IRAs have some similarities. Which of the following in Not true?
- Both have penalties for early withdrawal.
- Both have tax deferred.
- Both are tax deductible to the investor.
- Both allow the investor to invest for themselves and their non-income earning spouse.
Correct Answer

A. Both are tax deductible to the investor.

Explanation

Both the Roth and Traditional IRAs have tax advantages, but they differ in terms of tax deductibility. Contributions to a Traditional IRA are tax-deductible, meaning they can be deducted from the investor's taxable income for the year. However, contributions to a Roth IRA are not tax-deductible. Instead, withdrawals from a Roth IRA are tax-free in retirement. Therefore, the statement "Both are tax deductible to the investor" is not true.

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13.

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
- Indemnity
- Estoppel.
- Warranty.
- Representation.
Correct Answer

A. Representation.

Explanation

When an applicant makes a material statement believed to be true to the best of their knowledge, it is considered to be a representation. A representation is a statement of fact made by one party to another during the negotiation or formation of a contract. It is not a guarantee or a promise, but rather a statement that is believed to be true at the time it is made. If a representation turns out to be false, it can potentially give rise to legal consequences, such as a claim for misrepresentation.

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14.

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 felony punishable by a fine of 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 misdeameanor punishable by a $5,000 fine, if unintentional, or 10,000, if intentional.
- Administrative fee only.
Correct Answer

A. A misdemeanor punishable by a fine up to $1,000, a year in jail, or both.

Explanation

If a person refuses to deliver any books, records, or assets of an insurer after a seizure order has been issued by the commissioner, they face a misdemeanor. This means they can be punished by a fine of up to $1,000, a year in jail, or both.

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15.

Which of the following is an Incorrect statement about a client’s privacy rights?
- Signed consent is required before an Attending Physician's Statement.
- Abuse of information found within medical records could result in a HPAA violation.
- A client does not have access to their MIB report as it belongs to the member life insurers.
- Consent is required before an insurer may access an insured's credit history. Any entry may be disputed if in error.
Correct Answer

A. A client does not have access to their MIB report as it belongs to the member life insurers.

Explanation

The MIB report belongs to the member life insurers, so clients do not have access to it. This statement implies that clients have no right to access their own MIB report, which is incorrect. Clients do have the right to access their MIB report and review the information in it.

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16.

How many hours of continuing education are required per renewal for a life-only agent?
- 20 hours, 4 of the hours must be in ethics.
- 20 hours, 2 of the hours must be in ethics
- 24 hours, 4 of the hours must be in ethics.
- 24 hours, 2 of the hours must be in ethics.
Correct Answer

A. 24 hours, 4 of the hours must be in ethics.

Explanation

Life-only agents are required to complete 24 hours of continuing education per renewal. Out of these 24 hours, 4 hours must be specifically focused on ethics. This ensures that life-only agents stay updated with the latest industry standards and ethical practices, enabling them to provide the best service to their clients.

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17.

Variable insurance and variable annuity products are regulated by:
- SEC and FINRA
- SEC, FINRA, and DOI.
- DOI and FINRA.
- None of the above.
Correct Answer

A. SEC, FINRA, and DOI.

Explanation

Variable insurance and variable annuity products are regulated by the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and the Department of Insurance (DOI). These regulatory bodies oversee the sale and marketing of variable insurance and annuity products to ensure that they comply with relevant laws and regulations. The SEC focuses on investor protection and market integrity, FINRA oversees the conduct of brokerage firms and their registered representatives, and the DOI regulates insurance products and companies. Therefore, the correct answer is SEC, FINRA, and DOI.

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18.

Which of the following is most likely to have a TSA? (tax sheltered accounts)
- Corporate executive.
- Small business owner.
- School district employee.
- Employee of a blue chip corporation.
Correct Answer

A. School district employee.

Explanation

A school district employee is most likely to have a TSA (tax sheltered account) because many school districts offer retirement plans that include tax sheltered annuities. These plans allow employees to contribute a portion of their salary to a retirement account on a pre-tax basis, reducing their taxable income and providing potential tax advantages. Corporate executives, small business owners, and employees of blue chip corporations may have other retirement plans or investment options available to them, but it is less likely that these options would specifically be tax sheltered accounts.

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19.

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?
- The death benefit will be reduced to reflect the age discrepancy.
- The policy will be rescinded and all premiums paid will be refunded to the beneficiary.
- The full death benefit will be paid because the policy is over 2 years old.
- The death benefit will be paid to the estate of the insured for legal action.
Correct Answer

A. The death benefit will be reduced to reflect the age discrepancy.

Explanation

If the insured understated his age on the application, it means that the premium rates were calculated based on a younger age. As a result, the death benefit will be reduced to reflect the correct age of the insured at the time of death. This adjustment ensures that the premiums paid by the insured were appropriate for the actual age, and prevents any potential advantages or disadvantages resulting from incorrect information provided on the application.

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20.

Which party has the legal authority to name or change the beneficiary?
- Insurer
- Policy owner.
- Insured
- Agent
Correct Answer

A. Policy owner.

Explanation

The policy owner has the legal authority to name or change the beneficiary. As the owner of the insurance policy, they have the right to decide who will receive the benefits of the policy in the event of the insured's death. This authority allows the policy owner to make changes to the beneficiary designation as needed, providing flexibility and control over the policy's proceeds. The insurer, insured, and agent do not have the legal authority to make such decisions.

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21.

Term insurance is best described by which of the following:
- Provides coverage to age 100, builds cash value, participates in dividend payments, high premium and is payable at the end of a preselected period.
- Combines monthly income during a stated period with a death benefit, nonforfeiture provisions and greater flexibility during times of inflation.
- Provides temporary protection, builds no cash value, is less expensive, and may be renewed.
- Provides the option to adjust the face amount, change anniversary dates, and automatically increases face amount at given age.
Correct Answer

A. Provides temporary protection, builds no cash value, is less expensive, and may be renewed.

Explanation

Term insurance is best described as a type of insurance that provides temporary protection for a specified period of time. It does not build cash value, making it less expensive compared to other types of insurance. It can be renewed after the initial term expires, providing continued coverage. The policyholder has the option to adjust the face amount, change anniversary dates, and the face amount may automatically increase at a certain age.

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22.

Which of the following transactions would most likely be declined due to lack of insurable interest?
- 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.
Correct Answer

A. An employee insures their employer in the fear of losing their job

Explanation

Insurable interest refers to the financial or legal interest that a person has in the subject matter of an insurance policy. In this case, an employee insuring their employer in the fear of losing their job would most likely be declined due to lack of insurable interest. The employee does not have a financial or legal interest in the employer, and therefore there is no valid reason for them to insure the employer. Insurable interest requires that the insured would suffer a financial loss if the insured event occurs, which is not the case in this scenario.

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23.

Which of the following is Not a personal use of Life Insurance?
- A client buys cash value insurance to fun 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.
Correct Answer

A. A client buys insurance to fund a buy-sell agreement.
24.

All of these statements about life insurance Settlement Options are False, except:
- Fixed amount is the default option when no options 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.
Correct Answer

A. Life income with 10 years certain provides at least 120 months of payments.

Explanation

The statement "Life income with 10 years certain provides at least 120 months of payments" is the only true statement among the given options. The other statements are false. Fixed amount is not the default option, life income payments are not income tax free, and settlement options like fixed period may not be suitable for beneficiaries who cannot handle large sums of money.

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25.

7. 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?
- 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.
Correct Answer

A. Rescind the policy.

Explanation

The most likely course of action for the insurer is to rescind the policy. This means that the insurer will cancel the policy and treat it as if it never existed. This is because it is determined that the applicant made a material misstatement on the application, which means that the applicant provided false or misleading information that could have affected the insurer's decision to issue the policy. Rescinding the policy allows the insurer to avoid paying out any benefits or claims associated with the policy.

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26.

According to the California DOI (Dept. of Insurance), and insurer whose articles of incorporation are registered in Oslo, Norway is considered:
- A domestic insurer
- A foreign insurer.
- An alien insurer.
- An admitted insurer.
Correct Answer

A. An alien insurer.

Explanation

An insurer whose articles of incorporation are registered in Oslo, Norway is considered an alien insurer because it is a foreign insurer that is not incorporated in the United States. Alien insurers are typically subject to different regulations and requirements than domestic insurers or insurers from other states within the United States.

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27.

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:
- Spendthrift (Trust) clause.
- Common Disaster Caluse
- Incontestability Clause.
- The Beneficiary Protection Clause.
Correct Answer

A. Spendthrift (Trust) clause.

Explanation

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 spendthrift (trust) clause. This clause ensures that the beneficiary cannot use the life insurance proceeds as collateral or be forced to use them to pay off their debts. Instead, the proceeds are protected and can only be used for the intended purpose, such as providing financial support to the beneficiary.

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28.

In a group life policy with a death benefit of more than $50,000:
- Premium cost is taxable to the employer.
- Premium cost for insurance above $50,000 is taxable as income to the employee.
- Premium cost for insurance below 50,000 is taxable as income to the insured.
- Premium cost is tax deferred.
Correct Answer

A. Premium cost for insurance above $50,000 is taxable as income to the employee.

Explanation

In a group life policy with a death benefit of more than $50,000, the premium cost for insurance above $50,000 is taxable as income to the employee. This means that the employee will have to report the premium cost as part of their taxable income when filing their taxes. This is because the IRS considers the portion of the premium that covers insurance above $50,000 to be a benefit provided by the employer to the employee, and therefore subject to taxation.

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29.

To authorize the release of an attending physician’s report, the applicant must:
- Sign a consent form.
- Send a letter to the physician .
- Furnish the name of the physician.
- Submit to a physical examination.
Correct Answer

A. Sign a consent form.

Explanation

The correct answer is to sign a consent form. This is because authorizing the release of a physician's report requires the applicant to give their consent for the release of their medical information. Signing a consent form is a formal way of providing this authorization. Sending a letter to the physician or furnishing the name of the physician may be part of the process, but the essential step is signing the consent form. Submitting to a physical examination is not mentioned in relation to authorizing the release of the report.

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30.

The commissioner can deny an applicant for a license after a hearing:
- If the applicant doesn't lack integrity.
- If the applicant has permitted someone in their employment to violate the California Insurance Code.
- For applicants holding other professional licenses.
- For applicants seeking the license for the purpose of aiding the enforcement of the California Insurance code.
Correct Answer

A. If the applicant has permitted someone in their employment to violate the California Insurance Code.

Explanation

The correct answer is if the applicant has permitted someone in their employment to violate the California Insurance Code. This means that if the applicant has allowed someone working for them to break the rules and regulations stated in the California Insurance Code, the commissioner has the authority to deny their license application. This shows that the applicant has not demonstrated the necessary integrity and responsibility required for obtaining a license in the insurance industry.

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31.

At what age does Social Security Medicare program Part B start providing benefits?
- 60
- 62
- 65.
- 67
Correct Answer

A. 65.

Explanation

The Social Security Medicare program Part B starts providing benefits at the age of 65. This is the age at which individuals become eligible for Medicare coverage, which includes Part B. Part B helps cover medical services and supplies that are necessary to treat or diagnose a medical condition. It is important to note that there may be certain enrollment periods and requirements that individuals need to meet in order to receive these benefits.

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32.

All of the following statements about a policy grace period are False, Except:
- Death during the grace period results in the denial of the claim.
- Grace periods are typically 31 days.
- Returning the policy during the grace period result in a full refund of premiums.
- Not every insurer is required to provide a grace period.
Correct Answer

A. Grace periods are typically 31 days.

Explanation

The correct answer is "Grace periods are typically 31 days." This statement is the only one that is true. A policy grace period refers to the period of time after the premium due date during which an insurance policy remains in force even if the premium has not been paid. During this period, the policyholder has the opportunity to make the premium payment without any penalty or loss of coverage. The length of the grace period may vary depending on the insurance company and the type of policy, but it is commonly 31 days.

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33.

Which insurance is known for having a level premium with a fixed rate of return resulting in guaranteed cash value?
- Adjustable life
- Whole Life.
- Variable Universal
- Universal life.
Correct Answer

A. Whole Life.

Explanation

Whole life insurance is known for having a level premium, which means that the premium remains the same throughout the policy's duration. It also offers a fixed rate of return, ensuring that the cash value of the policy grows at a guaranteed rate. This makes whole life insurance a popular choice for individuals who want a stable and predictable investment option with guaranteed cash value. Adjustable life, variable universal life, and universal life insurance policies do not necessarily offer these features, making whole life insurance the correct answer.

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34.

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?
- Flexible Premium Deferred Annuity.
- Single premium Immediate Annuity.
- A consumer report.
- A pretext interview.
Correct Answer

A. Single premium Immediate Annuity.

Explanation

The client purchased a single premium immediate annuity. This type of annuity is funded by a lump sum payment (single premium) and provides immediate benefit payments starting at a specified time (in this case, the end of this year). The fact that the client used an annual bonus to purchase the annuity indicates that it was a one-time payment rather than ongoing contributions (flexible premium deferred annuity). A consumer report and a pretext interview are unrelated to annuities and are not applicable in this context.

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35.

. According to the CIC (California Insurance Code), life-only agents must keep records of their transactions for:
- 12 months
- 3 years.
- 5 years.
- 7 years.
Correct Answer

A. 5 years.

Explanation

According to the CIC (California Insurance Code), life-only agents are required to keep records of their transactions for a period of 5 years. This means that life-only agents must maintain documentation and records of their business activities, including policies sold, premiums collected, and any other relevant information, for a minimum of 5 years. This requirement ensures that there is a sufficient record of the agent's transactions, which can be useful for audits, investigations, and customer inquiries.

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36.

All of the following are True about Key Person insurance, Except:
- The business is the applicant and owner.
- The employee must give written consent by signing the application.
- The business is the beneficiary.
- The death benefit is taxable to the business.
Correct Answer

A. The death benefit is taxable to the business.

Explanation

Key Person insurance is a type of life insurance policy taken out by a business on the life of a key employee. The purpose of this insurance is to protect the business from financial loss in the event of the key employee's death. The business is the applicant and owner of the policy, and it is also the beneficiary, meaning that it will receive the death benefit payout. The employee must give written consent by signing the application to be covered by the policy. However, the death benefit is not taxable to the business, making it the exception among the given statements.

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37.

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 peril.
- A hazard.
- Pure risk.
- Cause of loss.
Correct Answer

A. A hazard.

Explanation

The given situations, such as slippery floors, a habit of lying, and reckless drunk driving, indicate potential dangers or risks. These situations can lead to accidents, injuries, or damage. Therefore, they can be best described as hazards, which refer to conditions or factors that increase the likelihood of a loss occurring. Hazards can be physical, moral, or moral in nature, and they contribute to the overall risk associated with a particular situation or activity.

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38.

A client has a history of DUIs. To his insurer, they see him as a _________ hazard
- Physical
- Moral
- Morale
- Legal
Correct Answer

A. Morale

Explanation

The correct answer is "Morale". This is because the client's history of DUIs indicates a lack of responsibility and judgment, which can affect their overall attitude and behavior. The insurer would view the client as a morale hazard, as their past actions suggest a potential for future risky behavior that could result in accidents or insurance claims.

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39.

All of the following statements about agents are true Except:
- 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.
Correct Answer

A. Exclusive agents work for themselves.

Explanation

The given correct answer is "Exclusive agents work for themselves." This statement is false because exclusive agents work exclusively for one insurer and are not self-employed. They have a contractual agreement with a single insurance company and represent only that company's products and services.

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40.

Under which Life Settlement option does the insurer retain the death benefit but pays the beneficiary the earnings on the death benefit?
- Interest only option
- Accumulate with the interest option.
- Life income option
- Cash option.
Correct Answer

A. Interest only option

Explanation

Under the interest only option, the insurer retains the death benefit but pays the beneficiary the earnings on the death benefit. This means that the beneficiary will receive the interest earned on the death benefit, while the actual death benefit remains with the insurer. This option allows the beneficiary to receive some financial benefit while still keeping the death benefit intact.

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41.

What is the minimum number of members required for group life insurance?
- 15
- 10
- 25
- 100
Correct Answer

A. 10

Explanation

The minimum number of members required for group life insurance is 10. Group life insurance is a type of insurance coverage that is offered to a group of people, typically employees of a company or members of an organization. By pooling together a larger number of individuals, the risk is spread out, making it more affordable for each member. Therefore, even with just 10 members, a group can qualify for group life insurance.

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42.

A client 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?
- Automatic premium loan.
- Incontestability Clause.
- Reinstatement Provision.
- Over-draft Protection.
Correct Answer

A. Automatic premium loan.

Explanation

The correct answer is Automatic premium loan. This provision allows the insurer to deduct the premium amount from the cash value of the policy to keep it in force when the client misses a payment and the grace period has lapsed. It acts as a loan against the policy's cash value to cover the premium amount, ensuring that the policy remains active even if the client fails to make the payment on time.

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43.

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 privacy notice.
- An application for insurance.
- A consumer report.
- A pretext interview.
Correct Answer

A. A consumer report.

Explanation

A consumer report is a document that contains information about an individual's credit, character, and reputation. This report is typically prepared by a consumer reporting agency and includes details such as credit history, employment history, and public records. Insurance companies may request and review consumer reports as part of their underwriting process to assess the risk associated with insuring an applicant. Therefore, a consumer report is a valid source from which an insurer may gain information about an applicant's credit, character, and reputation.

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44.

All of the following describe differences between binding receipts and conditional receipts, Except:
- 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.
Correct Answer

A. No claim is paid with either receipt until a policy is issued.

Explanation

The given answer, "No claim is paid with either receipt until a policy is issued", is incorrect. Both binding receipts and conditional receipts can provide coverage before a policy is issued. The main difference between the two is that a binding receipt always provides immediate coverage from the date of the receipt, while a conditional receipt can provide coverage from the date of application once the application is later approved by underwriting. Therefore, this answer is not a difference between binding receipts and conditional receipts.

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45.

All of the following needs to be included on an application for life insurance Except:
- Life insurance with other insurers.
- The agent's statement, if applicable.
- Signatures of the agent, proposed insured, and the owner.
- Disability income insurance.
Correct Answer

A. Disability income insurance.

Explanation

The question asks for the item that should not be included on an application for life insurance. The correct answer is "Disability income insurance." This is because disability income insurance is a separate type of insurance that provides income replacement in the event that the insured becomes disabled and is unable to work. It is not directly related to life insurance, which provides a death benefit to beneficiaries upon the insured's death. Therefore, disability income insurance should not be included on an application for life insurance.

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46.

. 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?
- Automatic Premium Loan.
- Payor benefit.
- Cost of Living.
- Facility of Payment.
Correct Answer

A. Facility of Payment.

Explanation

Facility of Payment is a provision that allows for a partial payment of proceeds to cover final expenses to be paid to someone who is not designated as a beneficiary but is acting in a legal or fiduciary capacity. This provision ensures that the necessary funds are available to cover any outstanding expenses related to the policyholder's death, such as funeral costs or outstanding debts. It provides flexibility in distributing the proceeds and ensures that the policyholder's final expenses are taken care of.

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47.

All of the following statements about assignments are Not False, Except:
- Absolute assignments can be used for life settlement agreements.
- A lender may be repaid through the use of a collateral assignment.
- Absolute assingnment involve the complete transfer of all policyowner rights in the insurance policy.
- Assignments need not be filed with the insurer if notarized and filed in county records.
Correct Answer

A. Assignments need not be filed with the insurer if notarized and filed in county records.

Explanation

Assignments need to be filed with the insurer if notarized and filed in county records.

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48.

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:
- Activity period.
- Annuity period.
- Accumulation period.
- Annuitization period.
Correct Answer

A. Accumulation period.

Explanation

The correct answer is the accumulation period. In a flexible premium deferred annuity, the accumulation period refers to the time when the owner makes premium payments and the funds accumulate within the annuity account. During this period, the funds grow on a tax-deferred basis until the annuitization period begins, at which point the owner can start receiving benefit payments.

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49.

Which statement best describes “agreement” as it relates to contracts?
- The intent of the contract must be legally acceptable to both parties.
- All parties must be capable of entering into contract.
- Each party must offer something of value.
- One party accepts the exact terms of the other party’s offer.
Correct Answer

A. One party accepts the exact terms of the other party’s offer.

Explanation

"One party accepts the exact terms of the other party's offer" best describes "agreement" as it relates to contracts. In order for a contract to be formed, there must be a mutual understanding and acceptance of the terms and conditions outlined in the offer. This means that one party agrees to the exact terms proposed by the other party, creating a meeting of the minds and a binding agreement. The other options mentioned in the question are also important aspects of contracts, but they do not specifically capture the concept of agreement.

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Examinicion De Vida Practica B

All of the following statements about policy provisions are true, Except

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Which of the following is Not an acceptable underwriting classification?

. 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?

Which action by an insurer, or its representatives, is Not considered an unfair claims violation?

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?

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:

For an insurance contract, utmost good faith means:

In insurance, the agents have authorization to represent the company. The producers may exercise this relationship through:

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?

Who submits a request for life insurance to a company?

A policy owner 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/an?

The Roth and Traditional IRAs have some similarities. Which of the following in Not true?

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

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:

Which of the following is an Incorrect statement about a client’s privacy rights?

How many hours of continuing education are required per renewal for a life-only agent?

Variable insurance and variable annuity products are regulated by:

Which of the following is most likely to have a TSA? (tax sheltered accounts)

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?

Which party has the legal authority to name or change the beneficiary?

Term insurance is best described by which of the following:

Which of the following transactions would most likely be declined due to lack of insurable interest?

Which of the following is Not a personal use of Life Insurance?

All of these statements about life insurance Settlement Options are False, except:

7. 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?

According to the California DOI (Dept. of Insurance), and insurer whose articles of incorporation are registered in Oslo, Norway is considered:

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:

In a group life policy with a death benefit of more than $50,000:

To authorize the release of an attending physician’s report, the applicant must:

The commissioner can deny an applicant for a license after a hearing:

At what age does Social Security Medicare program Part B start providing benefits?

All of the following statements about a policy grace period are False, Except:

Which insurance is known for having a level premium with a fixed rate of return resulting in guaranteed cash value?

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?

. According to the CIC (California Insurance Code), life-only agents must keep records of their transactions for:

All of the following are True about Key Person insurance, Except:

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 client has a history of DUIs. To his insurer, they see him as a _________ hazard

All of the following statements about agents are true Except:

Under which Life Settlement option does the insurer retain the death benefit but pays the beneficiary the earnings on the death benefit?

What is the minimum number of members required for group life insurance?

A client 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?

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:

All of the following describe differences between binding receipts and conditional receipts, Except:

All of the following needs to be included on an application for life insurance Except:

. 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?

All of the following statements about assignments are Not False, Except:

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:

Which statement best describes “agreement” as it relates to contracts?