California Life Insurance Practice Exam
Practice examination for Life Insurance Licensing in California. Combines exams A, B, and C with 125 questions.
- 1.In disability insurance, the period of time between when the disability started and the commencement of benefits is the:
- A.
Cancellation Period
- B.
Elimination Period
- C.
Probationary Period
- D.
Grace Period
- 2.Which of the following characteristics would not stop an insurance company from accepting an insurance risk? The item to be insured:
- A.
Faces high catastrophic loss exposure
- B.
Is part of a large group of homogeneous exposure units
- C.
Has a market value difficult to determine
- D.
Holds no hardship to the owner should it be lost or damaged
- 3.All of the following statements about mutual insurance companies are correct, except:
- A.
If a mutual company goes public, it demutualizes
- B.
Mutual companies issue policies referred to as participating
- C.
Policy dividends issued by mutual companies are guaranteed and not taxable
- D.
Dividends allow policyholders to share in a mutual companies divisible surplus
- 4.In a seven year vesting schedule, what percentage of employer contributions is vested after seven years?
- A.
0%
- B.
60%
- C.
80%
- D.
100%
- 5.Which is a false statement? The California Insurance Commissioner is:
- A.
Elected by the people of California every four years
- B.
Selected by the Governor as an appointee
- C.
Is a representative to the National Association of Insurance Commissioners (NAIC)
- D.
Capable of becoming the conservator of a financially impaired, or insolvent, insurer
- 6.Which statement about life insurance code and ethics is not true?
- A.
Marketing plans to offer free insurance as an inducement to buy or rent real property are prohibited
- B.
Acts of fair and unfair discrimination are prohibited
- C.
Agents are not permitted to advertise that an insurer is a member of any insurance guaranty association
- D.
The act of twisting could result in a license suspension for up to three years
- 7.Which of the following statements about a resident life-only agent licensing is incorrect?
- A.
A licensee has 30 days to update a change in address
- B.
Licensees are required to have an in-state residential address
- C.
Loss of a precious professional license could result in the automatic denial of the life-only license application
- D.
A plea of nolo contendere is considered a conviction, thus it could hinder attempts to obtain a life-only license
- 8.Tommy Greene has a CLU certification. Which of th following names would automatically approve for use as his agency's name?
- A.
Tommy Greene and Associates
- B.
Thomas Greene, CLU, & Company
- C.
Greene Insurance Agency
- D.
None of the would ever be automatically approved
- 9.An agent follows the rules and terms of his agent contract. He is excersising his _______ authority.
- A.
Implied
- B.
Express
- C.
Apparent
- D.
Contractual
- 10.Any person who misappropriates fiuciary funds for personal use is guilty of:
- A.
Fraud
- B.
Theft
- C.
Misreperesentation
- D.
Pre-texting
- 11.According to the code, any person legally capable of making an insurance policy is considered:
- A.
An agent
- B.
A broker
- C.
An insurer
- D.
An underwriter
- 12.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.
As a life insurance product, future proceeds are tax free.
- B.
She has a 30 day free look period in case she changes her mind.
- C.
Since she only has a few more years before she retires, she should invest with the objective tho make as much money as possible. Her time horizon is limited.
- D.
She will have to begin taking withdrawals within six months of receiving the proceeds.
- 13.In a non-contributory group policy:
- A.
75% of eligible employees must elect to join the plan.
- B.
100% of eligible employees must participate.
- C.
75% of employees must elect to join the plan.
- D.
100% of employees must be allowed to participate.
- 14.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.
The new policy will be term life. The employee pays all premiums.
- B.
The new policy will be term life. The employer will pay a portion of the cost.
- C.
The new policy will be cash value. The employer will pay a portion of the cost.
- D.
The new policy will be cash value. The employee pays all the premiums.
- 15.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.
Split Dollar Plan
- B.
Executive Bonus Plan
- C.
Buy-Sell Agreement
- D.
Deferred Compensation Plans
- 16.Rank from lowest to highest, the amount of monthly income that would result from the following annuity settlement options:
- A.
Life with refund option, life with 10 years certain, straight life
- B.
Straight life, life with ten years certain, life refund option
- C.
Life with ten year certain, life with refund option, straight life
- D.
Life with refund option, straight life, life with 10 years certain
- 17.All of the following are dividend options, except:
- A.
Interest only option
- B.
One-year term option
- C.
Reduce the nest premium payment
- D.
Accumulate with interest
- 18.Which best describes industrial insurance?
- A.
$2,000 or less in coverage and premiums collected by agent.
- B.
$10,000 coverage and premiums paid by mail.
- C.
$50,000 coverage and premiums paid by mail.
- D.
$100,000 coverage and premiums collected by agent.
- 19.A client's flexible premium is invested into a seperate account. What type of insurance product did he purchase?
- A.
Universal Life
- B.
An Annuity
- C.
Variable Life
- D.
Variable Universal Life
- 20.Which rider pays a multiple of the original face amount?
- A.
Accelerated Death Benefit
- B.
Accidental Death Benefit
- C.
Accidental Death and Dismemberment
- D.
Cost of Living
- 21.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.
The client is covered during underwriting.
- B.
The agent faces potential suspension or revocation of their license.
- C.
The client is not covered during underwriting since binders only start once underwriting is complete.
- D.
Since the medical exam hasn't been completed yet, the client is not covered at all.
- 22.Which of the following would not be considered a speculative risk?
- A.
Every week your client plays $20 on the lotto.
- B.
Any action that could do harm to your clients well-being such as reckless driving.
- C.
Your client invest 5% of his salary into the defined benefit plan at his work.
- D.
All of the above situations involve some risk.
- 23.According to the California Insurance Code, what information is the agent required to include on their business card?
- A.
Identification of their relationship to the insurance company.
- B.
License number must appear in the same size font as the phone number.
- C.
Must not include any title, designations, or licenses that are not currently held.
- D.
All of the above.
- 24.How does the IRS classify the two different types of retirement accounts?
- A.
Qualified and unfunded
- B.
Fully funded and non-qualified
- C.
Qualified and non-qualified
- D.
Contributory and noncontributory
- 25.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.
Automatic Premium Loan
- B.
Accelerated (Living) Benefit
- C.
Assignment of Benefit
- D.
Payor Benefit
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