Practice Exam 5 - Life Insurance
- 1.Any transaction that involves purchasing a life insurance policy and terminating an existing policy is known as:
- A.
Replacement
- B.
Reinsurance
- C.
Reinstatement
- D.
Assignment
- 2.According to the CA Insurance Code, in which of the following classes of insurance can a binder NOT be issued:
- A.
Marine insurance
- B.
Auto insurance
- C.
Fire insurance
- D.
Life insurance
- 3.An organization will cease to exsit as an entity eligible to hold a license for all of the following reasons, expept:
- A.
Termination of an association
- B.
Termination of a key employee
- C.
Dissolution of a corporation
- D.
Dissolution of a co-partnership
- 4.What does it mean if an agent's license is inactive?
- A.
The agent can still transact insurance business in CA, but not in any other states unti the license is reactived.
- B.
The agent can transact any insurance business with another agent's approval
- C.
The agent can transact any insurance business for which the agent is licensed.
- D.
The agent cannot transact any insurance business for which a license is required.
- 5.If the Commissioner issues a Notice of Seizure for documents and the individual falls to send those documents what is the penalty ?
- A.
1 year in jail
- B.
$1000 fine
- C.
1 year in jail and / or $1,000 fine
- D.
Each state handles discipline in its own way
- 6.Which of the following must any person engaged in the business of acting as an insurance agent or broker who receiveds compensation for arranging or directing sales in connection with a premium financing agreement do?
- A.
Provide a list of the potential complaint lodged against the broker or agent through past customers.
- B.
Provide records of interest payments to the broker agent with respect to interest paid by the insurer.
- C.
Maintain a list of accounts un connection with compensation exempted in premium financing payments for three years.
- D.
Provide a list of current accounts for any client who wishes to see the records.
- 7.All the following would be considered one of the three major types of loss exposure except:
- A.
Liability loss exposure
- B.
Financial loss exposure
- C.
Human and personel loss exposure
- D.
Property loss exposure
- 8.Tony Brown has a CLU certification. Which of the following names would be automatically approved for his agency's use?
- A.
Tony Brown CLU and Company
- B.
Brownies Insurances Services
- C.
Brown Insurance
- D.
None of these would be automatically approved
- 9.A person has paid $50,000 into a fixed aunnuity over 20 years. When he decised to begin income payments the insurer calculates that he will receive $4,000 per year for life, which means that he will receive a total of $100,000. Int he first 10 years of payment how much is taxable each year?
- A.
$0
- B.
$800
- C.
$2,000
- D.
$4,000
- 10.According to the Code, all insurers must maintain a department to investigate:
- A.
Possible abuses of rating laws
- B.
Possible arson
- C.
Possible fraudulent claims from insureds
- D.
Possible fraud by insurers
- 11.What does the Insurance COmmissioner have the right to do if an agent lacks authority from an insurer named on a binder for coverage?
- A.
Request his certificate of authority
- B.
Authorize agent with a certificate of convenience
- C.
Suspend or revoke the license of the agent
- D.
Fine the insurance company
- 12.An insured bought an aunnuity ten years agon. He will retire in five years. To determine the value fo the aunnuity, the number of accumulation units is multiplied by the value of the seperate account. What type o annuity was purchased?
- A.
Variable annuity
- B.
Fixed premium annuity
- C.
Tax sheltered annuity
- D.
Single payent annuity
- 13.The class beneficiary designation which means that the beneficiaries will receive equal shares of the death benefit devided among the surving members of the class is
- A.
Class beneficiary designation, equal shares
- B.
Per capita
- C.
Per stirpes
- D.
Per diem
- 14.The mathematical rule that says that as the numver of individual but similar exposure units increases the easier it is o predict losses is which of the following?
- A.
Insurable interest standard
- B.
Contract law
- C.
The law of large numbers
- D.
Materiality
- 15.Which of the following is a description of a Life and Disability Analyst?
- A.
A broker paid fees fror service
- B.
A person licensed to assist an agent in soliciting life insurance
- C.
A person licensed to advise clients about life and disability isnrance for a fee
- D.
Any agent
- 16.What happens to a license after the death of a natural person who hold a valid insurance license?
- A.
It always terminates
- B.
It may be transfered to another person
- C.
The license becomes inactive until the expiration date
- D.
The license must be returned tot he Commissioner to cancel the license
- 17.Which of the following are common insruance policy provisions?
- A.
Reinstatement, suicide, pre-existing conditions
- B.
Entire contract, grace period, reinstatement
- C.
Entire contract, incontestability, pre-existing conditions
- D.
Grace period, suicide, right to return
- 18.With the cost of living rider, the life insurance polcy holder:
- A.
Must increase or decrease the face value of the policy as the index increases or decreases
- B.
Gets the automatic increase in the dace value if there is an increase in the cost of living index. There is an additional premium for the additional coverage
- C.
Gets the automatic increase in the face value if the index goes up. There is no charge except for the flat charge for the rider
- D.
All of the above are false
- 19.All of the following statements refardung survorship life insurance are ture except:
- A.
It is particularly well situated to provide cash to cover estate taxes
- B.
The policy face amounts are usually for more than $1,000,000
- C.
Age of the insured
- D.
The amount of disability income insurance in force
- 20.All of the following statements regarding survivorship life insruance are true, except:
- A.
It is particularly well situated to provide cash to cover estate taxes
- B.
The policy face amounts are usually for more than $1,000,000
- C.
If offers premiums that are quite low compared to what you would be charged for separate policies
- D.
The policy face amount is made out based only on the death of the first to die
- 21.Which of the follwing is not an option for the use fo the policy dividends?
- A.
Fund the distribution of monthly income payment
- B.
Purchase paid-up additions
- C.
Reduce the current premium
- D.
Purchase one year term insurance
- 22.What information can a party to a contract of insurance be allowed NOT to communicate accourding to California Law?
- A.
Information which the other party already knows
- B.
Information not specifically asked by an agent and company, even if it's considered relevant
- C.
Information wich is material to the contract
- D.
Information which cannot be proven but it material
- 23.According to the CA Insurance Code, a judgment ageinst an applicant who entered a plea of "nolo contendere" is considered to be
- A.
Innocent by code, but guilty by law
- B.
Innocent
- C.
Referred to the Insurance Commissioner fo option
- D.
Convicted
- 24.The policy pervision which prevents an insurer from voiding a policy for misstatements after two years is:
- A.
Incontestability
- B.
Indemnity
- C.
Misrepresentation
- D.
There is no such provision
- 25.The clause that protects the proceeds fo ta life insrauce policy from attachment by creditors after the death of the insured is:
- A.
Common disaster clause
- B.
Spendthrift clause
- C.
Incontestability clause
- D.
Beneficiary clause
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