Download Life and Health Insurance Exam Questions and Answers and more Exams Insurance law in PDF only on Docsity!
Life and Health License Exam Questions
and Answers 100% Pass
What is meant by referring to an insurance policy as a unilateral contract? ✔✔Only one party makes a legally enforceable promise
When must insurance records of insurance agents and brokers be made available to the Insurance Commissioner? ✔✔At all times
Any situation that presents the possibility of a loss is known as ✔✔a loss exposure
Which of the following information is not required to be communicated in a Life insurance contract? ✔✔Personal judgment
The direct distribution of insurance utilizes all of the following to promote the sale of insurance EXCEPT ✔✔telephone call from an agent
A contract in which one party promises to indemnify another against loss that arises from an unknown event is ✔✔an insurance policy
All of the occurrences listed below are examples of an insurable event as defined by the California Insurance Code EXCEPT ✔✔an insured suffers a financial loss in the state lottery
All of the following statements about aleatory contracts are true EXCEPT ✔✔the insured and insurer contribute equally to the contract
All of the following would be considered unfair trade practices EXCEPT ✔✔committing any act of discrimination whether it be deemed fair or unfair
As authorized by the California Insurance Code, the Insurance Commissioner has provided standards for names used by life insurance agents. Under these standards which, if any, of the following are automatically acceptable for Mary Brown, a holder of the CLU designation ✔✔Mary Brown Insurance Services
A contract of indemnity is one in which ✔✔one party is restored to the same financial position the party was in before the loss occurred
In insurance terminology, "indemnity" means ✔✔make whole
What rule is used to determine the importance of a representation? ✔✔The materiality of concealment
The required contents of a policy include all of the following EXCEPT ✔✔the probability of loss
All of the following are characteristics of reinsurance EXCEPT it ✔✔increases the unearned premium reserve
According to the California Insurance Code, an insurance policy must specify all of the following EXCEPT the ✔✔financial rating of the insurer
All of the following qualify as "background information" as defined in Section 1729.2 of the California Insurance Code, EXCEPT ✔✔misdemeanor charges filed, not resulting in a conviction
Loss retention is an effective risk management technique when all of the following conditions exist EXCEPT the ✔✔probability of loss is unknown
A situation in which there is a possibility of loss or a gain is a ✔✔speculative risk
Why is having a large number of similar exposure units important to insurers ✔✔The greater the number insured, the more accurately the insurer can predict losses and set appropriate premiums
All of the following are benefits of insurance EXCEPT it ✔✔eliminates fraudulent losses
Who are members of the Medical information Bureau? ✔✔Life and health insurers
The process by which an insurer decides whether to issue requested insurance is called ✔✔Underwriting
Unless it is merely a statement of an expectation or belief, a representation as to the future is considered which of the following? ✔✔Promise
Upon notification of a claim, a claimant must be given access to the California Fair Claims Settlement Practices resolution by all of the following means EXCEPT ✔✔by interview appointment with the agent of record
Moral hazard can be defined as the increase ✔✔chance of a loss occurring due to an insured's dishonest tendencies
According to the California Insurance Code, the Commissioner can disapprove a licensee's request to use a fictitious name for any of the following reasons EXCEPT that the ✔✔name is the licensee's actual name
It is considered an unfair method of competition for an agent to advertise that the insurer the agent is appointed with is ✔✔a member of the Insurance Guarantee Association
All of the following are requirements of contract EXCEPT ✔✔there must be equal consideration between the parties
If an insurer must have its rates accepted by the insurance Department prior to using them, the insurer would be operating in which of the following types of jurisdictions? ✔✔Prior approval
It is Federal offense for an insurance agent to do all of the following EXCEPT ✔✔misrepresent facts on an insurance application
How often MUST an insurer file the National Association of Insurance Commissioners (NAIC) financial statement? ✔✔Annually
person authorized by and on behalf of an insurer who transacts life, disability or life and accident and health insurance is defined as a ✔✔life agent
An insurer entitled to transact business by complying with the California Insurance Code is known as an ✔✔admitted carrier
Who are the members of the Medical Information Bureau? ✔✔Life and Health insurers
If you have been convicted of a misdemeanor and that misdemeanor conviction is later expunged pursuant to California Penal Code Section 1203.4, which of the following is true? ✔✔Even though your misdemeanor conviction was expunged, you must still disclose your misdemeanor conviction on your individual application for an insurance license
The direct response distribution of Insurance utilizes all of the following to promote the sales of insurance EXCEPT ✔✔telephone call from the agent
According to the California Insurance Code, if an insurer's certificate of authority is revoked, the Commissioner can proceed with any of the following actions EXCEPT ✔✔using Guarantee Funds to pay salaries
Section 1729.2 of the California Insurance Code requires insurance producer applications and licensees to notify the Insurance Commissioner in writing, within ___days of charges in background information after an application has been submitted or a license has been issued ✔✔ 30
The insurer's department with PRIMARY responsibility for the risk selection process is called: ✔✔underwriting
A person owns a life annuity. He elects to receive his annuity payments monthly for the remainder of his life with "ten years certain". The annuity will make payments ✔✔for a minimum of 120 months and a maximum of the remainder of his life
All of the following information is gathered during the personal financial planning process EXCEPT ✔✔a listing of a person's civic and professional organization memberships
Which policy provision allows an insured to continue coverage under a previously lapsed policy? ✔✔The reinstatement provision
According to the California Insurance Code, governing the use of life insurance policy illustrations, the term illustration means ✔✔a presentation of policy features that includes non- guaranteed elements
The life insurance grace period allows the insured to ✔✔pay the premium after the due date without loss of coverage
When a family policy covers children, all of the following are true EXCEPT ✔✔evidence of insurability is required to convert coverage for children to permanent insurance
An attempt by an agent to deter an insured from replacing an existing life insurance policy is called ✔✔conservation
Which of the following would an agent be guilty of for misrepresenting the amount of dividends a policy will pay? ✔✔A misdemeanor
If a life agent sells a whole life policy to a prospect on behalf of an insurer without an appointment... ✔✔the insurer must submit a notice of appointment to the Commissioner
Which component of a life insurance premium is based on the insured's age and gender? ✔✔Mortality
Which benefits are provided by key employee insurance? ✔✔Payment to a business when an important employee dies.
How can partners guarantee a market for their share of the business in the event of death? ✔✔Buy-sell agreements
Which policy covering two or more individuals pays the face amount only when the first person dies? ✔✔Joint life policy
Which two insurance products are commonly used to fund buy-sell agreements? ✔✔Life insurance and disability insurance
Which policy provision protects the insurer against possible adverse selection? ✔✔Suicide clause
Which type of insurance coverage has both a savings element and a flexible premium option? ✔✔Universal life
A life insurance policy written after 1988 that fails to meet the seven pay test is known as ✔✔a modified endowment contract
What type of insurance policy provides a death benefit that matches the projected outstanding debt on an individual's home? ✔✔Mortgage redemption
An agent who violates the laws governing life insurance policy illustrations is subject to all of the following EXCEPT ✔✔mandatory termination of all insurer appointments
Which policy is a saving instrument designed to first accumulate funds and then systematically to liquidate the funds? ✔✔Deferred annuity
The payor rider on a juvenile life policy provides that if the payor dies or becomes disabled before the insured juvenile reaches the age specified in the policy that the... ✔✔insurer will make the payments until the insured juvenile reaches a specified age-usually twenty-one or twenty- five.
Which of the following contracts provides benefits that fluctuate automatically with investment results? ✔✔Variable life insurance
The theory of probability is applied to life insurance through the use of ✔✔mortality tables
What is the difference between deferred annuities and immediate annuities? ✔✔Deferred annuities have longer accumulation periods
Which of the following is NOT an option for the use of the policy dividends? ✔✔Fund the distribution of monthly income payments
The insured is totally and permanently disabled. The insured's policy continues in force without payment of further premiums because the policy contains a ✔✔waiver of premium provision
What do we call the process whereby insurers decide which customers to insure and what coverage to offer? ✔✔Underwriting
What is used to determine the amount of an annuity distribution that is exempt from taxation? ✔✔The exclusion ratio
The number of deaths during a year compared with the total number of persons exposed in the class is known as the ✔✔mortality rate
The insured bought an annuity ten years ago. He will retire in five years. To determine the value of his annuity, he must multiply the value of the "accumulation units" he owns, times the value of the "separate account". This type of annuity is known as a ✔✔variable annuity
All of the following are true about term life insurance policies EXCEPT the ✔✔face amount is paid if the insured survives to the end of the policy period
A life insurance policy dividend is ✔✔legally defined as a return of excess premium and not taxable
What is the penalty tax imposed on amounts received from a modified endowment contract? ✔✔10%
A participating life insurance policy is defined as a contract that ✔✔allows the policy owner to receive a share of surplus in the form of policy dividends
All of the following are contained in a mortality table EXCEPT ✔✔number living at the end of designated year
Which policy pays the face amount if the insured survives to the end of a certain period? ✔✔Endowment insurance
A husband and wife have a disabled child who is financially dependent upon them. The death of one parent would not result in financial disaster for the disabled child, but the death of both parents would. Which policy should they purchase? ✔✔Second-to-die policy
How can partners guarantee a market for their share of the business in the event of death? ✔✔Buy-sell agreements
Which policy covering two or more individuals terminates after paying benefits on the first to die? ✔✔Joint life policy
The accidental benefit rider is also known as ✔✔double indemnity
The use of non-medical life insurance accomplishes all of the following EXCEPT ✔✔insureds can avoid answering medical questions on the application
Who MUST sign a statement acknowledging that a life insurance policy illustration was given to an applicant? ✔✔The applicant and the agent
In financial planning, the human life value concept is based on an individual's ✔✔Income
When does an individual have an insurable interest in the life of another person? ✔✔The individuals depends on the other person for financial support
The cost of employer-provided group life insurance above $50,000 is ✔✔taxable as income to the employee
