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Agent Examination (Life Agent) Questions
Admitted Insurance Company vs. Non-Admitted Insurance Company - CORRECT ANSWERS ✅An admitted insurance company is authorized to transact insurance in California because it has a Certificate of Authority granted by the California Department of Insurance (CDI) A non-admitted insurance company is not authorized to transact insurance in California because of failing to comply with California requirements or did not seek admission Pure Risk vs. Speculative Risk - CORRECT ANSWERS ✅Pure risks are insurable but Speculative risks are not Pure Risks - A possibility of loss, no loss, or gain Pure Risk - A possibility of loss or no loss; there is no possibility for gain Contract of Adhesion - CORRECT ANSWERS ✅One party writes the contract without inout from the other party on a "take-it-or-leave-it" basis Aleatory Contract - CORRECT ANSWERS ✅The exchange of value is unequal.
Agent Examination (Life Agent) Questions
Insured's premium payment is less than the potential benefit to be received in the event of a loss. Indemnity Contract - CORRECT ANSWERS ✅An agreement to pay on behalf of another party under specified circumstances Unilateral Contract - CORRECT ANSWERS ✅Only one party is legally bound to the contractual obligations after the premium is paid to the insurer Only the insurer makes a promise of future performance, and only the insurer can be charged with breach of contract 4 elements of a valid contract - CORRECT ANSWERS ✅1) Competent Parties
- Legal Purpose
- Agreement (offer and acceptance)
- Consideration
Agent Examination (Life Agent) Questions
Needs Analysis Approach determines a need for coverage upon the premature death of an individual. It always assumes the death of the individual to be immediate and factors the following steps into arriving at the proper amount of coverage needed:
- Calculate all financial needs caused by immediate death, including debts, medical bills, and final expenses
- Provide lifetime income to the spouse
- Pay off mortgage or other debts
- Provide funds for children's education
- Subtracts any assets available to fund financial needs after death (such as retirement plan, other insurance, liquid investments, separate savings) Waiver of Premium - CORRECT ANSWERS ✅Life Insurance Disability Rider If the insured becomes totally disabled, the insurer will waive premiums for the duration of the disability or the end of the policy, whichever occurs first.
Agent Examination (Life Agent) Questions
To qualify for the waiver, the insured must be disabled for a waiting period of 3-6 months. The policyowner must continue to pay premiums during the waiting period, but once eligible, the waiver is retroactive to the start of the disability and the premiums will be refunded. During the disability, the insured will credit the premiums to the policy and all benefits, such as cash value accumulation and dividend payments, will continue. Disability Income Rider - CORRECT ANSWERS ✅Life Insurance Disability Rider In the event of total disability and after the initial waiting period (such as 6 months), premiums are waived and the insured is paid a monthly income. The monthly disability income benefit is typically limited to a percentage of the face value. The benefit paid from the rider does not reduce the death benefits paid out upon death. Accidental Death Benefit rider - CORRECT ANSWERS ✅Life Insurance Rider affecting the death benefit amount
Agent Examination (Life Agent) Questions
Viatical Settlement - CORRECT ANSWERS ✅An agreement between a policyowner and a third-party buyer to purchase the life policy covering a person who is diagnosed as terminally ill with less than 24 months remaining life expectancy. Principle of Indemnity - CORRECT ANSWERS ✅To indemnify means to restore a person, in whole or in part, to the same physical or financial condition which existed prior to a loss, but without profit or gain. In life and health insurance, it may not be possible to truly indemnify a person for all losses. o Instead, indemnity takes the form of cash (a death or disability income benefit) or payments to physicians or hospitals for care and services provided to an insured who is injured or ill. Joint Life - CORRECT ANSWERS ✅Joint Life (First to Die) is a whole life policy that is written to cover 2 or more lives.
- The death benefit is paid upon the first insured to die and the policy terminates.
Agent Examination (Life Agent) Questions
Joint Survivorship - CORRECT ANSWERS ✅Joint Survivorship (Last to Die) is a whole life policy written to cover 2 or more lives, and the death benefit is not paid until the last insured dies. Family Policies - CORRECT ANSWERS ✅To this base life insurance policy, a term insurance rider is attached that is designed to provide a monthly income to the survivor if the insured dies during the specified term. Irrevocable Beneficiary - CORRECT ANSWERS ✅An irrevocable beneficiary has certain guaranteed rights to assets held in the policy, and this beneficiary must agree to any changes in rights to compensation from policyowner. Contributory Plan - CORRECT ANSWERS ✅A type of group insurance plan where employees pay 100% of premium payments and at least 75% of employees participate in this policy. Partial Surrender - CORRECT ANSWERS ✅A partial withdrawal is considered a partial surrender of a Universal or Variable Universal Life policy.
Agent Examination (Life Agent) Questions
delivery in California must contain a notice regarding a return of the policy for cancellation of 10-30 days after its receipt by the owner. o The minimum free look period is 10 days for persons under age 60. o Persons who are age 60 or older must be given a 30-day free look period. Uniform Simultaneous Death Act - CORRECT ANSWERS ✅Provides that when the insured and primary beneficiary die as the result of the same event and the order of death cannot be determined, it is assumed the insured died last, protecting their secondary beneficiary or heirs. Cease and Desist order - CORRECT ANSWERS ✅Given when unlicensed persons are caught transacting insurance without appropriate licensing, and penalties can be up to $5,000 a day. Immediate vs. Deferred Annuity - CORRECT ANSWERS ✅Immediate Annuity: Annuity that does not have an accumulation period and is used to generate immediate income within a year of the issue date. Deferred Annuity: Annuity that will pay periodic benefits starting at some specified time in the future; begins more than 1 year from the issue date. Deferred annuities are ideal for accumulating a retirement fund.
Agent Examination (Life Agent) Questions
Life Income Joint & Survivor - CORRECT ANSWERS ✅Joint annuity with lifetime income and is payable to 2 annuitants (in one check) while both are living. Upon the death of the first annuitant, survivor benefits continue, either paying the full amount of reduced to 2/3 or ½ for the survivor's income until the survivor dies. Joint Life Annuity - CORRECT ANSWERS ✅Annuity is payable to 2 or more named annuitants while all are living. o Upon death of the first annuitant, the benefit stops. Endow - CORRECT ANSWERS ✅Maturity date of policy, when it ends. Limit of Liability - CORRECT ANSWERS ✅Also known as the face amount it is the death benefit payable or coverage provided on a life insurance policy.
Agent Examination (Life Agent) Questions
PCP will either provide treatment after being the first contact for a person with an undiagnosed health concern, or make the determination to refer the subscriber to a specialist. Preferred Provider Organizations (PPO) - CORRECT ANSWERS ✅An Preferred Provider Organizations (PPO) is an arrangement under which a selected group of independent hospitals and medical practitioners become preferred providers in a geographic area. o Providers perform services to subscribers and charge a discounted fee-for-service negotiated in advanced. o The contracting agency or organizer of a PPO might be a commercial insurance company, Blue Cross/Blue Shield, local group of hospitals or physicians, an HMO, large employers, or trade unions. o PPOs share the concept of cost reduction by health care management and differ from HMOs in that PPOs do not have separate physical facilities and not as capable of controlling expenses other than negotiating standard fees for services with its network provider. Exclusive Provider Organization (EPO) - CORRECT ANSWERS ✅An EPO is a type of PPO that REQUIRES a subscriber to seek treatment from a limited number of network providers.
Agent Examination (Life Agent) Questions
Noncontributory Plan - CORRECT ANSWERS ✅Employers pay the entire premium and 100% of the eligible employees must be covered. Social Security Blackout Period - CORRECT ANSWERS ✅The time between when the youngest child reaches age 16 and the spouse is eligible for retirement benefits at age 60. Morbidity Tables - CORRECT ANSWERS ✅Morbidity: The predicted number of claims resulting from illness or injury in any given year for a specific group of insureds.
- Morbidity tables are used to provide statistics that give the company a basic estimate of how many insureds might be expected to suffer an illness or injury in any year. Fully Insured Status - CORRECT ANSWERS ✅• Fully Insured status requires an individual to have earned 40 quarters or credits, which is approximately 10 years of employment. o A fully insured worker has permanent coverage under Social Security and cannot lose this status. o Benefits that may be received under fully insured status are: Retirement income at age 62 or older. Spousal retirement at age 62 or older.
Agent Examination (Life Agent) Questions
advertised, marketed, offered, solicited, or designed to provide coverage for no more than 12 consecutive months. Adult Day Health Care - CORRECT ANSWERS ✅A LTC coverage designed to provide custodial care and supervision on a day care basis outside the home for individuals not requiring 24-hour confinement in a nursing home nut who continue to live at home. Custodial Care - CORRECT ANSWERS ✅Nonmedical care (non-skilled care) to provide assistance with activities of daily living such as bathing, toileting, eating, dressing, transferring, and continence. May be provided in a nursing home or in one's own home. Providers are not required to undergo medical training Hospice Care - CORRECT ANSWERS ✅Provides pain control, comfort, and counseling for the terminally ill patient. Hospice care also includes a family counseling benefit. Respite Care - CORRECT ANSWERS ✅Provides relief to a primary caregiver and can include a service, such as someone coming to the home while the original caregiver tends to other matters.
Agent Examination (Life Agent) Questions
Most policies will include benefits for temporary institutionalization of the insured during a period of respite. Assuming CE requirements have been met, how is the life agent's license renewed? - CORRECT ANSWERS ✅Pay the renewal billing notice the Department sends out 90 days before the renewal date. Assume two people apply for life insurance with exactly the same monthly premiums. One individual buys a whole life policy, and the other, a 10-year renewable term plan. Both are standard risks with no difference in their age or health rating. Select the statement from below which is false. C. The 10-year renewable term contract will have a premium increase every 10 years while the whole life policy premium remains level. D. The whole life policy will pay a higher amount to the beneficiary should the insured die within the first 10 years - CORRECT ANSWERS ✅D An annuity which may be used to help fund retirement in a few years maintains a "separate account". the owner purchases "accumulation units". This is called a ____ annuity. - CORRECT ANSWERS ✅Variable
Agent Examination (Life Agent) Questions
therefore it is a(n) ______________insurer. - CORRECT ANSWERS ✅Mutual All of the following are examples of the dividend options available on a whole life insurance policy, except: A. One-year term option B. Application to reduce premium C. Paid-up additions D. Life income with period certain - CORRECT ANSWERS ✅D A policy owner makes the last premium payment on his $250,000 non- par whole life policy today. The owner is 70 years of age. When will the cash value reach $250,000. A. About 13 years from now B. The cash value is $250,000 today C. Never, he didn't pay up to age 100 D. When he reaches the age of 100 - CORRECT ANSWERS ✅D
Agent Examination (Life Agent) Questions
Arnold and Bertha are married and work for different firms. Arnold has group health insurance through his company that also insures Bertha. Likewise Bertha has group health insurance also covering Arnold. Select the correct statement below about how benefits are affected by the coordination of benefits provision in both plans. A. If Bertha files a medical claim Arnold's company is considered secondary. B. If Arnold files a medical claim Bertha's company is considered primary C. First the secondary insurer will decide what it won't pay for which will dictate what the primary insurer will pay D. Since both Arnold and Bertha are covered by a group plan neither insurer will pay if the other insurer is primary - CORRECT ANSWERS ✅D All of the following are used in determining life insurance rates, except: A. Investment and interest return B. Insurance company expenses C. Mortality expenses D. Policy reserves - CORRECT ANSWERS ✅Policy Reserves
