Exam 5

Question 1

E5Q1. Any transaction that involves purchasing a life insurance policy and terminating an existing policy is known as:

Answer 1

Replacement

Question 2

E5Q2. According to the CA Insurance Code, in which of the following classes of insurance can a binder NOT be issued?

Answer 2

Life insurance

Question 3

E5Q3. An organization will cease to exist as an entity eligible to hold a license for all of the following reasons, except:

Answer 3

Termination of a key employee

Question 4

E5Q4. What does it mean if an agent’s license is inactive?

Answer 4

The agent cannot transact any insurance business for which a license is required

Question 5

E5Q5. If the Commissioner issues a Notice of Seizure for documents and the individual fails to send these documents what is the penalty?

Answer 5

1 year in jail and/or $1,000 fine

Question 6

E5Q6. Which of the following must any person engaged in the business of acting as an insurance agent or broker who receives compensation for arranging or directing sales in connection with a premium financing agreement do?

Answer 6

Maintain a list of accounts in connection with compensation exempted in premium financing payments for three years

Question 7

E5Q7. All of the following would be considered one of the three major types of loss exposures, except:

Answer 7

Financial loss exposure

Question 8

E5Q8. Tony Brown has a CLU certification. Which of the following names would be automatically approved for his agency’s use?

Answer 8

None of these would be automatically approved

Question 9

E5Q9. A person has paid $50,000 into a fixed annuity over 20 years. When he decides 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. In the first 10 years of payments ho much is taxable each year?

Answer 9

$2,000

Question 10

E5Q10. According to the Code, all insurers must maintain a department to investigate:

Answer 10

Possible fraudulent claims from the insureds

Question 11

E5Q11. What does the Insurance Commissioner have the right to do if an agent lacks authority from an insurer named on a binder for coverage?

Answer 11

Suspend or revoke the license of the agent

Question 12

E5Q12. An insured bought an annuity ten years ago. He will retire in five years. To determine the value of the annuity, the number of accumulation units is multiplied by the value of the separate account. What type of annuity was purchased?

Answer 12

Variable annuity

Question 13

E5Q13. The class beneficiary designation which means that the beneficiaries will receive equal shares of the death benefit divided among the surviving members of the class is:

Answer 13

Per capita

Question 14

E5Q14. The mathematical rule that says that as the number of individual but similar exposure units increases the easier it is to predict losses is which of the following?

Answer 14

The law of large numbers

Question 15

E5Q15. Which of the following is a description of a Life and Disability Analyst?

Answer 15

A person licensed to advise clients about life and disability insurance for a fee

Question 16

E5Q16. What happens to a license after the death of a natural person who holds a valid insurance license?

Answer 16

It always terminates

Question 17

E5Q17. Which of the following are common insurance policy provisions?

Answer 17

Entire contract, grace period, reinstatement

Question 18

E5Q18. With the cost of living rider, the life insurance policy holder:

Answer 18

Gets the automatic increase in the face value if there is an increase in the cost of living index. There is an additional premium for the additional coverage.

Question 19

E5Q19. All of the following is required on a life insurance application, except:

Answer 19

The amount of disability income insurance in force

Question 20

E5Q20. All of the following statements regarding survivorship life insurance are true, except:

Answer 20

The policy face amount is made out based only on the death of the first to die

Question 21

E5Q21. Which of the following is not an option for the use of the policy dividends?

Answer 21

Fund the distribution of monthly income payment

Question 22

E5Q22. What information can a party to a contract of insurance be allowed NOT to communicate according to California law?

Answer 22

Information which the other party already knows