EXAM CRAM - Bonus Exam Questions (p. 5- 8)

Question 1

How often MUST an insurer file the National Association of
Insurance Commissioners (NAIC) financial statement?

Answer 1

Annually.

EC - Page 5, #43

Question 2

A person authorized by and on behalf of an insurer who transacts life, disability or life, and accident and health insurance is defined as a:

Answer 2

life agent.

Question 3

An insurer entitled to transact business by complying with the California Insurance Code is
known as an:

Answer 3

admitted carrier.

Question 4

Who are the members of the Medical Information Bureau?

Answer 4

Life and Health insurers.

Question 5

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?

Answer 5

Even though your misdemeanor conviction was expunged, you must still disclose your misdemeanor conviction on your individual application for an insurance license.

Question 6

The DIRECT RESPONSE DISTRIBUTION of Insurance utilizes all of the following to promote the sales of insurance EXCEPT:

Answer 6

Telephone call from the agent.

Question 7

The increase in the probability of a loss resulting from an insured’s dishonest tendencies is known as:

Answer 7

Moral hazard.

Question 8

Name an agreement in which an insurer contacts with a third party to insure itself against losses from insurance policies it issues?

Answer 8

Reinsurance.

Question 9

Which if the following would an agent be guilty of for misrepresenting the amount of dividends a policy will pay?

Answer 9

A misdemeanor.

Question 10

What rule is used to determine the importance of a representation?

Answer 10

The materiality of concealment.

Question 11

Which of the following is a hazard?

Answer 11

A condition that may increase the likelihood of a loss occurring.

Question 12

When are parties to a contract REQUIRED to communicate information solely based on personal judgment for a matter in
question?

Answer 12

Never.

Question 13

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:

Answer 13

Using Guarantee Funds to pay salaries.

Question 14

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.

Answer 14

Thirty (30) days.

Question 15

The insurer’s department with PRIMARY responsibility for the risk selection process is called:

Answer 15

Underwriting

Question 16

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:

Answer 16

For a minimum of 120 months and a maximum of the remainder of his life.

Question 17

All of the following information is gathered during the personal financial planning process EXCEPT:

Answer 17

a listing of a person’s civic and professional organization memberships.

Question 18

Which policy provision allows an insured to continue coverage under a previously lapsed policy?

Answer 18

The REINSTATEMENT provision

Question 19

According to the California Insurance Code, governing the use of Life Insurance policy illustrations, the term illustration means:

Answer 19

a presentation of policy features that includes non-guaranteed elements.

Question 20

The life insurance grace period allows the insured to:

Answer 20

pay the premium after the due date without loss of coverage.

Question 21

When a family policy covers children, all of the following are true, EXCEPT:

Answer 21

Evidence of insurability is required to convert coverage for children to permanent insurance.

Question 22

An attempt by an agent to deter an insured from replacing an existing life insurance policy is called:

Answer 22

Conservation.

Question 23

Which of the following would an agent be guilty of for
misrepresenting the amount of dividends a policy will pay?

Answer 23

A misdemeanor.

Question 24

The additional premium charged by an insurer for adding the accidental death benefit to a whole life policy

Answer 24

Does not affect the policy’s cash value.

Question 25

How much employer-provided Group Term Life insurance is exempt from income taxation?

Answer 25

$50,000.

Question 26

How long is the free cancellation period for the life insurance offered to individuals who are 60 or older?

Answer 26

30 days.

Question 27

What does the statement “life insurance created an immediate estate” mean?

Answer 27

The total death benefit is paid whenever the insured dies.

Question 28

Which report of an insurance applicant’s creditworthiness and personal characteristics may influence eligibility for life and health
insurance?

Answer 28

Consumer report.

Question 29

In Group Life insurance, who is issued a certificate of insurance?

Answer 29

The participant.

Question 30

Which type of insurance guarantees the right to renew the policy each year, regardless of health, but at an increased premium?

Answer 30

Renewable term.

Question 31

If a life agent sells a whole life policy to a prospect on behalf of an insurer without an appointment:

Answer 31

The insurer must submit a notice of appointment to the Commissioner.

Question 32

Which component of a life insurance premium is based on the insured’s age and gender?

Answer 32

Mortality.

Question 33

Which benefits are provided by key employee insurance?

Answer 33

Payment to a business when an important employee dies.

Question 34

How can partners guarantee a market for their share of the business in the event of death?

Answer 34

Buy-sell agreements.

Question 35

Which policy covering two or more individuals pays the face amount only when the first person dies?

Answer 35

Joint Life policy.

Question 36

Which two insurance products are commonly used to fund buy-sell agreements?

Answer 36

Life insurance and Disability insurance.

Question 37

Which policy provision protects the insurer against possible adverse selection?

Answer 37

Suicide clause.

Question 38

Which type of insurance coverage has both a savings element and a flexible premium option?

Answer 38

Universal Life.

Question 39

A life insurance policy written after 1988 that fails to meet the Seven- Pay test is known as:

Answer 39

a Modified Endowment Contract. (MEC)

Question 40

What type of insurance policy provides a death benefit that matches the projected outstanding debt on an individual’s home?

Answer 40

Mortgage redemption.

Question 41

An agent who violates the laws governing life insurance policy illustrations is subject to all of the following EXCEPT:

Answer 41

mandatory termination of all insurer appointments.