LIFE INSURANCE - PRACTICE TEST QUESTIONS AND ANSWERS 2025, Exams of Advanced Education

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LIFE INSURANCE - PRACTICE TEST QUESTIONS

AND ANSWERS 2025

A special characteristic of insurance contract where equal value is not exchanged between parties is known as: - Aleatory Life insurance contracts are ___ agreements - Unilateral What is the proper definition of "take it or leave it" contracts written by insurer? - Adhesion using the human value approach, the best way to figure out the amount of death benefit is based on?: A. proposed insured's life span B. proposed insured's retirement date C. proposed insured's health status D. proposed insured's potential earnings - D. proposed insured's potential earnings an insurer pays a refund from the surplus of profits to the holder of a participating policy. what is this payment called? A. unlawful rebate B. dividend C. annuity D. not legal, as only stock companies pay dividends - B. policy dividend the non-forfeiture provision that would give the insured the most amount of coverage would be? A. cash surrender value B. extended term insurance C. reduced paid up insurance D. automatic premium loan - B. extended term insurance if you choose the settlement option of receiving fixed monthly installments or fixed amounts, you may receive an amount that is: A. more than the face amount B. less than the face amount C. the same as the face amount D. none of the above - A. more than the face amount. an individual, who wishes to provide a retirement income for himself that will also provide retirement income for his wife in the event that he dies, should purchase which of the following? A. life annuity with period certain B. a refundable life annuity

C. joint and survivor life annuity D. immediate annuity - C. joint and survivor life annuity a pure life annuity offers protection against the risk of: A. death during the earning years B. disability during the earning years C. outliving one's income D. death after the age of retirement - C. outliving one's income a ____ is a product used to accumulate funds and later liquidate that amount? A. industrial life policy B. term life policy C. annuity D. life paid up at 65 - C. annuity the period of time during which a deferred annuity builds its value is referred to as? A. an accumulation period B. an annuity period C. an elimination period D. a waiting period - A. accumulation period a life annuity with a 10-year period certain: A. will pay the annuitant only for 120 months B. is guaranteed to pay for a minimum of 120 months either to the annuitant or beneficiary C. will pay the annuitant for 10 years and continue for 10 years, but the amount will be less D. will pay the annuitant for life and the beneficiary for 10 years after the death of the annuitant - B. is guaranteed to pay for a MINIMUM of 120 months either to the annuitant or beneficiary Robert works for a small business that just offered employees a group heath insurance plan. 75% of eligible employees must sign up. Which statement is true? A. This is non-contributory plan B. This is a contributory plan C. This is a shared risk plan D. All group health insurance plans require maximum 75% participation - B. This is a contributory plan A multiple employee trust (MET) is: A. A legal entity formed to provide groups of small business owners with group health and other types of employee benefit programs B. A third party administrator may not form a MET C. Never composed of employers in same industry D. None of the above - A.

A. established by the commissioner's office of the dept. of insurance B. legislative procedures of the CA assembly C. contained in the CA insurance code D. have no relationship or effect on the CA insurance code - A. established by the commissioner's office of the dept. of insurance which of the following is not used in determining health insurance rates? A. expenses B. interset C. morbidity D. mortality - D. mortality which provision policy allows the insured to buy more insurance, at specified intervals, with no proof of insurability? A. convertibility provision B. guaranteed insurability rider C. paid up additions provision D. reinstatement provision - B. Guaranteed insurability rider a waiver of premium rider: A. allows insured to cancel a policy within 90 days and receive 100% premium refund B. allows insured to cancel policy after 3 years and receive refund of premium C. allows insured to waive premium if the insured becomes totally disabled D. if the insured is permanently disabled, the insurer may retroactively waive premium payments from start of disability - D. the entire contract provision states which of the following in addition to the policy: A. the application B. the application and credit references C. a statement from the agent and application D. the insureds name and underwriting procedures - A. the application an individual has a hospital indemnity plan that pays $500/day. this person is hospitalized for two days and the bills are $400/day. how much will the company pay? A. $ B. $1, C. $ D. $100 - B. $1, an amount that must be paid after the basic health policy benefits are exhausted and before the excess coverage becomes effective is: A. coinsurance B. corridor deductible C. extended benefits D. co-payment - B. corridor deductible

a type of health insurance referred to as "service plan" ... A. is more service oriented than most plans B. pays the provider directly for the cost of medical services C. provides broader services to its members D. pays insured directly for medical costs incurred - B. pays provider directly for the cost of medical services in a health maintenance organization (HMO) the use of a primary care physician (PCP) is common as part of the... A. group model B. capitation arrangement C. open enrollment D. gatekeeper system - D. gatekeeper system which of the following is not a recognized HMO model? A. staff B. group C. network D. independent practitioner - C. network each of the following is a principal factor of determining group premium rates except: A. location of business B. size of group C. financial stability of group D. number and frequency of new entrants into group - A. location of business group underwriters are concerned with what criteria that relates to the group as a whole? A. adverse selection B. size of group C. nature of group D. all of the above - D. all of the above the convertibility provision in group insurance means that: A. the insurer may convert the policy to another group insurance plan within 30 days notice B. the insured has 30 days to convert to another group plan at their anniversary date C. the insurer may convert the employees premium contribution with proper notice D. the insured may convert to another plan offered by the insurer when they no longer meet qualifications for group coverage - D. which of the following is an acronym for federal legislation covering the continuation of insurance coverage for terminated employees? A. COBRA B. ERISA C. OBRA

medicare provides: A. long term care benefits B. very limited nursing benefits C. broad coverage for intermediate care D. all of the above - B. very limited nursing benefits what provides counseling and comfort to terminally ill patients? A. adult day care B. HICAP C. hospice D. COBRA - C. hospice primary support for medicare part A comes from: A. general tax revenues B. social security payroll taxes C. private funding D. combo of above - B. SS payroll taxes who funds medi-cal? - state and federal funds medicare supplement policies: A. are provided by federal govt B. only pay for same health services covered by medicare C. pay some or all of medicare deductibes and co payments D. are necessary if individual is covered by medicare - C. medicare supplement policies may offer contracts that cover: A. policies with core benefits B. broader coverages with core benefits C. both of the above D. none of the above - D. when replacing medicare supplement policy it is considered unneccessary if replacement is done: A. 3 times in one year B. 2 times in one year C. 3 times in 6 months D. 2 times in 6 months - A. medicare supplement policy: A. prohibits exclusion of pre-existing conditions B. prohibits exclusion of pre-existing conditions if their occurred 6 months prior to policy C. prohibits exclusion of pre-existing conditions after policy has been in force for 6 months D. none of the above - C.

what is HICAP? - Health insurance counseling advocacy program which provides counseling for individuals to help them make best health insurance decisions, advises older people regarding medicare and does not endorse or sell specific types of insurance which of the following long term care policies wold have highest premium: A. 14 day elimination period with a 3 year benefit period B. 14 day elimination period with a 5 year benefit period C. 90 day elimination period with a 5 year benefit period D. 180 day elimination period with a 5 year benefit period - B. who would be most in need of purchasing comprehensive long term care policy: A. someone eligible for medi-cal B. someone with $300,000 annual income and assets of $2,000, C. someone with $60,000 income and $125,000 assets D. someone with $8,500 income and $5,000 assets - C. if mary wants to reduce premium on her long term care policy, what should she do? A. lengthen her elimination period B. lengthen her benefit period C. shorten her benefit period D. none of the above - A. the term used to apply to a break given to people caring full time for an individual in their home is: A. restoration B. intermediate care C. respite D. none of the above - C. respite An employee has lost access to their group term life insurance plan, but they are allowed to convert to a new plan. Which best describes this new plan? A. The new policy will be term life. The employer will pay a portion of the cost. B. The new policy will be cash value. The employer will pay a portion of the cost. C. The new policy will be term life. The employee pays all premiums. D. The new policy will be cash value. The employee pays all the premiums. - D. The definition of mortality and morbidity: A. They are virtually the same concept. B. Odds of dying versus the odds of disability. C. Odds of sickness versus the odds of dying. D. Odds of sickness versus odds of disability. - B. Which pair are Activities of Daily Living (ADLs)? A. Mobility & bathing

A. Straight life, life with ten years certain, life refund option B. Life with refund option, life with 10 years certain, straight life C. Life with ten year certain, life with refund option, straight life D. Life with refund option, straight life, life with 10 years certain - B. In a non-contributory group policy: A. 100% of employees must be allowed to participate. B. 75% of employees must elect to join the plan. C. 75% of eligible employees must elect to join the plan. D. 100% of eligible employees must participate. - D Your policy contains the guaranteed insurability rider. When can you purchase additional insurance on you policy? A. Without proof of insurability when the cost of living increases. B. Any time you wish once proving you are insurable for the additional coverage. C. Without evidence of insurability at specified ages or dates. D. At specified ages or date after providing evidence of insurance. - C Which best describes industrial insurance? A. $10,000 coverage and premiums paid by mail. B. $2,000 or less in coverage and premiums collected by agent. C. $50,000 coverage and premiums paid by mail. D. $100,000 coverage and premiums collected by agent. - B In contrasting stock insurers with mutual insurers, which statement is not false? A. Stock insurers are owned by the shareholders, and issue non-participating policies. B. Mutual insurers are owned by the shareholders, and issue participating policies. C. Stock dividends are tax-free while policy dividends are taxable. D. Non-participating policies can pay out dividends to the policyholders. - A What nonforfeiture option allows a policyowner to use the existing cash value to purchase a policy of the same face amount as the original policy but for a reduced amount of time? A. Extended term insurance B. Reduced paid-up insurance C. Cash surrender value D. Extended paid-up insurance - A Under which life settlement option does the insurer retain the death benefit but pays the beneficiary the earnings on the death benefit? A. Life income option B. Interest only option C. Cash option D. Accumulate with interest option - B Which statement is an accurate description of life insurance policy dividends?

A. Stock insurers pay dividends to policy owners, mutual insurers pay dividends to shareholders. B. They are guaranteed to be paid and they are taxable. C. They are likely to be larger in nonparticipating policies. D. They are not taxable and are not guaranteed. - D In the insurance planning processes, the blackout period is: A. The period of time after the youngest child reaches 16, but before the widow reaches 60, in which the surviving spouse receives no Social Security benefits. B. The period of time in which a policy can be rescinded due to the applicants intentional or unintentional misstatements on the application. C. The period of time in which the policy is still in force despite non-payment. D. The period of time in which an employee is not yet eligible to join a group life insurance plan. - A Sam has a $200,000 convertible life insurance policy. If he chooses, he can: A. Convert to another term policy with a lower face amount without proof of insurability. B. Purchase an individual annuity for any face amount using the 1035 exchange privilege. C. Convert to a whole life policy for the same face amount without proof of insurability. D. Purchase another term policy and increase his death benefit without proof of insurability. - C After 12 years, the policyowner decides she no longer needs the large death benefit on her whole life policy. She calls you, her agent, and you tell her she can use the reduced paid-up non-forfeiture option. Which of the following is not true about the new policy? A. The new policy will require no further premium payments. B. The new policy will be in effect until the age of 100, or until she dies, whichever occurs first. C. The new policy will expire in 10 years. D. The new death benefit is much lower than the original policy. - C Which type of insurer requires an attorney-in-fact overseen by an advisory committee of subscribers? A. Reciprocal insurer B. Mutual insurer C. Fraternal insurer D. Reinsurer - A Which of the following becomes part of the contract, is guaranteed to be true, and if untrue, may be grounds for rescinding the policy? A. Warranty B. Consideration C. Facility of payment clause D. Contract of adhesion - A