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Agent Examination (Life Agent) Exam
Question & Answers 2025
Admitted Insurance Company vs. Non-Admitted Insurance Company - CORRECT ANSWER ✔✔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 ANSWER ✔✔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 ANSWER ✔✔One party writes the contract without inout from the other party on a "take-it-or-leave-it" basis
Agent Examination (Life Agent) Exam
Question & Answers 2025
Aleatory Contract - CORRECT ANSWER ✔✔The exchange of value is unequal. Insured's premium payment is less than the potential benefit to be received in the event of a loss. Indemnity Contract - CORRECT ANSWER ✔✔An agreement to pay on behalf of another party under specified circumstances Unilateral Contract - CORRECT ANSWER ✔✔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 ANSWER ✔✔1) Competent Parties
- Legal Purpose
- Agreement (offer and acceptance)
- Consideration
Agent Examination (Life Agent) Exam
Question & Answers 2025
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 ANSWER ✔✔Life Insurance Disability Rider
Agent Examination (Life Agent) Exam
Question & Answers 2025
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. 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 ANSWER ✔✔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.
Agent Examination (Life Agent) Exam
Question & Answers 2025
o There is no guaranteed minimum return on the cash value in the separate account and the policy may lose both cash value and death benefit if there are market losses. o The death benefit is recalculated annually. The general account provides a fixed rate of interest and the cash value in the general account provides for a guaranteed minimum death benefit. Viatical Settlement - CORRECT ANSWER ✔✔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 ANSWER ✔✔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.
Agent Examination (Life Agent) Exam
Question & Answers 2025
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 ANSWER ✔✔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. Joint Survivorship - CORRECT ANSWER ✔✔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 ANSWER ✔✔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 ANSWER ✔✔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.
Agent Examination (Life Agent) Exam
Question & Answers 2025
- The grace period in California is 60 days. Incontestability clause - CORRECT ANSWER ✔✔Within the first 2 years of a policy, the insurer may contest a claim and void the contract upon proof of a material misstatement or fraud. Free Look - CORRECT ANSWER ✔✔Every policy of individual life insurance and annuities (other than variable contracts) that is used for 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 ANSWER ✔✔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 ANSWER ✔✔Given when unlicensed persons are caught transacting insurance without appropriate licensing, and penalties can be up to $5,000 a day.
Agent Examination (Life Agent) Exam
Question & Answers 2025
Immediate vs. Deferred Annuity - CORRECT ANSWER ✔✔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. Life Income Joint & Survivor - CORRECT ANSWER ✔✔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 ANSWER ✔✔Annuity is payable to 2 or more named annuitants while all are living. o Upon death of the first annuitant, the benefit stops.
Agent Examination (Life Agent) Exam
Question & Answers 2025
o Copayment is required for office visits and hospital services. Copayments discourage unnecessary use of medical resources, such as emergency room services for non-emergency care. o HMOs are deemed to be both a health care financing and servicing mechanism by emphasizing preventive medicine by providing routine medical exams, wellness programs, and diagnostic screenings. Services include usual physician, hospitalization, prescription drugs, laboratory, x-ray, urgent care. Primary Care Physician (PCP) - CORRECT ANSWER ✔✔Gatekeeper in HMOs 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 ANSWER ✔✔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.
Agent Examination (Life Agent) Exam
Question & Answers 2025
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 ANSWER ✔✔An EPO is a type of PPO that REQUIRES a subscriber to seek treatment from a limited number of network providers. Noncontributory Plan - CORRECT ANSWER ✔✔Employers pay the entire premium and 100% of the eligible employees must be covered. Social Security Blackout Period - CORRECT ANSWER ✔✔The time between when the youngest child reaches age 16 and the spouse is eligible for retirement benefits at age 60.
Agent Examination (Life Agent) Exam
Question & Answers 2025
o The shorter the elimination period, the higher premium. Medi-cal - CORRECT ANSWER ✔✔• Medi-Cal is the name of the Medicaid program in California that provides health coverage to people with low-income and asset levels who meet eligibility requirements. o For individuals age 19 through 64 and not confined to an institutional setting, Medi-Cal eligibility is conditioned only on a household's annual income. o Benefits: Medi-Cal pays for "medically necessary" health care including" physician visits, hospital and nursing home care, home health care, laboratory and x-ray services, prescriptions, medical equipment, ambulance services, eyeglasses, prenatal care, preventive care, and hospice. Long-Term Care - CORRECT ANSWER ✔✔• Long-Term Care (LTC) insurance includes any individual policy, group policy or rider that is advertised, marketed, offered, solicited, or designed to provide coverage for no more than 12 consecutive months. Adult Day Health Care - CORRECT ANSWER ✔✔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.
Agent Examination (Life Agent) Exam
Question & Answers 2025
Custodial Care - CORRECT ANSWER ✔✔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 ANSWER ✔✔Provides pain control, comfort, and counseling for the terminally ill patient. Hospice care also includes a family counseling benefit. Respite Care - CORRECT ANSWER ✔✔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. 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 ANSWER ✔✔Pay the renewal billing notice the Department sends out 90 days before the renewal date.
Agent Examination (Life Agent) Exam
Question & Answers 2025
What regard to the tax treatment of the death benefit in life insurance is true? - CORRECT ANSWER ✔✔Death benefits are exempt from taxation A hospital confinement indemnity insurance policy pays: - CORRECT ANSWER ✔✔A daily dollar benefit for each day the insured is confined to a hospital Disability income insurance offers various riders to supplement benefits from these policies. The Social Security rider: - CORRECT ANSWER ✔✔Helps establish a limit for the amount of income benefits paid to an insured who will receive substantial benefits that may or may not be paid from government programs. Sam's insurance policy pays a dividend. the agent that sold Sam the policy refers to the shareholders of the company as "participating", therefore it is a(n) ______________insurer. - CORRECT ANSWER ✔✔Mutual All of the following are examples of the dividend options available on a whole life insurance policy, except:
Agent Examination (Life Agent) Exam
Question & Answers 2025
A. One-year term option B. Application to reduce premium C. Paid-up additions D. Life income with period certain - CORRECT ANSWER ✔✔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 ANSWER ✔✔D 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.
