CA LIFE INSURANCE COMPREHENSIVE
EXAM #2 QUESTIONS AND ANSWERS
Which of the following riders is used to increase the death benefit if death is the result
of an unintended fatal injury, paying a multiple of the face amount? - ANSWER-
Accidental Death
If death is ruled to be accidental, the Accidental Death Rider pays a multiple (usually
double) of the death benefit of the underlying policy.
Alice finds she no longer is able to pay premiums on her $50,000 Whole Life Policy
but needs that amount of protection for her family. Which Nonforfeiture Option
provides this protection? - ANSWER-Extended Term
Extended Term would allow the present cash value of the policy to buy a single
premium term policy of the same face amount for the time period stated in the policy's
nonforfeiture table. Fixed Amount is a Settlement Option, and Paid-Up Option is a
Dividend Option.
Which of the following scenarios will cause the value of a life insurance policy death
benefit to be included in the insured's estate? - ANSWER-The insured is also the
policyowner
If the policyowner and the insured are the same person, the death benefit will be
included in the insured's estate.
If the entire cost of the policy is paid in a lump sum at the time of purchase, what
premium paying method was used? - ANSWER-Single
The person offering him/herself or another person to be insured by the contract best
defines the: - ANSWER-Applicant
The applicant is the party making the application, offering him/herself or another to be
insured. The applicant may possibly also be the insured and/or policyowner, but not
necessarily.
Linda wants her husband to be the beneficiary of her life policy but also wants to retain
all rights of ownership. Which of the following types of beneficiary designations should
she use? - ANSWER-Revocable beneficiary
By naming her husband as a revocable beneficiary, Linda would retain all rights of
ownership. To name her husband irrevocably would give her husband a vested
interest in policy benefits.
If an annuity is purchased in December and monthly benefits begin in January of the
following year, what type of annuity is it? - ANSWER-Single Premium Immediate
Annuity
, The question addresses when the actual receipt of benefits from an annuity begins.
When benefits begin within a year of the issue date, this is referred to as 'immediate'.
A universal life policy has a death benefit of $125,000 and a cash accumulation value
of $15,000. Generally, what will happen to the policy if there is a $5,000 partial
withdrawal? - ANSWER-The death benefit or cash accumulation will be reduced by
the partial withdrawal
A partial withdrawal also known as a partial surrender will cause the policy to have
either the face amount or cash accumulation reduced by the amount of the withdrawal.
Y just received an inheritance and instead of spending the money right now, decides
to put it away for the future. What annuity premium funding would be best in this
situation? - ANSWER-Single
A single premium would allow Y to have the peace of mind of knowing that the
inheritance is earning tax-deferred interest toward a future goal.
Which of the following term life insurance policies would be the most expensive,
everything else being equal at the time of issuance? - ANSWER-Renewable and
Convertible
To have a term policy with both features would mean that the term policy would be the
most expensive of the ones listed.
There are no brokers for which line of insurance in California? - ANSWER-Life
There are no brokers for life or disability insurance in California. All life licensees are
agents when transacting life or disability insurance, regardless of the language the
insurance company may use in its agency agreements, advertising, or other
communication.
Taxation applies to any ________ on the cash value paid out as a withdrawal of a
Universal Life policy. - ANSWER-Interest
Taxation applies to any interest on the cash value paid out as a withdrawal. In other
words, any amount paid in excess of the premium is subject to taxation.
Which of the following is a type of rating that does not involve an extra premium being
assessed? - ANSWER-The lien plan
With the lien plan, initially, only the premium would be refunded in case of death. The
death benefit increases over time with the full face amount eventually payable. This is
generally used with Senior Life Insurance plans to provide minimal benefits without a
medical examination.
EXAM #2 QUESTIONS AND ANSWERS
Which of the following riders is used to increase the death benefit if death is the result
of an unintended fatal injury, paying a multiple of the face amount? - ANSWER-
Accidental Death
If death is ruled to be accidental, the Accidental Death Rider pays a multiple (usually
double) of the death benefit of the underlying policy.
Alice finds she no longer is able to pay premiums on her $50,000 Whole Life Policy
but needs that amount of protection for her family. Which Nonforfeiture Option
provides this protection? - ANSWER-Extended Term
Extended Term would allow the present cash value of the policy to buy a single
premium term policy of the same face amount for the time period stated in the policy's
nonforfeiture table. Fixed Amount is a Settlement Option, and Paid-Up Option is a
Dividend Option.
Which of the following scenarios will cause the value of a life insurance policy death
benefit to be included in the insured's estate? - ANSWER-The insured is also the
policyowner
If the policyowner and the insured are the same person, the death benefit will be
included in the insured's estate.
If the entire cost of the policy is paid in a lump sum at the time of purchase, what
premium paying method was used? - ANSWER-Single
The person offering him/herself or another person to be insured by the contract best
defines the: - ANSWER-Applicant
The applicant is the party making the application, offering him/herself or another to be
insured. The applicant may possibly also be the insured and/or policyowner, but not
necessarily.
Linda wants her husband to be the beneficiary of her life policy but also wants to retain
all rights of ownership. Which of the following types of beneficiary designations should
she use? - ANSWER-Revocable beneficiary
By naming her husband as a revocable beneficiary, Linda would retain all rights of
ownership. To name her husband irrevocably would give her husband a vested
interest in policy benefits.
If an annuity is purchased in December and monthly benefits begin in January of the
following year, what type of annuity is it? - ANSWER-Single Premium Immediate
Annuity
, The question addresses when the actual receipt of benefits from an annuity begins.
When benefits begin within a year of the issue date, this is referred to as 'immediate'.
A universal life policy has a death benefit of $125,000 and a cash accumulation value
of $15,000. Generally, what will happen to the policy if there is a $5,000 partial
withdrawal? - ANSWER-The death benefit or cash accumulation will be reduced by
the partial withdrawal
A partial withdrawal also known as a partial surrender will cause the policy to have
either the face amount or cash accumulation reduced by the amount of the withdrawal.
Y just received an inheritance and instead of spending the money right now, decides
to put it away for the future. What annuity premium funding would be best in this
situation? - ANSWER-Single
A single premium would allow Y to have the peace of mind of knowing that the
inheritance is earning tax-deferred interest toward a future goal.
Which of the following term life insurance policies would be the most expensive,
everything else being equal at the time of issuance? - ANSWER-Renewable and
Convertible
To have a term policy with both features would mean that the term policy would be the
most expensive of the ones listed.
There are no brokers for which line of insurance in California? - ANSWER-Life
There are no brokers for life or disability insurance in California. All life licensees are
agents when transacting life or disability insurance, regardless of the language the
insurance company may use in its agency agreements, advertising, or other
communication.
Taxation applies to any ________ on the cash value paid out as a withdrawal of a
Universal Life policy. - ANSWER-Interest
Taxation applies to any interest on the cash value paid out as a withdrawal. In other
words, any amount paid in excess of the premium is subject to taxation.
Which of the following is a type of rating that does not involve an extra premium being
assessed? - ANSWER-The lien plan
With the lien plan, initially, only the premium would be refunded in case of death. The
death benefit increases over time with the full face amount eventually payable. This is
generally used with Senior Life Insurance plans to provide minimal benefits without a
medical examination.
