Life-Only Agent Exam # 1
"A contract whereby an individual deposits funds with a life insurance company, the
individual defers taxes on the buildup of savings within the contract and the
individual can choose to take money out in several ways upon retirement." What
does this describe?
A. A whole life policy
B. An annuity
C. A universal life policy
D. A term policy
Answer: B
A husband and wife have a disabled child who is financially dependent upon them.
The death of one parent would not result in financial disaster for the disabled child,
but the death of both parents would. Which policy should they purchase?
A. Joint life policy
B. First-to-die policy
C. Second-to-die policy
D. Two separate policies
Answer: C
A life insurance policy dividend is:
A. Taxable as ordinary income
B. Legally defined as a return of excess premium and not taxable
C. Taxable as capital gains
D. Tax-deferred until withdrawn
Answer: B
A life insurance policy written after 1988 that fails to meet the seven-pay test is
known as:
A. A universal life contract
,B. A variable life contract
C. A modified endowment contract
D. An adjustable life contract
Answer: C
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:
A. For exactly 120 months
B. For the remainder of his life only
C. For a minimum of 120 months and a maximum of the remainder of his life
D. For a maximum of 120 months
Answer: C
A policy is issued to a 32 year old that has a face amount of $100,000. When the
insured reaches the age 55, the policy has built up $100,000 of cash value. Choose
from the selections below the type of policy this most likely describes:
A. A whole life policy
B. A universal life policy
C. An endowment at age 55 policy
D. A term life policy
Answer: C
A type of receipt stating that coverage begins on the date of the application as long
as the insurer approves the application is a:
A. Binding Receipt
B. Conditional Receipt
C. Temporary Receipt
D. Approval Receipt
Answer: B
, A written contract attempts to indemnify another party against loss, damage, or
liability arising from a contingent or unknown event. This describes:
A. A warranty
B. Insurance
C. A guarantee
D. An investment
Answer: B
According to the CA Insurance Code, an insured's policy must specify all of the
following, EXCEPT:
A. The policy period
B. The financial rating of the insurer
C. The property or life being insured
D. The risks insured against
Answer: B
According to the California Insurance Code, a binder is a valid insurance policy for
the purpose of proving the insured has issued insurance coverage specified in the
binder for all of the following classes of insurance EXCEPT:
A. Marine
B. Auto
C. Life
D. Fire
Answer: C
According to the California Insurance Code, an insurance policy must be:
A. In writing
B. Verbal or written
C. Notarized
D. Filed with the state
"A contract whereby an individual deposits funds with a life insurance company, the
individual defers taxes on the buildup of savings within the contract and the
individual can choose to take money out in several ways upon retirement." What
does this describe?
A. A whole life policy
B. An annuity
C. A universal life policy
D. A term policy
Answer: B
A husband and wife have a disabled child who is financially dependent upon them.
The death of one parent would not result in financial disaster for the disabled child,
but the death of both parents would. Which policy should they purchase?
A. Joint life policy
B. First-to-die policy
C. Second-to-die policy
D. Two separate policies
Answer: C
A life insurance policy dividend is:
A. Taxable as ordinary income
B. Legally defined as a return of excess premium and not taxable
C. Taxable as capital gains
D. Tax-deferred until withdrawn
Answer: B
A life insurance policy written after 1988 that fails to meet the seven-pay test is
known as:
A. A universal life contract
,B. A variable life contract
C. A modified endowment contract
D. An adjustable life contract
Answer: C
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:
A. For exactly 120 months
B. For the remainder of his life only
C. For a minimum of 120 months and a maximum of the remainder of his life
D. For a maximum of 120 months
Answer: C
A policy is issued to a 32 year old that has a face amount of $100,000. When the
insured reaches the age 55, the policy has built up $100,000 of cash value. Choose
from the selections below the type of policy this most likely describes:
A. A whole life policy
B. A universal life policy
C. An endowment at age 55 policy
D. A term life policy
Answer: C
A type of receipt stating that coverage begins on the date of the application as long
as the insurer approves the application is a:
A. Binding Receipt
B. Conditional Receipt
C. Temporary Receipt
D. Approval Receipt
Answer: B
, A written contract attempts to indemnify another party against loss, damage, or
liability arising from a contingent or unknown event. This describes:
A. A warranty
B. Insurance
C. A guarantee
D. An investment
Answer: B
According to the CA Insurance Code, an insured's policy must specify all of the
following, EXCEPT:
A. The policy period
B. The financial rating of the insurer
C. The property or life being insured
D. The risks insured against
Answer: B
According to the California Insurance Code, a binder is a valid insurance policy for
the purpose of proving the insured has issued insurance coverage specified in the
binder for all of the following classes of insurance EXCEPT:
A. Marine
B. Auto
C. Life
D. Fire
Answer: C
According to the California Insurance Code, an insurance policy must be:
A. In writing
B. Verbal or written
C. Notarized
D. Filed with the state
