CA LIFE AND HEALTH INSURANCE EXAM 3 2024-2025 ACTUAL EXAM
QUESTIONS AND CORRECT DETAILED ANSWERS
Study online at https://quizlet.com/_fz6ro8
1. A family's need for income is Family Dependency Period
greatest during the
Time after the insured has died, leaving a
surviving spouse with dependent children to
support.
2. Which of the following would Vacation travel expenses
be least likely to be consid-
ered a legitimate need that
would be paid by insurance THere are many legitimate need-based ex-
proceeds? penses that can be paid by life insurance
proceeds, from groceries to retirement in-
come. Vacation expenses are most likely to
be considered a luxury and not a need.
3. Which of the following is NOT D. Estimated Longevity
a type of information that
needs to be gathered in or- There are four main types of information that
der to determine the value an insurer needs to obtain in order to deter-
of someone's life when using mine the value of some's life: debt status,
the needs approach? income, mortgage, and expenses. Longevity
A. Outstanding debt is not a factor in the personal financial plan-
B. Mortgages ing process.
C. Expenses
D. Estimated longevity
4. What falls in the category of Costs would take into account final med-
costs associated with death? ical expenses the insured, funeral expenses,
and a day to day expenses of maintaining
the family including rent or mortgage pay-
ments, car payments, utilities, groceries, etc.
5. What is the preretirement pe- Period after children are no longer depen-
riod? dent upon surviving spouse for support, but
before surviving spouse qualifies for social
security benefits.
6. What is the human life Value Human Life Value Approach gives the in-
approach? sured an estimate of what would be lost to
, CA LIFE AND HEALTH INSURANCE EXAM 3 2024-2025 ACTUAL EXAM
QUESTIONS AND CORRECT DETAILED ANSWERS
Study online at https://quizlet.com/_fz6ro8
the family in the event of premature death
of the insured. Calculates and individuals
life value by looking at the insured's wages,
inflation, number of years to retirement, and
time value of money.
7. What is the needs approach? Based on predicted needs of a family after
the premature death of an insured.
Some factors are income, amount of debt,
investments, and other ongoing expenses.
8. What is a Key person Insur- Business suffers a financial loss because
ance? of the premature death of a key employ-
ee--someone who has a specialized knowl-
edge, skills or business contacts.
9. What is it when buy-sell in- Buy Sell Insurance is a legal contract that
surance? determines what will be done with a busi-
ness in the event that an owner dies or be-
comes disabled. Also, referred to as busi-
ness continuation agreement.
10. Cross Purchase Used in partnerships when each partner
buys a policy on the other
11. Entity Purchase When the partnerships buy the policies on
the partners
12. Stock Purchase used by privately owned corporations when
each stockholder buys a policy on each of
the others
13. Stock redemption when the corporations buys one policy on
each shareholder
14. In comparison to consumer THE CUSTOMER'S ASSOCIATES,
reports, which of the fol- FRIENDS, AND NEIGHBORS PROVIDE
lowing describes a unique THE REPORT'S DATA.
, CA LIFE AND HEALTH INSURANCE EXAM 3 2024-2025 ACTUAL EXAM
QUESTIONS AND CORRECT DETAILED ANSWERS
Study online at https://quizlet.com/_fz6ro8
characteristic of investigative
consumer reports? Both consumer reports and investigative
consumer reports provide additional infor-
mation from an outside source about a cus-
tomer's character and reputation, and both
types of reports are used under the Fair
Credit Reporting Act. The main difference
is that the information for investigative con-
sumer reports is obtained through an in-
vestigation and interviews with associates,
friends and neighbors of the consumer.
15. Which of the following must Insurance monetary value index
be disclosed in all advertise-
ments and policies of term
life insurance for individuals When a term life insurance monetary value
55 years of age or older? index is adopted by the commissioner, it
must be disclosed in all advertisements and
policies of term life insurance for individuals
age 55 and older.
16. Which of the following is an Cash Value available to the policy owner:
example of liquidity in a life
insurance contract?
Liquidity in life insurance refers to availability
of cash to the insured. Some life insurance
policies offer cash values that can be bor-
rowed at any time and used for immediate
needs.
17. Which of the following is NOT Need is predicted using the number of years
true regarding the Needs Ap- until the insured's retirement.
proach method of determin-
ing the value of an individ- NEEDS APPROACH: need is determined by
ual's life? the predicted needs of the family after the
premature of the insured, which must be as-
sumed will happen immediately. The policy
allows for benefits to be collected upon the
insured's death.
, CA LIFE AND HEALTH INSURANCE EXAM 3 2024-2025 ACTUAL EXAM
QUESTIONS AND CORRECT DETAILED ANSWERS
Study online at https://quizlet.com/_fz6ro8
18. Why should the producer To help the insured understand all aspects
personally deliver the policy of the contract.
when the first premium has
already been paid?
It is the producer's responsibility to make
sure that the policy is understood by the in-
sured and all of their questions are satisfied,
and the delivery receipt is signed.
19. If an insured changes his Decreases, because the insurer would have
payment plan from monthly the entire premium to invest for a full year,
to annually, what happens to they would reduce the premium amount.
the total premium?
20. If a business owner becomes C. Loss of the owner's income
totally disabled, a business
overhead expense policy will If business owners want coverage for the
pay all of the following EX- loss of their own income due to total dis-
CEPT ability, they need to purchase a separate
A. Utilities individual disability income policy.
B. Employee payroll
C. Loss of the owner's in-
come
D. Rent
21. The mode of premium pay- Frequency and amount of the premium pay-
ment ment.
Refers to frequency policy owner pays the
premium: monthly, quarterly, semiannually,
or annually.
22. Within how many days of 3 days: investigative consumer reports can-
requesting an investigative not be made unless the consumer is advised
consumer report must an in- in writing about the report within 3 days of
surer notify the consumer in the date the report was requested.
QUESTIONS AND CORRECT DETAILED ANSWERS
Study online at https://quizlet.com/_fz6ro8
1. A family's need for income is Family Dependency Period
greatest during the
Time after the insured has died, leaving a
surviving spouse with dependent children to
support.
2. Which of the following would Vacation travel expenses
be least likely to be consid-
ered a legitimate need that
would be paid by insurance THere are many legitimate need-based ex-
proceeds? penses that can be paid by life insurance
proceeds, from groceries to retirement in-
come. Vacation expenses are most likely to
be considered a luxury and not a need.
3. Which of the following is NOT D. Estimated Longevity
a type of information that
needs to be gathered in or- There are four main types of information that
der to determine the value an insurer needs to obtain in order to deter-
of someone's life when using mine the value of some's life: debt status,
the needs approach? income, mortgage, and expenses. Longevity
A. Outstanding debt is not a factor in the personal financial plan-
B. Mortgages ing process.
C. Expenses
D. Estimated longevity
4. What falls in the category of Costs would take into account final med-
costs associated with death? ical expenses the insured, funeral expenses,
and a day to day expenses of maintaining
the family including rent or mortgage pay-
ments, car payments, utilities, groceries, etc.
5. What is the preretirement pe- Period after children are no longer depen-
riod? dent upon surviving spouse for support, but
before surviving spouse qualifies for social
security benefits.
6. What is the human life Value Human Life Value Approach gives the in-
approach? sured an estimate of what would be lost to
, CA LIFE AND HEALTH INSURANCE EXAM 3 2024-2025 ACTUAL EXAM
QUESTIONS AND CORRECT DETAILED ANSWERS
Study online at https://quizlet.com/_fz6ro8
the family in the event of premature death
of the insured. Calculates and individuals
life value by looking at the insured's wages,
inflation, number of years to retirement, and
time value of money.
7. What is the needs approach? Based on predicted needs of a family after
the premature death of an insured.
Some factors are income, amount of debt,
investments, and other ongoing expenses.
8. What is a Key person Insur- Business suffers a financial loss because
ance? of the premature death of a key employ-
ee--someone who has a specialized knowl-
edge, skills or business contacts.
9. What is it when buy-sell in- Buy Sell Insurance is a legal contract that
surance? determines what will be done with a busi-
ness in the event that an owner dies or be-
comes disabled. Also, referred to as busi-
ness continuation agreement.
10. Cross Purchase Used in partnerships when each partner
buys a policy on the other
11. Entity Purchase When the partnerships buy the policies on
the partners
12. Stock Purchase used by privately owned corporations when
each stockholder buys a policy on each of
the others
13. Stock redemption when the corporations buys one policy on
each shareholder
14. In comparison to consumer THE CUSTOMER'S ASSOCIATES,
reports, which of the fol- FRIENDS, AND NEIGHBORS PROVIDE
lowing describes a unique THE REPORT'S DATA.
, CA LIFE AND HEALTH INSURANCE EXAM 3 2024-2025 ACTUAL EXAM
QUESTIONS AND CORRECT DETAILED ANSWERS
Study online at https://quizlet.com/_fz6ro8
characteristic of investigative
consumer reports? Both consumer reports and investigative
consumer reports provide additional infor-
mation from an outside source about a cus-
tomer's character and reputation, and both
types of reports are used under the Fair
Credit Reporting Act. The main difference
is that the information for investigative con-
sumer reports is obtained through an in-
vestigation and interviews with associates,
friends and neighbors of the consumer.
15. Which of the following must Insurance monetary value index
be disclosed in all advertise-
ments and policies of term
life insurance for individuals When a term life insurance monetary value
55 years of age or older? index is adopted by the commissioner, it
must be disclosed in all advertisements and
policies of term life insurance for individuals
age 55 and older.
16. Which of the following is an Cash Value available to the policy owner:
example of liquidity in a life
insurance contract?
Liquidity in life insurance refers to availability
of cash to the insured. Some life insurance
policies offer cash values that can be bor-
rowed at any time and used for immediate
needs.
17. Which of the following is NOT Need is predicted using the number of years
true regarding the Needs Ap- until the insured's retirement.
proach method of determin-
ing the value of an individ- NEEDS APPROACH: need is determined by
ual's life? the predicted needs of the family after the
premature of the insured, which must be as-
sumed will happen immediately. The policy
allows for benefits to be collected upon the
insured's death.
, CA LIFE AND HEALTH INSURANCE EXAM 3 2024-2025 ACTUAL EXAM
QUESTIONS AND CORRECT DETAILED ANSWERS
Study online at https://quizlet.com/_fz6ro8
18. Why should the producer To help the insured understand all aspects
personally deliver the policy of the contract.
when the first premium has
already been paid?
It is the producer's responsibility to make
sure that the policy is understood by the in-
sured and all of their questions are satisfied,
and the delivery receipt is signed.
19. If an insured changes his Decreases, because the insurer would have
payment plan from monthly the entire premium to invest for a full year,
to annually, what happens to they would reduce the premium amount.
the total premium?
20. If a business owner becomes C. Loss of the owner's income
totally disabled, a business
overhead expense policy will If business owners want coverage for the
pay all of the following EX- loss of their own income due to total dis-
CEPT ability, they need to purchase a separate
A. Utilities individual disability income policy.
B. Employee payroll
C. Loss of the owner's in-
come
D. Rent
21. The mode of premium pay- Frequency and amount of the premium pay-
ment ment.
Refers to frequency policy owner pays the
premium: monthly, quarterly, semiannually,
or annually.
22. Within how many days of 3 days: investigative consumer reports can-
requesting an investigative not be made unless the consumer is advised
consumer report must an in- in writing about the report within 3 days of
surer notify the consumer in the date the report was requested.
