California Life Insurance State Exam Simulator
Questions and Answers
1. An annuitant would life to determine the amount of an annuity distribution
that is exempt from taxation. What is used to calculate this?
Mortality rate,
Exclusion ratio,
Morbidity rate,
Debt-to-Equity ration✔✔✔ Exclusion ratio
2. Which of the following is NOT a feature of equity-indexed annuities?
Offers long term inflation protection, Offers a minimum guaranteed rate,
Offers a maximum interest rate that increases annually, Offers protection
during a decline in the stock market✔✔✔ Offers a maximum interest rate
that increases annually
3. What kind of annuity pays income to two annuitants until their deaths?
Period certain annuity
Joint and survivor annuity
Straight life annuity
Installment refund✔✔✔ Joint and survivor annuity
,4. Victoria owns a life annuity and elects to receive annuity payments month-
ly for the remainder of her life with "ten years certain". Her annuity will make
payments
For a period of time dependent on the performance of the annuity's underly-
ing assets
For a maximum of 120 months
For the remainder of her life only
For a minimum of 120 months and a maximum of the remainder of his life✔✔✔
Fora minimum of 120 months and a maximum of the remainder of his life
5. An annuitant would life to determine the current value of her annuity. To do
this, she multiplies the number of "accumulation units" she owns times the
unit value of the "separate account". What kind of annuity BEST matches
this description?
Variable annuity
Fixed annuity
Immediate annuity
Life annuity✔✔✔ Variable annuity
6. Cindy buys a 10-year annuity with an installment refund. After receiving
monthly payments for 5 years, Cindy dies. How many remaining payments
will the insurer make to her beneficiary?
,No payments
30 payments
60 payments
120 payments✔✔✔ 60 payments
7. What is a common reason people purchase an annuity?
To create an immediate estate
To pay off a debt in the event of death
To minimize their tax burden
To protect against the risk of outliving their financial resources✔✔✔ To
protectagainst the risk of outliving their financial resources
8. An annuity which is backed by a life insurer's separate account is called
a(n)
Equity indexed annuity
Variable annuity
Immediate annuity
403(b) plan✔✔✔ Variable annuity
9. What distinguishes a deferred annuity from an immediate annuity?
The time at which benefit payments start
The benefit payment amount
The taxation of benefit payments
The age at which the annuity can be purchased✔✔✔ The time at which benefit
, payments start
10. A savings vehicle designed to first accumulate funds and then system-
atically liquidates the funds is called a(n)
Immediate annuity
Deferred annuity
Endowment
Whole life policy✔✔✔ Deferred annuity
11. Which of the following is a contract that involves one party which indem-
nifies another when a loss arises from an unknown event?
Insurance policy
Loss contract
Warranty arrangement
Indemnification arrangement✔✔✔ Insurance policy
12. A participating company is also referred to as which type of insurer?
Reciprocal insurer
Re-insurer
Questions and Answers
1. An annuitant would life to determine the amount of an annuity distribution
that is exempt from taxation. What is used to calculate this?
Mortality rate,
Exclusion ratio,
Morbidity rate,
Debt-to-Equity ration✔✔✔ Exclusion ratio
2. Which of the following is NOT a feature of equity-indexed annuities?
Offers long term inflation protection, Offers a minimum guaranteed rate,
Offers a maximum interest rate that increases annually, Offers protection
during a decline in the stock market✔✔✔ Offers a maximum interest rate
that increases annually
3. What kind of annuity pays income to two annuitants until their deaths?
Period certain annuity
Joint and survivor annuity
Straight life annuity
Installment refund✔✔✔ Joint and survivor annuity
,4. Victoria owns a life annuity and elects to receive annuity payments month-
ly for the remainder of her life with "ten years certain". Her annuity will make
payments
For a period of time dependent on the performance of the annuity's underly-
ing assets
For a maximum of 120 months
For the remainder of her life only
For a minimum of 120 months and a maximum of the remainder of his life✔✔✔
Fora minimum of 120 months and a maximum of the remainder of his life
5. An annuitant would life to determine the current value of her annuity. To do
this, she multiplies the number of "accumulation units" she owns times the
unit value of the "separate account". What kind of annuity BEST matches
this description?
Variable annuity
Fixed annuity
Immediate annuity
Life annuity✔✔✔ Variable annuity
6. Cindy buys a 10-year annuity with an installment refund. After receiving
monthly payments for 5 years, Cindy dies. How many remaining payments
will the insurer make to her beneficiary?
,No payments
30 payments
60 payments
120 payments✔✔✔ 60 payments
7. What is a common reason people purchase an annuity?
To create an immediate estate
To pay off a debt in the event of death
To minimize their tax burden
To protect against the risk of outliving their financial resources✔✔✔ To
protectagainst the risk of outliving their financial resources
8. An annuity which is backed by a life insurer's separate account is called
a(n)
Equity indexed annuity
Variable annuity
Immediate annuity
403(b) plan✔✔✔ Variable annuity
9. What distinguishes a deferred annuity from an immediate annuity?
The time at which benefit payments start
The benefit payment amount
The taxation of benefit payments
The age at which the annuity can be purchased✔✔✔ The time at which benefit
, payments start
10. A savings vehicle designed to first accumulate funds and then system-
atically liquidates the funds is called a(n)
Immediate annuity
Deferred annuity
Endowment
Whole life policy✔✔✔ Deferred annuity
11. Which of the following is a contract that involves one party which indem-
nifies another when a loss arises from an unknown event?
Insurance policy
Loss contract
Warranty arrangement
Indemnification arrangement✔✔✔ Insurance policy
12. A participating company is also referred to as which type of insurer?
Reciprocal insurer
Re-insurer
