California Life Insurance State Exam Simulator Study Guide with Complete Solutions 2024 Graded A

Exclusion ratio - 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 Offers a maximum interest rate that increases annually - 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 Joint and survivor annuity - What kind of annuity pays income to two annuitants until their deaths? Period certain annuity Joint and survivor annuity Straight life annuity Installment refund For a minimum of 120 months and a maximum of the remainder of his life - Victoria owns a life annuity and elects to receive annuity payments monthly 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 underlying 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 Variable annuity - 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 60 payments - 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 To protect against the risk of outliving their financial resources - 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 Variable annuity - 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 The time at which benefit payments start - 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 Deferred annuity - A savings vehicle designed to first accumulate funds and then systematically liquidates the funds is called a(n) Immediate annuity Deferred annuity Endowment Whole life policy Insurance policy - Which of the following is a contract that involves one party which indemnifies another when a loss arises from an unknown event? Insurance policy Loss contract Warranty arrangement Indemnification arrangement Mutual insurer - A participating company is also referred to as which type of insurer? Reciprocal insurer Re-insurer Mutual insurer Domestic insurer Reinsurance - An insurer enters into a contract with a third party to insure itself against losses from insurance policies it issues. What is this agreement called? Reinsurance Mutual Multi-line Reserves Primary insurer - AAA Insurance Company has transferred a portion of its loss exposure to BBB Insurance Company. In this reinsurance transaction, what is AAA Insurance Company called? Tertiary insurer Primary insurer Secondary insurer Captive insurer Contract that allows the policyowner to receive a share of surplus in the form of policy dividends - What is a participating life insurance policy? Contract that gives beneficiaries the right to participate in any dividends Agreement that insures two or more lives Agreement that allows two or more beneficiaries to share in the death benefit Contract that allows the policyowner to receive a share of surplus in the form of policy dividends Participating - John owns an insurance policy that gives him the right to share in the insurer's surplus. What kind of policy is this? Contributory Nonparticipating Surplus Participating Increases the unearned premium reserve - Which of the following is NOT a characteristic of reinsurance? Protects against a very large claim Increases the unearned premium reserve A specialized branch of the insurance industry Enables insurer to meet certain objectives Marketing - One important function of an insurance company is to identify and sell to potential customers. Which of the BEST describes this function? Regulation Marketing Underwriting Reinsurance