CA LIFE INSURANCE PRACTICE EXAM
QUESTIONS WITH CORRECT ANSWERS RATED
A+
AWkeyWpersonWisWtypicallyWallWofWtheWfollowing,Wexcept:W-WCORRECTWANSWERS-
NotWdirectlyWinvolvedWinWsales,Wproduction,WorWservice
KeyWpersonsWareWemployeesWwhoseWcontributionsWhaveWaWsignificantWimpactWonWtheWrevenueWandWprof
itabilityWofWtheWcompany,WespeciallyWinWsmallWbusinesses.WTheyWareWtypically:WpartWofWtheWmanagement
Wteam,WmoreWhighlyWpaid,WrespectedWbyWcustomers,Wcreditors,Wsuppliers,WandWvendors,WandWhaveWdirec
tWresponsibilitiesWforWsales,Wproduction,WorWservice.
WhichWoneWofWtheWfollowingWisWnotWaWreasonWwhyWpremiumWforWtheWindividualWpolicyWissuedWtoWanWins
uredWexercisingWaWgroupWconversionWrightWisWhigherWthanWtheWgroupWlifeWrateWpreviouslyWcharged?W-
WCORRECTWANSWERS-TheWconversionWpolicyWhasWaWhigherWdeathWbenefit
TheWpremiumWofWanWindividualWpolicyWissuedWdueWtoWaWgroupWlifeWinsuranceWplanWconversionWwillWbeWa
tWaWhigherWthanWnormalWrateWtoWincludeWtheWinsurer'sWguaranteedWconvertibleWsurchargeWbecauseWtheW
majorityWofWallWconversionsWinvolveWpersonsWthatWwouldWotherwiseWbeWuninsurable,WbecauseWtheWconv
ersionWpolicyWwillWbeWissuedWatWtheWattainedW(current)WageWofWtheWinsured,WandWtheWpolicyWwillWbuildWc
ashWvalues.
TheWtypeWofWlifeWinsuranceWusedWtoWprovideWfundsWforWaWBuy-SellWAgreementWis:W-
WCORRECTWANSWERS-AnyWtypeWofWlifeWinsurance
AnyWtypeWofWlifeWinsuranceWmayWbeWusedWtoWprovideWfundsWforWaWBuy-SellWAgreement.
,Lorraine'sWpositionWhasWbeenWterminated,WandWsheWisWinterestedWinWconvertingWherWgroupWlifeWcoverag
eWtoWanWindividualWpolicy.WInWtheWprocess,WsheWwillWfindWallWofWtheWfollowingWtoWbeWTRUE,Wexcept:W-
WCORRECTWANSWERS-SheWwillWbeWconvertingWherWgroupWtermWbenefitWtoWanWindividualWtermWbenefit
SheWwillWbeWconvertingWherWgroupWtermWlifeWtoWanWindividualWpermanentWpolicy.
ToWhelpWprotectWagainstWexperiencingWimmediateWclaims,WgroupWplansWhaveWa(n)W_______WperiodWsetW
upWbyWtheWgroupWsponsor.W-WCORRECTWANSWERS-Probationary
AWprobationaryWperiodWisWsetWupWtoWhelpWreduceWtheWchanceWofWfacingWimmediateWclaims.
HowWisWtheWfundingWforWSocialWSecurityWprovided?W-WCORRECTWANSWERS-
ThroughWFICAWtaxesWthatWareWpaidWbyWbothWemployersWandWemployees
BothWtheWemployerWandWemployeeWfundWSocialWSecurityWthroughWpayingWFICAWtaxes.WSelf-
employedWpersonsWpayWtheWentireWamount.
TheWpremiumWforWoptionalWdependentWgroupWinsuranceWcanWbeWpayableWby:W-
WCORRECTWANSWERSTheWemployer,WtheWemployeeWorWboth
OptionalWdependentWcoverageWmayWbeWpaidWforWbyWtheWemployer,WtheWemployee,WorWboth.
WhenWanWinsurerWwishesWtoWimplementWchangesWtoWaWgroupWlifeWpolicy,WwhomWmustWitWnotify?W-
WCORRECTWANSWERSTheWgroupWsponsor
, JustWasWinWindividualWcontracts,WtheWownerWcontrolsWtheWpolicy.WInWthisWcase,WonlyWtheWplanWsponsorWh
asWaWpolicyW(i.e.WtheWMasterWPolicy).WAsWsuch,WtheWinsurerWmustWnotifyWtheWgroupWsponsorWofWtheWcha
nges.
ThereWisWaWconversionWperiodWofWhowWmanyWdaysWinWwhichWtheWemployeeWmay,WuponWterminationWofW
eligibilityWandWwithoutWevidenceWofWinsurability,WconvertWhis/herWgroupWlifeWinsuranceWbenefitWtoWanWin
dividualWpermanentWpolicy?W-WCORRECTWANSWERS31
ThereWisWaWconversionWperiodWofW31WdaysWinWwhichWtheWemployeeWmay,WuponWterminationWofWeligibilit
yWandWwithoutWevidenceWofWinsurability,WconvertWhis/herWgroupWlifeWinsuranceWbenefitWtoWanWindividual
WpermanentWpolicy.
TheWproceedsWfromWaW_________WplanWprovideWtheWnecessaryWfundsWtoWrecruit,Whire,WandWtrainWaWrepl
acementWemployee.W-WCORRECTWANSWERSKeyWemployee
KeyWemployeeWlifeWinsuranceWplansWprovideWtheWfundsWtoWrecruit,Whire,WandWtrainWaWreplacementWempl
oyee.
WhichWofWtheWfollowingWisWaWdisadvantageWofWbeingWcoveredWunderWaWgroupWinsuranceWplan?W-
WCORRECTWANSWERSTheWgroupWsponsorWcanWelectWtoWdiscontinueWtheWplan,WandWtheWinsuranceWcomp
anyWcanWincreaseWtheWratesWitWcharges
TheWadvantageWofWanWinsuranceWfundedWbuy-sellWagreementWis:W-
WCORRECTWANSWERSItWisWaWlegallyWenforceableWagreement,WwhichWpre-
establishesWtheWvalueWofWtheWbusiness,WandWprovidesWtheWfundsWforWanWefficientWmethodWofWtransferri
ngWtheWdeceased'sWbusinessWinterest
QUESTIONS WITH CORRECT ANSWERS RATED
A+
AWkeyWpersonWisWtypicallyWallWofWtheWfollowing,Wexcept:W-WCORRECTWANSWERS-
NotWdirectlyWinvolvedWinWsales,Wproduction,WorWservice
KeyWpersonsWareWemployeesWwhoseWcontributionsWhaveWaWsignificantWimpactWonWtheWrevenueWandWprof
itabilityWofWtheWcompany,WespeciallyWinWsmallWbusinesses.WTheyWareWtypically:WpartWofWtheWmanagement
Wteam,WmoreWhighlyWpaid,WrespectedWbyWcustomers,Wcreditors,Wsuppliers,WandWvendors,WandWhaveWdirec
tWresponsibilitiesWforWsales,Wproduction,WorWservice.
WhichWoneWofWtheWfollowingWisWnotWaWreasonWwhyWpremiumWforWtheWindividualWpolicyWissuedWtoWanWins
uredWexercisingWaWgroupWconversionWrightWisWhigherWthanWtheWgroupWlifeWrateWpreviouslyWcharged?W-
WCORRECTWANSWERS-TheWconversionWpolicyWhasWaWhigherWdeathWbenefit
TheWpremiumWofWanWindividualWpolicyWissuedWdueWtoWaWgroupWlifeWinsuranceWplanWconversionWwillWbeWa
tWaWhigherWthanWnormalWrateWtoWincludeWtheWinsurer'sWguaranteedWconvertibleWsurchargeWbecauseWtheW
majorityWofWallWconversionsWinvolveWpersonsWthatWwouldWotherwiseWbeWuninsurable,WbecauseWtheWconv
ersionWpolicyWwillWbeWissuedWatWtheWattainedW(current)WageWofWtheWinsured,WandWtheWpolicyWwillWbuildWc
ashWvalues.
TheWtypeWofWlifeWinsuranceWusedWtoWprovideWfundsWforWaWBuy-SellWAgreementWis:W-
WCORRECTWANSWERS-AnyWtypeWofWlifeWinsurance
AnyWtypeWofWlifeWinsuranceWmayWbeWusedWtoWprovideWfundsWforWaWBuy-SellWAgreement.
,Lorraine'sWpositionWhasWbeenWterminated,WandWsheWisWinterestedWinWconvertingWherWgroupWlifeWcoverag
eWtoWanWindividualWpolicy.WInWtheWprocess,WsheWwillWfindWallWofWtheWfollowingWtoWbeWTRUE,Wexcept:W-
WCORRECTWANSWERS-SheWwillWbeWconvertingWherWgroupWtermWbenefitWtoWanWindividualWtermWbenefit
SheWwillWbeWconvertingWherWgroupWtermWlifeWtoWanWindividualWpermanentWpolicy.
ToWhelpWprotectWagainstWexperiencingWimmediateWclaims,WgroupWplansWhaveWa(n)W_______WperiodWsetW
upWbyWtheWgroupWsponsor.W-WCORRECTWANSWERS-Probationary
AWprobationaryWperiodWisWsetWupWtoWhelpWreduceWtheWchanceWofWfacingWimmediateWclaims.
HowWisWtheWfundingWforWSocialWSecurityWprovided?W-WCORRECTWANSWERS-
ThroughWFICAWtaxesWthatWareWpaidWbyWbothWemployersWandWemployees
BothWtheWemployerWandWemployeeWfundWSocialWSecurityWthroughWpayingWFICAWtaxes.WSelf-
employedWpersonsWpayWtheWentireWamount.
TheWpremiumWforWoptionalWdependentWgroupWinsuranceWcanWbeWpayableWby:W-
WCORRECTWANSWERSTheWemployer,WtheWemployeeWorWboth
OptionalWdependentWcoverageWmayWbeWpaidWforWbyWtheWemployer,WtheWemployee,WorWboth.
WhenWanWinsurerWwishesWtoWimplementWchangesWtoWaWgroupWlifeWpolicy,WwhomWmustWitWnotify?W-
WCORRECTWANSWERSTheWgroupWsponsor
, JustWasWinWindividualWcontracts,WtheWownerWcontrolsWtheWpolicy.WInWthisWcase,WonlyWtheWplanWsponsorWh
asWaWpolicyW(i.e.WtheWMasterWPolicy).WAsWsuch,WtheWinsurerWmustWnotifyWtheWgroupWsponsorWofWtheWcha
nges.
ThereWisWaWconversionWperiodWofWhowWmanyWdaysWinWwhichWtheWemployeeWmay,WuponWterminationWofW
eligibilityWandWwithoutWevidenceWofWinsurability,WconvertWhis/herWgroupWlifeWinsuranceWbenefitWtoWanWin
dividualWpermanentWpolicy?W-WCORRECTWANSWERS31
ThereWisWaWconversionWperiodWofW31WdaysWinWwhichWtheWemployeeWmay,WuponWterminationWofWeligibilit
yWandWwithoutWevidenceWofWinsurability,WconvertWhis/herWgroupWlifeWinsuranceWbenefitWtoWanWindividual
WpermanentWpolicy.
TheWproceedsWfromWaW_________WplanWprovideWtheWnecessaryWfundsWtoWrecruit,Whire,WandWtrainWaWrepl
acementWemployee.W-WCORRECTWANSWERSKeyWemployee
KeyWemployeeWlifeWinsuranceWplansWprovideWtheWfundsWtoWrecruit,Whire,WandWtrainWaWreplacementWempl
oyee.
WhichWofWtheWfollowingWisWaWdisadvantageWofWbeingWcoveredWunderWaWgroupWinsuranceWplan?W-
WCORRECTWANSWERSTheWgroupWsponsorWcanWelectWtoWdiscontinueWtheWplan,WandWtheWinsuranceWcomp
anyWcanWincreaseWtheWratesWitWcharges
TheWadvantageWofWanWinsuranceWfundedWbuy-sellWagreementWis:W-
WCORRECTWANSWERSItWisWaWlegallyWenforceableWagreement,WwhichWpre-
establishesWtheWvalueWofWtheWbusiness,WandWprovidesWtheWfundsWforWanWefficientWmethodWofWtransferri
ngWtheWdeceased'sWbusinessWinterest
