California Life Insurance State Exam
Simulator Questions And Answers
Verified 100% Correct
Indemnity - ANSWER -Restoring an insured to the same condition as before a loss
is an example of the principle of
Utmost good faith
Adhesion
Legal purpose
Indemnity
Rescinding the contract - ANSWER -Which course of action is the insurer entitled
to when deliberate concealment is committed by the insured?
Rescinding the contract
Charge a higher premium
Charge a penalty
Nothing
The insured and the insurer contribute equally to the contract - ANSWER -Which
of the following statements about aleatory contracts is NOT true?
Insurance contracts are considered aleatory
The insured and the insurer have the potential for unequal contributions
The insured and the insurer contribute equally to the contract
Aleatory contracts are conditioned upon the occurrence of an event
Fiduciary - ANSWER -When handling premiums for an insured, an agent is acting
in which capacity?
Adhesion
Fiduciary
Conditional
Aleatory
, Indemnity - ANSWER -Which principle is accurately described with the statement
"Insureds are entitled to recover an amount NOT greater than the amount of their
loss"?
Unilateral
Indemnity
Aleatory
Utmost good faith
Only one party (the insurer) makes any kind of legally enforceable promise -
ANSWER -A unilateral contract is one in which
There is an element of chance and potential for unequal exchange of value or
consideration for both parties
Only one party (the insurer) makes any kind of legally enforceable promise
The contract has been prepared by one party (the insurance company) with no
negotiation between the applicant and insurer
Both the policyowner and the insurer must know all material facts and relevant
information
Rescind the policy - ANSWER -If a material warranty violation on the part of the
insured is found, what recourse does an insurer have?
Sue the insured
Rescind the policy
Charge more premium
Terminate the agent
Materiality of concealment - ANSWER -The importance of a representation is
demonstrated in what rule?
Insurable interest
Law of adhesion
Materiality of concealment
Consideration clause
An offer and acceptance of the contract terms - ANSWER -A contract requires
Implied authority
An offer and acceptance of the contract terms
,Negotiation between the involved parties
An offer and acceptance of the contract terms
Dividends - ANSWER -Which of the following is NOT a component of
determining policy premiums?
Dividends
Mortality
Interest
Expenses
Insurer's expenses - ANSWER -When calculating life insurance premium rates,
which component would an agent's commission fall under?
Morbidity
Mortality
Insurer's expenses
Occupation
Mortality tables - ANSWER -The probability of death, listed by year, is
demonstrated in
Risk tables
Frequency tables
Mortality tables
Morbidity tables
Exempt from federal income taxes - ANSWER -How are death benefits that are
received by a beneficiary normally treated for tax purposes?
Taxable at the beneficiary's current tax bracket
Subject to state and local taxes only
Exempt from federal income taxes
Taxable as a capital gain
Premiums - ANSWER -Which of the following is NOT an insurer policy expense?
Rent
Salaries
Commissions
, Premiums
Rate - ANSWER -What is the price of insurance for each exposure unit?
Rate
Premium
Rating
Expense
Extended term option - ANSWER -Which of the following is NOT a life
insurance settlement option?
Lump sum option
Fixed amount option
Life income option
Extended term option
Restricts the ability of the beneficiary to assign benefits - ANSWER -A spendthrift
clause in a life insurance policy
Permits the beneficiary to borrow from a policy's cash value
Evenly distributes benefits among all named living beneficiaries
Assigns a policy's face amount to the insured's estate if the beneficiary dies before
the insured
Restricts the ability of the beneficiary to assign benefits
The insured's estate - ANSWER -A creditor would be allowed rights to life
insurance policy proceeds if which of the following beneficiaries is chosen?
The insured's mother
The insured's estate
The insured's children
The insured's spouse
The amount an insured pays per unit of coverage - ANSWER -Premiums are best
described as
Money paid by the insurer for settling a claim
Money paid by the insured to acquire a policy's benefits
The amount an insured pays per unit of coverage
Simulator Questions And Answers
Verified 100% Correct
Indemnity - ANSWER -Restoring an insured to the same condition as before a loss
is an example of the principle of
Utmost good faith
Adhesion
Legal purpose
Indemnity
Rescinding the contract - ANSWER -Which course of action is the insurer entitled
to when deliberate concealment is committed by the insured?
Rescinding the contract
Charge a higher premium
Charge a penalty
Nothing
The insured and the insurer contribute equally to the contract - ANSWER -Which
of the following statements about aleatory contracts is NOT true?
Insurance contracts are considered aleatory
The insured and the insurer have the potential for unequal contributions
The insured and the insurer contribute equally to the contract
Aleatory contracts are conditioned upon the occurrence of an event
Fiduciary - ANSWER -When handling premiums for an insured, an agent is acting
in which capacity?
Adhesion
Fiduciary
Conditional
Aleatory
, Indemnity - ANSWER -Which principle is accurately described with the statement
"Insureds are entitled to recover an amount NOT greater than the amount of their
loss"?
Unilateral
Indemnity
Aleatory
Utmost good faith
Only one party (the insurer) makes any kind of legally enforceable promise -
ANSWER -A unilateral contract is one in which
There is an element of chance and potential for unequal exchange of value or
consideration for both parties
Only one party (the insurer) makes any kind of legally enforceable promise
The contract has been prepared by one party (the insurance company) with no
negotiation between the applicant and insurer
Both the policyowner and the insurer must know all material facts and relevant
information
Rescind the policy - ANSWER -If a material warranty violation on the part of the
insured is found, what recourse does an insurer have?
Sue the insured
Rescind the policy
Charge more premium
Terminate the agent
Materiality of concealment - ANSWER -The importance of a representation is
demonstrated in what rule?
Insurable interest
Law of adhesion
Materiality of concealment
Consideration clause
An offer and acceptance of the contract terms - ANSWER -A contract requires
Implied authority
An offer and acceptance of the contract terms
,Negotiation between the involved parties
An offer and acceptance of the contract terms
Dividends - ANSWER -Which of the following is NOT a component of
determining policy premiums?
Dividends
Mortality
Interest
Expenses
Insurer's expenses - ANSWER -When calculating life insurance premium rates,
which component would an agent's commission fall under?
Morbidity
Mortality
Insurer's expenses
Occupation
Mortality tables - ANSWER -The probability of death, listed by year, is
demonstrated in
Risk tables
Frequency tables
Mortality tables
Morbidity tables
Exempt from federal income taxes - ANSWER -How are death benefits that are
received by a beneficiary normally treated for tax purposes?
Taxable at the beneficiary's current tax bracket
Subject to state and local taxes only
Exempt from federal income taxes
Taxable as a capital gain
Premiums - ANSWER -Which of the following is NOT an insurer policy expense?
Rent
Salaries
Commissions
, Premiums
Rate - ANSWER -What is the price of insurance for each exposure unit?
Rate
Premium
Rating
Expense
Extended term option - ANSWER -Which of the following is NOT a life
insurance settlement option?
Lump sum option
Fixed amount option
Life income option
Extended term option
Restricts the ability of the beneficiary to assign benefits - ANSWER -A spendthrift
clause in a life insurance policy
Permits the beneficiary to borrow from a policy's cash value
Evenly distributes benefits among all named living beneficiaries
Assigns a policy's face amount to the insured's estate if the beneficiary dies before
the insured
Restricts the ability of the beneficiary to assign benefits
The insured's estate - ANSWER -A creditor would be allowed rights to life
insurance policy proceeds if which of the following beneficiaries is chosen?
The insured's mother
The insured's estate
The insured's children
The insured's spouse
The amount an insured pays per unit of coverage - ANSWER -Premiums are best
described as
Money paid by the insurer for settling a claim
Money paid by the insured to acquire a policy's benefits
The amount an insured pays per unit of coverage
