CA LIFE INSURANCE PRACTICE EXAM 2024
WITH 100% CORRECT ANSWERS
A key person is typically all of the following, except: - correct answer -Not directly
involved in sales, production, or service
Key persons are employees whose contributions have a significant impact on the
revenue and profitability of the company, especially in small businesses. They are
typically: part of the management team, more highly paid, respected by customers,
creditors, suppliers, and vendors, and have direct responsibilities for sales, production,
or service.
Which one of the following is not a reason why premium for the individual policy issued
to an insured exercising a group conversion right is higher than the group life rate
previously charged? - correct answer -The conversion policy has a higher death
benefit
The premium of an individual policy issued due to a group life insurance plan
conversion will be at a higher than normal rate to include the insurer's guaranteed
convertible surcharge because the majority of all conversions involve persons that
would otherwise be uninsurable, because the conversion policy will be issued at the
attained (current) age of the insured, and the policy will build cash values.
The type of life insurance used to provide funds for a Buy-Sell Agreement is: - correct
answer -Any type of life insurance
Any type of life insurance may be used to provide funds for a Buy-Sell Agreement.
Lorraine's position has been terminated, and she is interested in converting her group
life coverage to an individual policy. In the process, she will find all of the following to be
TRUE, except: - correct answer -She will be converting her group term benefit to an
individual term benefit
She will be converting her group term life to an individual permanent policy.
To help protect against experiencing immediate claims, group plans have a(n) _______
period set up by the group sponsor. - correct answer -Probationary
A probationary period is set up to help reduce the chance of facing immediate claims.
1
atm4success@stuvia
,How is the funding for Social Security provided? - correct answer -Through FICA
taxes that are paid by both employers and employees
Both the employer and employee fund Social Security through paying FICA taxes. Self-
employed persons pay the entire amount.
The premium for optional dependent group insurance can be payable by: - correct
answer The employer, the employee or both
Optional dependent coverage may be paid for by the employer, the employee, or both.
When an insurer wishes to implement changes to a group life policy, whom must it
notify? - correct answer The group sponsor
Just as in individual contracts, the owner controls the policy. In this case, only the plan
sponsor has a policy (i.e. the Master Policy). As such, the insurer must notify the group
sponsor of the changes.
There is a conversion period of how many days in which the employee may, upon
termination of eligibility and without evidence of insurability, convert his/her group life
insurance benefit to an individual permanent policy? - correct answer 31
There is a conversion period of 31 days in which the employee may, upon termination of
eligibility and without evidence of insurability, convert his/her group life insurance benefit
to an individual permanent policy.
The proceeds from a _________ plan provide the necessary funds to recruit, hire, and
train a replacement employee. - correct answer Key employee
Key employee life insurance plans provide the funds to recruit, hire, and train a
replacement employee.
Which of the following is a disadvantage of being covered under a group insurance
plan? - correct answer The group sponsor can elect to discontinue the plan, and the
insurance company can increase the rates it charges
The advantage of an insurance funded buy-sell agreement is: - correct answer It is a
legally enforceable agreement, which pre-establishes the value of the business, and
2
atm4success@stuvia
, provides the funds for an efficient method of transferring the deceased's business
interest
Some of the advantages of having such an agreement: it is legally enforceable, the
value of the business is previously agreed upon, it is an immediate and automatic
method of transferring the deceased's interest due to readily available funds.
An agreement by an employer to continue a key employee's salary upon retirement,
death or disability as long as the employee continues employment during the term of the
agreement is called a: - correct answer Salary continuation plan
An agreement by an employer to continue a key employee's salary upon retirement,
death or disability as long as the employee continues employment during the term of the
agreement is called a salary continuation plan.
Which of the following is not one of the most common methods of determining group
insurance benefits? - correct answer Tax bracket
The most common methods of determining group insurance benefits are flat benefit (all
employees receive the same insurance amounts), percentage of income (employees
receive 100%, 150%, or 200% of their annual base wage, subject to imputed income),
and position in the company (the employer may establish different benefits for specific
classes of employees, but may not discriminate between employees in the same class).
To be fully insured for Social Security, generally a person must have worked and paid
into the Social Security system for a minimum of ______ years. - correct answer 10
To be fully insured for Social Security, the requirement is to accumulate 40 credits or 10
years of work paying social security taxes. A maximum of four credits may be earned in
one calendar year of employment.
Every group policy containing a life insurance benefit must contain a reasonable
extension of benefits upon discontinuance of the policy for employees who, while
insured under the policy, become: - correct answer Totally disabled
Every group policy containing a life insurance benefit must contain a reasonable
extension of benefits upon discontinuance of the policy with respect to employees who
become totally disabled while insured under the policy and who continue to be totally
disabled at the date of discontinuance of the policy.
3
atm4success@stuvia
WITH 100% CORRECT ANSWERS
A key person is typically all of the following, except: - correct answer -Not directly
involved in sales, production, or service
Key persons are employees whose contributions have a significant impact on the
revenue and profitability of the company, especially in small businesses. They are
typically: part of the management team, more highly paid, respected by customers,
creditors, suppliers, and vendors, and have direct responsibilities for sales, production,
or service.
Which one of the following is not a reason why premium for the individual policy issued
to an insured exercising a group conversion right is higher than the group life rate
previously charged? - correct answer -The conversion policy has a higher death
benefit
The premium of an individual policy issued due to a group life insurance plan
conversion will be at a higher than normal rate to include the insurer's guaranteed
convertible surcharge because the majority of all conversions involve persons that
would otherwise be uninsurable, because the conversion policy will be issued at the
attained (current) age of the insured, and the policy will build cash values.
The type of life insurance used to provide funds for a Buy-Sell Agreement is: - correct
answer -Any type of life insurance
Any type of life insurance may be used to provide funds for a Buy-Sell Agreement.
Lorraine's position has been terminated, and she is interested in converting her group
life coverage to an individual policy. In the process, she will find all of the following to be
TRUE, except: - correct answer -She will be converting her group term benefit to an
individual term benefit
She will be converting her group term life to an individual permanent policy.
To help protect against experiencing immediate claims, group plans have a(n) _______
period set up by the group sponsor. - correct answer -Probationary
A probationary period is set up to help reduce the chance of facing immediate claims.
1
atm4success@stuvia
,How is the funding for Social Security provided? - correct answer -Through FICA
taxes that are paid by both employers and employees
Both the employer and employee fund Social Security through paying FICA taxes. Self-
employed persons pay the entire amount.
The premium for optional dependent group insurance can be payable by: - correct
answer The employer, the employee or both
Optional dependent coverage may be paid for by the employer, the employee, or both.
When an insurer wishes to implement changes to a group life policy, whom must it
notify? - correct answer The group sponsor
Just as in individual contracts, the owner controls the policy. In this case, only the plan
sponsor has a policy (i.e. the Master Policy). As such, the insurer must notify the group
sponsor of the changes.
There is a conversion period of how many days in which the employee may, upon
termination of eligibility and without evidence of insurability, convert his/her group life
insurance benefit to an individual permanent policy? - correct answer 31
There is a conversion period of 31 days in which the employee may, upon termination of
eligibility and without evidence of insurability, convert his/her group life insurance benefit
to an individual permanent policy.
The proceeds from a _________ plan provide the necessary funds to recruit, hire, and
train a replacement employee. - correct answer Key employee
Key employee life insurance plans provide the funds to recruit, hire, and train a
replacement employee.
Which of the following is a disadvantage of being covered under a group insurance
plan? - correct answer The group sponsor can elect to discontinue the plan, and the
insurance company can increase the rates it charges
The advantage of an insurance funded buy-sell agreement is: - correct answer It is a
legally enforceable agreement, which pre-establishes the value of the business, and
2
atm4success@stuvia
, provides the funds for an efficient method of transferring the deceased's business
interest
Some of the advantages of having such an agreement: it is legally enforceable, the
value of the business is previously agreed upon, it is an immediate and automatic
method of transferring the deceased's interest due to readily available funds.
An agreement by an employer to continue a key employee's salary upon retirement,
death or disability as long as the employee continues employment during the term of the
agreement is called a: - correct answer Salary continuation plan
An agreement by an employer to continue a key employee's salary upon retirement,
death or disability as long as the employee continues employment during the term of the
agreement is called a salary continuation plan.
Which of the following is not one of the most common methods of determining group
insurance benefits? - correct answer Tax bracket
The most common methods of determining group insurance benefits are flat benefit (all
employees receive the same insurance amounts), percentage of income (employees
receive 100%, 150%, or 200% of their annual base wage, subject to imputed income),
and position in the company (the employer may establish different benefits for specific
classes of employees, but may not discriminate between employees in the same class).
To be fully insured for Social Security, generally a person must have worked and paid
into the Social Security system for a minimum of ______ years. - correct answer 10
To be fully insured for Social Security, the requirement is to accumulate 40 credits or 10
years of work paying social security taxes. A maximum of four credits may be earned in
one calendar year of employment.
Every group policy containing a life insurance benefit must contain a reasonable
extension of benefits upon discontinuance of the policy for employees who, while
insured under the policy, become: - correct answer Totally disabled
Every group policy containing a life insurance benefit must contain a reasonable
extension of benefits upon discontinuance of the policy with respect to employees who
become totally disabled while insured under the policy and who continue to be totally
disabled at the date of discontinuance of the policy.
3
atm4success@stuvia
