California Life & Health Insurance License exam flashcards

All 103 questions

From the free lessons, each with its answer and why. The full course adds questions from every lesson.

In basic insurance terminology, what is risk?

Uncertainty concerning loss

Risk is uncertainty concerning loss. Cause, damage, and premium describe different concepts.

General insurance concepts · From Insurance, risk, and peril

Which statement best describes the basic function of insurance?

It transfers agreed financial consequences of covered events.

Insurance transfers covered financial consequences under a contract in exchange for a premium.

General insurance concepts · From Insurance, risk, and peril

Which insurance class in California includes insurance upon the lives of persons under section 101?

Life insurance

California Insurance Code section 101 includes insurance upon lives within life insurance.

Source: Cal. Ins. Code § 101 ·General insurance concepts · From Insurance, risk, and peril

Which term describes a condition that increases the likelihood of loss, such as defective wiring?

Hazard

A hazard is a condition that increases the likelihood or severity of loss.

General insurance concepts · From Insurance, risk, and peril

What is a peril?

The cause of a loss

A peril is the cause of loss, such as fire or lightning.

General insurance concepts · From Insurance, risk, and peril

Which set of possible outcomes defines pure risk?

Loss or no loss, without an opportunity for gain

Pure risk allows loss or no loss, with no gain opportunity.

General insurance concepts · From Insurance, risk, and peril

Which statement accurately connects insurance and pure risk?

Insurance generally addresses pure risks, but coverage still depends on the contract.

Pure risks are generally the subject of insurance, but the classification does not create automatic coverage.

General insurance concepts · From Insurance, risk, and peril

Under California Insurance Code section 102(a), which listed event falls within the statutory fire insurance class?

Lightning

California section 102(a) expressly lists loss by lightning within the fire insurance class.

Source: Cal. Ins. Code § 102(a) ·General insurance concepts · From Insurance, risk, and peril

What does loss mean in the basic risk-peril-loss framework?

The resulting injury, damage, or economic deprivation

Loss is the harm that results, as distinct from its cause or a condition contributing to it.

General insurance concepts · From Insurance, risk, and peril

Which statement describes property insurable interest under California Insurance Code section 281?

An interest, relationship, or liability must be such that a contemplated peril might directly harm the insured.

California section 281 connects an interest or relation to property with potential direct harm from a contemplated peril.

Source: Cal. Ins. Code § 281 ·General insurance concepts · From Insurance, risk, and peril

The insurer has agreed to pay a benefit for a covered event. Which fact determines the extent of that promise?

The insurance contract's terms

The contract specifies the promised protection and its limits, exclusions, and other terms.

General insurance concepts · From Insurance, risk, and peril

Which set lists the four basic elements of a valid insurance contract?

Agreement, consideration, competent parties, and legal purpose

Validity requires agreement, consideration, competent parties, and a legal purpose.

Insurance contract law · From Elements and special characteristics of an insurance contract

What is the insurer's consideration in an insurance contract?

Its promise to pay covered benefits

The insurer supplies its promise to pay covered benefits in exchange for the applicant's consideration.

Insurance contract law · From Elements and special characteristics of an insurance contract

Why is a standard insurance policy generally called a contract of adhesion?

The insurer generally drafts the terms for the applicant to accept.

Adhesion describes the insurer's preparation of standard policy wording that the applicant accepts.

Insurance contract law · From Elements and special characteristics of an insurance contract

Which statement best describes utmost good faith in an insurance contract?

Both parties must deal honestly in disclosure and contractual performance.

Utmost good faith calls for honest dealing by both parties, not just the applicant.

Insurance contract law · From Elements and special characteristics of an insurance contract

What does describing insurance as personal primarily emphasize?

Underwriting concerns the insured person or interest.

The personal characteristic concerns the person or interest evaluated in underwriting, not a universal prohibition on assignment.

Insurance contract law · From Elements and special characteristics of an insurance contract

Which basic contract element requires the agreement's objective to be lawful?

Legal purpose

Legal purpose requires a lawful objective for the agreement.

Insurance contract law · From Elements and special characteristics of an insurance contract

What is the basic purpose of indemnity?

Compensating a covered loss rather than creating a profit

Indemnity means compensation for covered loss rather than profit from the loss.

Insurance contract law · From Elements and special characteristics of an insurance contract

Which contribution is on the applicant's side of consideration?

The premium and application representations

The applicant contributes the premium and application representations; the insurer contributes its promise.

Insurance contract law · From Elements and special characteristics of an insurance contract

Which statement accurately defines an aleatory insurance contract?

Benefits depend on an uncertain event, so exchanged values may be unequal.

Aleatory refers to uncertainty and potentially unequal values, not arbitrary insurer discretion.

Insurance contract law · From Elements and special characteristics of an insurance contract

What does calling an insurance contract conditional mean?

The insurer's duty to pay depends on a covered event and applicable conditions.

Conditional describes the dependence of payment obligations on coverage triggers and applicable policy conditions.

Insurance contract law · From Elements and special characteristics of an insurance contract

Which distribution arrangement generally has an agency representing one insurer or insurer group?

Exclusive agency

An exclusive, or captive, agency generally represents one insurer or insurer group.

The California insurance marketplace and licensing · From Distribution systems and producer roles: agent, broker, and solicitor

In the standard distinction between producer roles, on whose behalf does a broker generally arrange insurance?

The customer seeking coverage

A broker generally arranges insurance on behalf of the customer; an agent acts for an insurer.

The California insurance marketplace and licensing · From Distribution systems and producer roles: agent, broker, and solicitor

Under California Insurance Code section 1640, which pair of roles cannot be held at the same time?

Insurance solicitor and insurance broker

Section 1640 makes solicitor authority incompatible with concurrent agent or broker authority.

Source: Cal. Ins. Code § 1640 ·The California insurance marketplace and licensing · From Distribution systems and producer roles: agent, broker, and solicitor

A California property broker-agent license can authorize which set of roles, subject to applicable restrictions?

Agent, broker, or solicitor

Section 1625 expressly includes agent, broker, and solicitor within the property or casualty licensing framework.

Source: Cal. Ins. Code §§ 1625(a), 1640 ·The California insurance marketplace and licensing · From Distribution systems and producer roles: agent, broker, and solicitor

Under California section 1627, who holds a life agency license issued to an organization?

The organization to which the license was issued

The organization is the license holder; named natural persons may exercise its powers subject to law.

Source: Cal. Ins. Code § 1627 ·The California insurance marketplace and licensing · From Distribution systems and producer roles: agent, broker, and solicitor

Which product is expressly included in the scope of California's life license under section 1626?

Annuities

California's life license covers human lives, including endowment benefits and annuities.

Source: Cal. Ins. Code § 1626(a) ·The California insurance marketplace and licensing · From Distribution systems and producer roles: agent, broker, and solicitor

Which statement best distinguishes an insurance solicitor from a broker in the standard role descriptions?

A solicitor works for an agent or broker to solicit insurance; a broker generally arranges coverage for a customer

The solicitor's working relationship with an agent or broker differs from the broker's customer-side arranging role.

The California insurance marketplace and licensing · From Distribution systems and producer roles: agent, broker, and solicitor

Under California section 1627, who may exercise the agency or brokerage powers of an organizational property broker-agent license, subject to applicable law?

The natural persons named on that license

Section 1627 permits named natural persons to exercise the organization's powers, while the organization remains the holder.

Source: Cal. Ins. Code § 1627 ·The California insurance marketplace and licensing · From Distribution systems and producer roles: agent, broker, and solicitor

Which statement accurately describes disability income benefits under California section 1626?

They may be included within both life and accident and health or sickness license scopes

Both subdivisions describing life and accident and health or sickness licenses say they may include disability income benefits.

Source: Cal. Ins. Code § 1626(a)(1)-(2) ·The California insurance marketplace and licensing · From Distribution systems and producer roles: agent, broker, and solicitor

What question does an insurance distribution system primarily answer?

How an insurer reaches its customers

Distribution concerns the route through which an insurer reaches customers, distinct from licensing and transaction authority.

The California insurance marketplace and licensing · From Distribution systems and producer roles: agent, broker, and solicitor

Which pair of concepts should be evaluated separately when identifying a producer's place in an insurance transaction?

The distribution arrangement and the party the producer represents

The channel describes how customers are reached; representation identifies the producer's role in the transaction.

The California insurance marketplace and licensing · From Distribution systems and producer roles: agent, broker, and solicitor

Which statement correctly describes possible accidental death benefits within California's section 1626 license scopes?

They may be included in life coverage and are also within accident and health or sickness scope

Section 1626 includes possible accidental death benefits in the life category and accidental death within accident and health or sickness coverage.

Source: Cal. Ins. Code § 1626(a) ·The California insurance marketplace and licensing · From Distribution systems and producer roles: agent, broker, and solicitor

What is the primary financial purpose of life insurance?

Provide funds to address the financial consequences of the insured's death

Life insurance addresses the financial loss resulting from death through a death benefit.

Life insurance basics · From Life insurance basics and the personal insurance planning process

Which role identifies the person whose life is covered by a life insurance policy?

Insured

The insured is the person whose life is covered; ownership, payment, and beneficiary roles are separate concepts.

Life insurance basics · From Life insurance basics and the personal insurance planning process

What should ordinarily come first in the personal life insurance planning process?

Establish the client's goals and gather financial and family facts

Goals and fact gathering establish the basis for a needs analysis and product recommendation.

Life insurance basics · From Life insurance basics and the personal insurance planning process

What does the human life value approach primarily estimate?

The present value of future economic contributions to dependents

Human life value focuses on the present value of the insured's future economic contributions.

Life insurance basics · From Life insurance basics and the personal insurance planning process

Which statement best describes term life insurance?

It provides death protection for a specified period and generally has no cash value

Term insurance provides protection for a specified period and generally does not accumulate cash value.

Life insurance basics · From Life insurance basics and the personal insurance planning process

Which description best fits permanent life insurance?

Coverage designed to last for life when funding and contract requirements are met, with potential cash value

Permanent life insurance is designed for lifelong protection under its funding and contract requirements and may build cash value.

Life insurance basics · From Life insurance basics and the personal insurance planning process

Which action belongs to implementation of a selected life insurance plan?

Complete an accurate application and review the issued policy and beneficiary designations

Implementation puts the selected plan into effect through application and review of issued coverage.

Life insurance basics · From Life insurance basics and the personal insurance planning process

Which item belongs among immediate financial needs after an insured person's death?

Final expenses that survivors must pay

Final expenses are an immediate funding need; savings and insurance proceeds are resources.

Life insurance basics · From Life insurance basics and the personal insurance planning process

Why does a human life value calculation discount future contributions?

To express contributions expected in future years as a value today

Discounting converts future economic contributions into present value.

Life insurance basics · From Life insurance basics and the personal insurance planning process

What are premiums in a life insurance contract?

Payments made to maintain coverage according to the contract

Premiums are payments associated with maintaining the insurance coverage, distinct from benefits and policy values.

Life insurance basics · From Life insurance basics and the personal insurance planning process

Why does the planning cycle return from review to goals and fact gathering?

Changed circumstances can require a new needs analysis and recommendation

Review updates the goals and facts on which the analysis and recommendation depend.

Life insurance basics · From Life insurance basics and the personal insurance planning process

What distinguishes a participating life insurance policy?

Eligibility to share in divisible surplus through declared dividends

Participation refers to eligibility for policy dividends from divisible surplus, not group enrollment or premium funding.

Types of life policies · From Participating, individual, and group life policies

Who normally holds the master policy in an employer group life arrangement?

The sponsoring employer

The employer sponsors the group arrangement and holds the master policy; employees receive certificates describing coverage.

Types of life policies · From Participating, individual, and group life policies

Which feature identifies the paid-up additions dividend option?

Buying additional permanent insurance requiring no further premiums on the addition

Paid-up additions use dividends to buy additional permanent insurance with cash value and no future premium requirement for the additions.

Types of life policies · From Participating, individual, and group life policies

Under California Insurance Code section 10209(a), what is the employee's standard period after employment termination to apply and pay for conversion?

31 days

Section 10209(a)(2) specifies application and premium payment within 31 days after employment termination.

Source: Cal. Ins. Code § 10209(a)(2) ·Types of life policies · From Participating, individual, and group life policies

Which experience can contribute to divisible surplus supporting participating policy dividends?

Mortality and expenses more favorable than assumed, along with favorable investment earnings

Favorable mortality, expense, and investment experience can contribute to divisible surplus.

Types of life policies · From Participating, individual, and group life policies

Which information must the employee certificate describe under California Insurance Code section 10209(a)(1)?

The insurance protection and to whom it is payable

Section 10209(a)(1) requires a statement of the employee's insurance protection and to whom it is payable.

Source: Cal. Ins. Code § 10209(a)(1) ·Types of life policies · From Participating, individual, and group life policies

Which description fits a nonparticipating life policy?

It does not provide participation in divisible surplus through policy dividends.

Nonparticipating describes the absence of policy dividend participation, not funding, issuance, or duration.

Types of life policies · From Participating, individual, and group life policies

Which policy form is excluded from the employment-termination conversion choice in California Insurance Code section 10209(a)(2)?

Term life insurance

The statute permits conversion to forms customarily issued by the insurer other than term insurance.

Source: Cal. Ins. Code § 10209(a)(2) ·Types of life policies · From Participating, individual, and group life policies

Which dividend option distributes the declared dividend directly to the policyowner?

Cash

The cash option pays the dividend directly to the policyowner.

Types of life policies · From Participating, individual, and group life policies

Which consideration most directly determines whether a life policy is participating?

Its contractual dividend-participation provisions

Participation is determined by the policy's dividend provisions, not payment method, ownership roles, or benefit formula.

Types of life policies · From Participating, individual, and group life policies

Which description best fits individual life insurance as taught in this lesson?

A policy issued to its owner and tailored to personal needs, subject to underwriting

Individual life insurance is issued to its policyowner; personal needs and underwriting shape the contract rather than membership under a group master policy.

Types of life policies · From Participating, individual, and group life policies

Which risk is directly addressed by an annuity that pays income for the annuitant's entire life?

Outliving available retirement resources

Lifetime annuity income addresses longevity risk: outliving retirement resources.

Annuities · From Annuity definitions, parties, and uses

Which annuity party holds the contractual right to select available options and designate a beneficiary?

The owner

Ownership carries contractual control. Being the measuring life or beneficiary does not itself confer ownership rights.

Annuities · From Annuity definitions, parties, and uses

A learner says an annuity contract must have different people as owner and annuitant. Which correction is accurate?

The owner and annuitant may be the same person or different people.

Owner and annuitant are distinct roles that may be held by one person or by different people.

Annuities · From Annuity definitions, parties, and uses

What is annuitization?

Converting contract value into scheduled income payments

Annuitization is the conversion of contract value into a scheduled payment stream.

Annuities · From Annuity definitions, parties, and uses

Which annuity party is obligated to provide the benefits promised in the contract?

The insurer

The insurer issues the annuity and owes its promised benefits.

Annuities · From Annuity definitions, parties, and uses

Which statement accurately distinguishes tax deferral from tax exemption for annuity income?

Deferral concerns timing; taxable income and recovery of investment remain distinct.

Tax deferral is not exemption. Section 72 distinguishes income inclusion from recovery of investment in the contract.

Source: 26 U.S.C. § 72(a)(1), (b)(1)-(2) ·Annuities · From Annuity definitions, parties, and uses

Which description best captures the annuity beneficiary's role?

The person designated to receive benefits the contract provides after death

A beneficiary is the designated recipient of contractually provided benefits after death.

Annuities · From Annuity definitions, parties, and uses

Which sequence describes building annuity value and then converting it to a scheduled payment stream?

Accumulation followed by annuitization

Accumulation builds value; annuitization converts value into scheduled income.

Annuities · From Annuity definitions, parties, and uses

Which definition best describes an annuity contract?

An agreement under which an insurer accepts money and promises payments under contract terms

An annuity exchanges money for the insurer's contractual payment promise, commonly used to create income.

Annuities · From Annuity definitions, parties, and uses

Which distinction between a period-certain annuity and a life annuity is correct?

Period certain uses a stated payment term; life annuity uses one or more lives.

The distinction concerns duration: a fixed period versus payments contingent on one or more lives.

Source: 26 U.S.C. § 72(a)(1) ·Annuities · From Annuity definitions, parties, and uses

At what age does California's senior individual life and annuity free-look protection begin?

60

The senior age threshold for this California free-look protection is 60. Other age thresholds govern different insurance or retirement rules.

Life insurance and annuity policy replacement and cancellation · From Free-look cancellation rights by applicant age

For an ordinary nonreplacement individual life policy purchased in California by someone under 60, which range describes the generally required stated return period?

At least 10 and no more than 30 days

The ordinary younger-purchaser individual life rule provides a stated period of 10 to 30 days; it does not give every purchaser 30 days.

Life insurance and annuity policy replacement and cancellation · From Free-look cancellation rights by applicant age

A California senior receives an individual annuity contract. What is the minimum return period its cancellation notice must state?

30 days after receipt

Section 10127.10(a) requires a clearly stated period of not less than 30 days after the owner's receipt.

Source: Cal. Ins. Code § 10127.10(a) ·Life insurance and annuity policy replacement and cancellation · From Free-look cancellation rights by applicant age

A California senior wishes to return a newly received individual life policy during its free look. Which recipient is expressly permitted?

The insurer or the agent who sold the policy

Section 10127.10(a) permits return by mail or other delivery method to the insurer or the agent from whom the policy was purchased.

Source: Cal. Ins. Code § 10127.10(a) ·Life insurance and annuity policy replacement and cancellation · From Free-look cancellation rights by applicant age

During a California senior's 30-day cancellation period, where may variable-annuity premiums be invested absent the owner's specific direction to use underlying mutual funds?

Fixed-income investments and money-market funds

Without the owner's specific mutual-fund direction, section 10127.10(a) limits investments during the period to fixed-income investments and money-market funds.

Source: Cal. Ins. Code § 10127.10(a) ·Life insurance and annuity policy replacement and cancellation · From Free-look cancellation rights by applicant age

A California senior timely returns a variable life policy without having directed investment in underlying mutual funds. What is the legal effect on the policy?

It is void from the beginning, restoring the parties to the position as if it had not been issued

Section 10127.10(a)(1) makes this timely return void the policy from inception and restores the parties to their pre-policy position.

Source: Cal. Ins. Code § 10127.10(a)(1) ·Life insurance and annuity policy replacement and cancellation · From Free-look cancellation rights by applicant age

For a California senior's timely variable-policy return without mutual-fund direction, when must premiums and any policy fee be refunded?

Within 30 days after the insurer is notified of cancellation

The refund deadline under section 10127.10(a)(1) is 30 days from notification to the insurer of cancellation.

Source: Cal. Ins. Code § 10127.10(a)(1) ·Life insurance and annuity policy replacement and cancellation · From Free-look cancellation rights by applicant age

Where must a California senior's individual life or annuity free-look notice appear under section 10127.10(a)?

On the front of the policy jacket or on the cover page

The statute specifies the front of the policy jacket or the cover page for the cancellation notice.

Source: Cal. Ins. Code § 10127.10(a) ·Life insurance and annuity policy replacement and cancellation · From Free-look cancellation rights by applicant age

A California senior specifically directed mutual-fund investment and timely canceled a variable life policy. Which deadline applies to refunding the account value?

Within 30 days after the insurer is notified of cancellation

Section 10127.10(a)(2) requires the account value to be refunded within 30 days from notification to the insurer of cancellation.

Source: Cal. Ins. Code § 10127.10(a)(2) ·Life insurance and annuity policy replacement and cancellation · From Free-look cancellation rights by applicant age

Which pair of products is expressly within California's senior cancellation-notice rule in section 10127.10(a)?

Individual life insurance policies and individual annuity contracts

The provision expressly covers every individual life policy and individual annuity contract delivered or issued for delivery to a senior within its scope.

Source: Cal. Ins. Code § 10127.10(a) ·Life insurance and annuity policy replacement and cancellation · From Free-look cancellation rights by applicant age

For federal income-tax purposes, what does a contract's adjusted basis generally represent?

After-tax investment that has not yet been recovered

Basis generally represents unrecovered after-tax investment, not cash value or gain.

Taxation of life insurance and annuities · From Tax treatment of life insurance and annuities, including modified endowment contracts

An individual pays premiums for personal life insurance benefiting her family. How are these premiums generally treated on her federal income-tax return?

They are paid with after-tax dollars and are not deductible.

Premiums for ordinary personal life insurance are generally nondeductible personal expenditures.

Taxation of life insurance and annuities · From Tax treatment of life insurance and annuities, including modified endowment contracts

What does the federal seven-pay test primarily compare when determining whether a newly issued life policy is a MEC?

Cumulative premiums paid with cumulative permitted seven-pay premiums

Section 7702A(b) compares accumulated amounts paid with the cumulative net level premiums for seven-pay funding during the first seven contract years.

Source: 26 U.S.C. § 7702A(b) ·Taxation of life insurance and annuities · From Tax treatment of life insurance and annuities, including modified endowment contracts

Which federal income-tax treatment generally applies to a withdrawal from a MEC that contains gain?

Earnings are distributed before basis.

MEC withdrawals generally receive earnings-first treatment, unlike ordinary non-MEC life withdrawals.

Taxation of life insurance and annuities · From Tax treatment of life insurance and annuities, including modified endowment contracts

Which circumstance is an express exception to the ten-percent additional federal tax on a taxable MEC distribution before age 59½?

The distribution is attributable to the taxpayer's qualifying disability.

Section 72(v)(2)(B) provides an exception for a distribution attributable to disability within the statutory definition.

Source: 26 U.S.C. § 72(v)(2)(B) ·Taxation of life insurance and annuities · From Tax treatment of life insurance and annuities, including modified endowment contracts

What is the exclusion ratio for annuitized payments under the general federal rule?

Investment in the contract divided by expected return

Section 72(b)(1) defines the excluded share by the ratio of investment in the contract to expected return, measured at the annuity starting date.

Source: 26 U.S.C. § 72(b)(1) ·Taxation of life insurance and annuities · From Tax treatment of life insurance and annuities, including modified endowment contracts

An annuitant has recovered the entire investment in a nonqualified annuity through prior exclusions. Under the general rule, how are later annuity payments taxed?

The payments are fully taxable because no unrecovered investment remains.

Section 72(b)(2) limits exclusions to unrecovered investment. Once it is exhausted, later payments are fully taxable.

Source: 26 U.S.C. § 72(b)(2) ·Taxation of life insurance and annuities · From Tax treatment of life insurance and annuities, including modified endowment contracts

What does tax-deferred cash-value growth in a qualifying life insurance policy generally mean?

Internal growth generally is not taxed annually merely as it accumulates.

Tax deferral generally postpones income recognition on internal growth; it is not a promise that every future distribution is tax free.

Taxation of life insurance and annuities · From Tax treatment of life insurance and annuities, including modified endowment contracts

Which funding description generally fits an individually owned nonqualified annuity purchased outside a retirement plan?

After-tax investment with tax-deferred internal earnings

An ordinary individually owned nonqualified annuity generally uses after-tax dollars and defers income taxation of internal growth.

Taxation of life insurance and annuities · From Tax treatment of life insurance and annuities, including modified endowment contracts

Which statement accurately explains what the seven-pay test requires of a policyowner's premium schedule?

The test establishes a cumulative funding limit rather than requiring seven actual annual premium payments.

The seven level annual premiums supply the statutory benchmark. The test does not itself mandate that the owner make seven equal payments.

Source: 26 U.S.C. § 7702A(b) ·Taxation of life insurance and annuities · From Tax treatment of life insurance and annuities, including modified endowment contracts

Who makes the decision to accept an individual life insurance application and assign its underwriting class?

The insurer

The insurer evaluates the evidence and makes the underwriting decision.

Individual underwriting, pricing, and claims · From Individual life underwriting, pricing, and claims

Compared with a standard risk, a preferred life insurance risk generally has which characteristic?

More favorable expected mortality

Preferred classification reflects more favorable expected mortality than standard classification.

Individual underwriting, pricing, and claims · From Individual life underwriting, pricing, and claims

Which statement distinguishes a gross life insurance premium from a net premium?

The gross premium includes expense loading.

Gross premium includes expense loading; net premium excludes that loading.

Individual underwriting, pricing, and claims · From Individual life underwriting, pricing, and claims

Under 15 U.S.C. § 1681d(a), when must written disclosure that an investigative consumer report may be made be delivered?

No later than three days after the report is first requested

The initial written disclosure is due no later than three days after the report is first requested.

Source: 15 U.S.C. § 1681d(a)(1) ·Individual underwriting, pricing, and claims · From Individual life underwriting, pricing, and claims

A California life insurer wants an applicant to take an HIV test. What consent must it obtain?

The applicant's written informed consent for the test

California requires the applicant's written informed consent before insurer HIV testing.

Source: Cal. Ins. Code § 799.03(a)-(b) ·Individual underwriting, pricing, and claims · From Individual life underwriting, pricing, and claims

Which pricing assumption represents expected investment earnings in life insurance premium calculations?

Interest

Interest assumptions reflect expected investment earnings.

Individual underwriting, pricing, and claims · From Individual life underwriting, pricing, and claims

Which basis can support different treatment of an HIV-positive applicant under California § 799.02(b), assuming the section applies?

Sound actuarial principles and actual or reasonably anticipated experience

The statute permits specified underwriting distinctions when based on sound actuarial principles and actual or reasonably anticipated experience.

Source: Cal. Ins. Code § 799.02(a)-(b) ·Individual underwriting, pricing, and claims · From Individual life underwriting, pricing, and claims

Which pricing component covers costs such as administering policies and acquiring new business?

Expenses

Expenses include administration and acquisition costs supported through premium loading.

Individual underwriting, pricing, and claims · From Individual life underwriting, pricing, and claims

Which rider waives qualifying life insurance premiums after the insured meets its total-disability definition and waiting period?

Waiver of premium

Waiver of premium protects policy funding when the insured meets the disability conditions.

Life policy riders · From Life policy riders

What does a guaranteed insurability rider primarily provide?

Specified opportunities to buy more coverage without new evidence of insurability

Guaranteed insurability preserves specified additional-purchase opportunities without new insurability evidence.

Life policy riders · From Life policy riders

Under California's accelerated death benefit article, which statement correctly characterizes a benefit governed by that article?

It is a life insurance benefit and may not be marketed as long-term care insurance.

California prohibits marketing these accelerated death benefits as long-term care insurance and requires disclosures distinguishing them from other products.

Source: Cal. Ins. Code § 10295.11(a) ·Life policy riders · From Life policy riders

Which rider is associated with a stated premium refund when its survival and other contractual conditions are met?

Return of premium

Return of premium provides a conditional refund, distinct from waiver of future premiums or acceleration of death proceeds.

Life policy riders · From Life policy riders

Which rider adds temporary death coverage on covered children under an adult's life policy?

Children's term rider

A children's term rider adds temporary coverage on the covered children's lives.

Life policy riders · From Life policy riders

For a life rider, which set of questions is most useful for determining how a claim or purchase right operates?

What event triggers it, whose life or disability matters, and what benefit changes?

Trigger, covered person, and benefit are the central dimensions for distinguishing rider functions.

Life policy riders · From Life policy riders

Which statement best distinguishes a return of premium rider from ordinary cash surrender value?

The refund arises from the rider's stated conditions rather than being synonymous with ordinary surrender value.

A return of premium rider is a conditional refund feature, distinct from cash surrender value, policy loans, acceleration, and waiver.

Life policy riders · From Life policy riders

What is the defining purpose of an accidental death benefit rider?

To add a benefit when death results from a covered accident

Accidental death benefit adds coverage for a death resulting from a covered accident.

Life policy riders · From Life policy riders

Which description captures an accelerated death benefit's basic payment mechanism?

Payment of some or all death proceeds during life after a qualifying event

Acceleration makes death proceeds available during life upon a qualifying event, as reflected in California's required product description.

Source: Cal. Ins. Code § 10295.11(a) ·Life policy riders · From Life policy riders

What is a life insurance rider?

A provision added to a base policy to modify its coverage or benefits

A rider modifies the base policy, often by adding a benefit, protection, or purchase right.

Life policy riders · From Life policy riders