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CA Life Insurance Practice Exam 2024/2025 already graded A+
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CA Life Insurance Practice Exam 2024/2025 already graded A+
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CA Life Insurance Practice ExamA key person is typically all of the following, except: - ANS-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? - ANS-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: - ANS-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: - ANS-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. - ANS-Probationary
A probationary period is set up to help reduce the chance of facing immediate claims.
How is the funding for Social Security provided? - ANS-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: - ANSThe 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? -
ANSThe 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? - ANS31
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. - ANSKey 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? -
ANSThe 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: - ANSIt is a legally enforceable
agreement, which pre-establishes the value of the business, and 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: - ANSSalary 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? - ANSTax 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. - ANS10
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: - ANSTotally 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.
L is no longer eligible for the employer's $50,000 group life insurance plan. L dies 28 days later
without sending in the required conversion paperwork. What will their beneficiaries receive? -
ANS50,000, less any premium due
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