California Life, Accident & Health Practice Test

Answer choices

1. A. As policyowner, she may change a revocable beneficiary by following the policy's change-of-beneficiary procedure.
2. B. She may change the beneficiary only with her son's written consent because his interest became vested when the policy was issued.
3. C. She must complete a beneficiary-change form and provide new evidence of insurability because changing the beneficiary changes the policy's underwriting risk.
4. D. She can change the beneficiary only by assigning ownership of the policy to her daughter.

Wrong-answer review

• B. She may change the beneficiary only with her son's written consent because his interest became vested when the policy was issued.: A revocable beneficiary does not have the consent right of an irrevocable beneficiary; the owner retains the contractual right to change the designation.
• C. She must complete a beneficiary-change form and provide new evidence of insurability because changing the beneficiary changes the policy's underwriting risk.: Changing a revocable beneficiary generally changes who receives proceeds, not the insured risk, so new medical underwriting is not ordinarily required.
• D. She can change the beneficiary only by assigning ownership of the policy to her daughter.: Assignment transfers ownership rights; a revocable beneficiary change can be made under the policy's beneficiary-change procedure without transferring ownership.

Answer choices

1. A. A deferred annuity.
2. B. A variable life policy.
3. C. A qualified plan solely because payments begin quickly.
4. D. An immediate annuity.

Answer choices

1. A. A variable annuity.
2. B. An indexed variable life policy.
3. C. A fixed annuity.
4. D. A securities margin account.

Answer choices

1. A. The partners selected the same insurance company.
2. B. The policies have identical premiums.
3. C. Both partners named unrelated contingent beneficiaries, and that beneficiary designation itself creates insurable interest for each partner.
4. D. Each partner faces a legitimate economic loss if the other dies.

Answer choices

1. A. A 0% index-crediting floor does not eliminate every loss risk; surrender charges, withdrawals, taxes, and contract terms can still reduce what the owner receives.
2. B. A 0% floor protects the accumulation value from index losses and therefore also prevents surrender charges from reducing the amount received.
3. C. The floor applies to both index crediting and early-withdrawal charges, although taxes can still reduce net proceeds.
4. D. The floor guarantees no negative index credit, but a positive index year must be credited at the full index gain.

Answer choices

1. A. As a qualified annuity solely because all annuities are retirement products.
2. B. As tax-exempt, meaning neither basis nor earnings are ever reported.
3. C. As a nonqualified annuity.
4. D. As a Roth IRA automatically.

Answer choices

1. A. It applies the dividend only to reduce the next term renewal premium.
2. B. It converts the entire policy into a nonparticipating contract.
3. C. It uses the dividend to purchase additional paid-up life insurance, increasing policy values and death benefit under the contract.
4. D. It pays the dividend to the beneficiary only after the insured dies.

Answer choices

1. A. Yes. Guaranteed renewable refers to the insured's lifetime unless the policy is expressly labeled nonrenewable.
2. B. Yes. Once the policy has been in force for two years, the terminal age no longer applies to the renewal promise.
3. C. No. The guarantee lasts for the period stated in the contract.
4. D. No. The guarantee ends at the stated terminal age, but California requires that terminal age to be 60 for disability policies.

Answer choices

1. A. Single-premium policies are legally required to double the premium immediately as cash value.
2. B. A large single premium funds the permanent contract at issue.
3. C. Ordinary whole life is prohibited from building cash value until the insured reaches age 65.
4. D. The insurer guarantees that single-premium cash value will always exceed the death benefit.

Answer choices

1. A. No notice is needed if the senior invited the producer by telephone.
2. B. The producer may conceal that insurance will be discussed until after entering the home, because the senior-home notice may be delivered after the sales discussion begins.
3. C. The notice may be delivered for the first time after the application is signed.
4. D. The producer must provide the required written notice at least 24 hours before the initial in-home meeting.