California Life Insurance Exam Version 2
Practice exam for Life Insurance Producer under Insurance Exams (Licensing Exams). 5 sample questions.
Sample Questions
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Question 1
A married couple who wants life insurance benefits to pay estate taxes when the second spouse dies should purchase what policy?
Correct Answer: C
Rationale: Survivorship policy (C) is correct because it pays the death benefit after the second spouse dies, ideal for estate taxes. Family policy (A) covers multiple family members. Joint life (B) pays on the first death. Universal life (D) is flexible but not specific to second death.
Rationale: Survivorship policy (C) is correct because it pays the death benefit after the second spouse dies, ideal for estate taxes. Family policy (A) covers multiple family members. Joint life (B) pays on the first death. Universal life (D) is flexible but not specific to second death.
Question 2
Unfair methods of competition laws prohibit a life agent from preparing an insurance quote that includes
Correct Answer: B
Rationale: Misleading dividend payouts (B) is correct because unfair competition laws prohibit deceptive practices, like misleading dividends. Policy comparisons (A) are allowed if accurate. Estimated accruals (C) and insurer financial info (D) are permissible if truthful.
Rationale: Misleading dividend payouts (B) is correct because unfair competition laws prohibit deceptive practices, like misleading dividends. Policy comparisons (A) are allowed if accurate. Estimated accruals (C) and insurer financial info (D) are permissible if truthful.
Question 3
What does the statement 'Life insurance creates an immediate estate' mean?
Correct Answer: C
Rationale: Total death benefit paid whenever insured dies (C) is correct, as life insurance provides an immediate estate via the death benefit. Premiums (A) are ongoing. Cash value (B) builds over time. Proceeds (D) go to beneficiaries, not necessarily the estate.
Rationale: Total death benefit paid whenever insured dies (C) is correct, as life insurance provides an immediate estate via the death benefit. Premiums (A) are ongoing. Cash value (B) builds over time. Proceeds (D) go to beneficiaries, not necessarily the estate.
Question 4
Which of the following statements about life insurance policy loans is correct?
Correct Answer: A
Rationale: Policy loans may be repaid anytime while policy is in force (A) is correct, as loans can be repaid flexibly. Unpaid loans (B) reduce death benefits, not estate debts. Loans for premiums (C) reduce benefits. Debtor-creditor (D) applies but isn’t the full context.
Rationale: Policy loans may be repaid anytime while policy is in force (A) is correct, as loans can be repaid flexibly. Unpaid loans (B) reduce death benefits, not estate debts. Loans for premiums (C) reduce benefits. Debtor-creditor (D) applies but isn’t the full context.
Question 5
The tendency of a person who has a higher than average exposure to loss to purchase insurance is known as
Correct Answer: A
Rationale: Adverse selection (A) is correct, as it describes high-risk individuals seeking insurance. Law of large numbers (B) predicts losses. Probability distribution (C) is statistical. Risk pooling (D) spreads risk across insureds.
Rationale: Adverse selection (A) is correct, as it describes high-risk individuals seeking insurance. Law of large numbers (B) predicts losses. Probability distribution (C) is statistical. Risk pooling (D) spreads risk across insureds.