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Free Life Agent License Examination Practice Questions

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Sample Practice Questions

Try these 10 sample questions from the Life Agent License Examination practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

  1. 1Under the California Insurance Code, which arrangement is insurance?

    1. A. Indemnity against loss from a contingent or unknown event
    2. B. A deposit agreement preserving a fixed account balance
    3. C. A maintenance agreement covering scheduled routine service
    4. D. A credit agreement secured by an existing insurance contract

    Answer: A

    Explanation: California Insurance Code section 22 defines insurance by its undertaking to indemnify another against loss, damage, or liability arising from a contingent or unknown event. Official text: “Identify the definition of insurance”

    Reference: 2025 Life License Examination Objectives — CIC section 22

  2. 2A life agent wants to negotiate a life settlement for the policyowner. What California licensing rule applies?

    1. A. The life license alone always suffices
    2. B. Only an insurer appointment is needed
    3. C. The agent generally must also qualify as a life settlement broker
    4. D. No license applies if the policy is in force

    Answer: C

    Explanation: The life-settlement role requires broker authority, with the producer pathway and exceptions controlled by section 10113.2. Official text: “a life agent must also be licensed as a life settlement broker in order to transact life settlements on behalf of a policy owner.”

    Reference: 2025 Life License Examination Objectives — Life Agent Examination Objectives II.E.3(d); CIC section 10113.2

  3. 3Before soliciting an individual California consumer for long-term-care insurance, what initial training must an authorized agent complete?

    1. A. Two hours of property training
    2. B. Four hours of claims training
    3. C. Twenty-four hours of securities training
    4. D. Eight hours of approved long-term-care training

    Answer: D

    Explanation: California requires completion of the section's initial LTC training before an agent may solicit individual consumers. Official text: “Licensees shall complete the initial training requirements of this section prior to being authorized to solicit individual consumers for the sale of long-term care insurance.”

    Reference: California Code, INS 10234.93. — CIC section 10234.93(a)(4)

  4. 4Which event may be made the subject of insurance in California?

    1. A. A loss that already occurred and is fully known
    2. B. A contingent event that may adversely affect a person with an insurable interest
    3. C. A wager with no possibility of loss to the policyowner
    4. D. A deliberate loss the insured is certain to cause

    Answer: B

    Explanation: Section 250 permits insurance of a contingent or unknown event that may damage a person having an insurable interest or create liability against that person. Official text: “Identify the definition of insurance”

    Reference: 2025 Life License Examination Objectives — CIC section 22

  5. 5Which transaction role meets California's statutory definition of a life settlement provider?

    1. A. An owner selling the owner's own policy
    2. B. A beneficiary awaiting ordinary death proceeds
    3. C. An adviser retained solely by the owner
    4. D. A nonowner that enters into a settlement contract with the owner

    Answer: D

    Explanation: The definition turns on a nonowner entering into or effectuating the settlement contract with the owner, subject to listed exclusions. Official text describes the provider as “a person, other than an owner, who enters into or effectuates a life settlement contract with an owner.”

    Reference: California Code, INS 10113.1. — CIC section 10113.1(r)

  6. 6For a California LTC agent first licensed after January 1, 1992, what recurring training applies during the first four 12-month periods?

    1. A. Eight hours in each of those four periods
    2. B. Eight hours total over four years
    3. C. One hour each period
    4. D. No recurring training

    Answer: A

    Explanation: Section 10234.93 requires eight hours in each of the first four 12-month periods for licensees issued a license after January 1, 1992. Official text: “eight hours of training in each of the first four 12-month periods beginning from the date of original license issuance.”

    Reference: California Code, INS 10234.93. — CIC section 10234.93(a)(4)(A)

  7. 7A California applicant seeks to insure an event certain to occur, but the date is unknown. How is that event treated?

    1. A. It is never insurable because occurrence is certain
    2. B. It is insurable only through a mutual insurer
    3. C. It may be insurable because the time of occurrence is unknown
    4. D. It is insurable only after the event occurs

    Answer: C

    Explanation: California's insurable-event rule includes an event certain to occur when the time of its occurrence is unknown. Official text: “Identify the definition of insurance”

    Reference: 2025 Life License Examination Objectives — CIC section 22

  8. 8When must an insurable interest exist for a California life-insurance policy?

    1. A. Only at the insured's death
    2. B. At every premium due date
    3. C. When the policy takes effect
    4. D. Only when a beneficiary files a claim

    Answer: C

    Explanation: California requires insurable interest at policy inception; continued interest at the time of death is generally not required for a validly issued life policy. Official text: “An insurable interest shall be required to exist at the time the contract of life or disability insurance becomes effective, but need not exist at the time the loss occurs.”

    Reference: California Code, INS 10110.1. — CIC section 10110.1(f)

  9. 9After the first four years, how often must the covered California LTC agent complete the eight-hour LTC course?

    1. A. Every month
    2. B. Before each license renewal
    3. C. Only once for life
    4. D. Only after a complaint

    Answer: B

    Explanation: After the first four annual periods, the statute requires eight hours of LTC training before each license renewal. Official text: “thereafter eight hours of training prior to each license renewal.”

    Reference: California Code, INS 10234.93. — CIC section 10234.93(a)(4)(A)

  10. 10Which fact is essential when a California contract is classified as insurance under section 22?

    1. A. One party promises a stated return on deposited funds
    2. B. One party performs scheduled maintenance for a service fee
    3. C. One party extends secured credit against policy cash value
    4. D. One party indemnifies another for a covered uncertain event

    Answer: D

    Explanation: The statutory classification turns on an undertaking to indemnify another against covered loss, damage, or liability from a contingent or unknown event. Official text: “Identify the definition of insurance”

    Reference: 2025 Life License Examination Objectives — CIC section 22

Topics in this practice bank

These topics describe the available practice for Life Agent License Examination. Review the examination outline and its sources for scope and allocation details.

  • General Insurance
    • Basic Insurance Concepts and Principles
    • Identify the definition of insurance (California Insurance Code section 22)
    • 2.Recognize the definition of risk
    • 3.Differentiate between a pure risk and a speculative risk Identify the definition of peril Identify the definition of hazard Differentiate between moral, morale, and physical hazards
    • 7.Identify the definition of the law of large numbers
    • 8.Identify the definition or the correct usage of the term loss exposure
    • 9. Identify risk management techniques
    • 10.Identify risk situations that present the possibility of a loss
    • 11.Recognize the requisites of an ideally insurable risk
    • 12.Identify the definition of insurable events (California Insurance Code section 250)
    • 13.Identify and apply the definitions of insurable interest, the principle of indemnity, and utmost good faith
    • 14.Identify the main purpose of insurance underwriting
    • 15.Identify the meaning of adverse selection and profitable distribution of exposures
    • Contract Law
    • 1.Compare contract law and tort law
    • 2.Identify the four basic elements of a contract a. Agreement, offer and acceptance b.Competent parties c. Legal purpose d.Consideration
    • 3.Identify the meaning and effect of the following special characteristics of an insurance contract: a.Contract of adhesion b.Conditional contract c.Aleatory d.Unilateral e.Personal
    • 4.Identify the term “insurance policy” (California Insurance Code section 380)
    • 5.Identify the meaning and effect of each of the following on a contract: a.Concealment (California Insurance Code sections 333 and 339) i.Be able to identify information that does not need to be communicated in a contract: 1) Known information 2)Information that should be known 3)Information which the other party waives 4)Information that is excluded by a warranty and not material to the risk 5)Information that is excepted from insurance and not material to the risk 6)Information based on personal judgment b.Warranty (California Insurance Code sections 440 through 445 and 447) i.Know that a warranty may be expressed or implied ii.Know that violation of a material warranty allows the other party to rescind the contract c.Representations (California Insurance Code sections 350 through 361) i.Know when a representation can be altered or withdrawn (California Insurance Code section 355) ii.Know that a representation is false when the facts fail to correspond with its assertions or stipulations (California Insurance Code section 358) iii. Know that a representation cannot qualify an express provision in a contract of insurance, but it may qualify an implied warranty (California Insurance Code section 354) d.Misrepresentation (California Insurance Code sections 780 through 784) e.Materiality (California Insurance Code section 334) i.Know that the materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due
    • 6.Identify when an insurer has the right of rescission (California Insurance Code sections 331, 338, 359, and 447) a.Know that either intentional or unintentional concealment entitles an injured party to rescission of a contract (California Insurance Code section 331)
    • 7.Identify six required specifications for all insurance policies (California Insurance Code section 381): a.The parties between whom the contract is made b. The property or life insured c. The interest of the insured in property insured, if he is not the absolute owner thereof d. The risks insured against e. The period during which the insurance is to continue f. Either: i. A statement of the premium ii. If the insurance is of a character where the exact premium is only determinable upon the termination of the contract, a statement of the basis and rates upon which the final premium is to be determined and paid 8 Know that the financial rating of the insurer is not required to be specified in the insurance policy
    • 9.Given an insurance situation, identify the following terms correctly: a.Application, contract, rider b.Cancellation, lapse, grace period, reinstatement c.Rate, premium, earned and unearned premium
    • The Insurance Marketplace
    • Distribution Systems
    • 1.Be able to identify different distribution systems that include, but are not limited to, the following: a.Agency b.Direct response
    • Producers
    • 1.Be able to understand the general rules of agency as they apply to an agent, broker, and insurance company a.The responsibilities and duties of each b.The effect of the types of authority an agent may exercise (express, implied, or apparent)
    • 2.With regard to the underwriting of applicants and/or insureds, be able to: a.Identify a producer’s responsibilities b.Understand the insurers’ requirements
    • 3.Be able to define the following: a.Life agent (California Insurance Code section 1626(a)(1)) b.Accident and health or sickness agent (California Insurance Code section 1626(a)(2)) c.Life and disability insurance analyst (California Insurance Code sections 32.5 and 1831 through 1849)
    • 4.Be able to identify the California Insurance Code definition of transact and why the definition is important (California Insurance Code sections 35, 1631, and 1633) a.Know that the Code prohibits certain acts by unlicensed persons (California Insurance Code section 1631) b.Know the penalties for such prohibited acts (California Insurance Code section 1633)
    • 5.Written consent regarding persons engaged in the business of insurance whose activities affect interstate commerce (prohibited persons in insurance): a.Be able to identify what conduct is prohibited and identify what civil and criminal penalties apply (United States Code, title 18, sections 1033 and 1034)
    • 6.Be able to identify the differences between the terms “agent” and “broker” with respect to their relationship with insurers and with their insureds a.Insurance agent means a person authorized, by and on behalf of an insurer, to transact all classes of insurance other than life, disability, or health insurance (California Insurance Code section 31) b.A life licensee is a person authorized to act as a life agent on behalf of a life insurer or a disability insurer to transact life insurance, accident and health or sickness insurance, or life and accident and health or sickness insurance (California Insurance Code section 32) i.Licenses to act as a life agent under this chapter shall be of the types as set forth in California Insurance Code section 1626(a)(1) c.Insurance broker means a person who, for compensation and on behalf of another person, transacts insurance other than life, disability, or health with, but not on behalf of, an insurer (California Insurance Code section 33) d. Life settlement broker means a person who, on behalf of an owner, and for a fee, commission, or other valuable consideration, offers or attempts to negotiate life settlement contracts between an owner and providers. A life settlement broker represents only the owner and owes a fiduciary duty to the owner to act according to the owner’s instructions, and in the best interest of the owner, notwithstanding the manner in which the broker is compensated. (California Insurance Code sections 10113.1(b) and 10113.2(b)(1)(A) through (D))
    • 7.Be able to recognize: a.The differences between the authority of an agent and a solicitor b.That there is no such license as “life solicitor” (California Insurance Code section 1704(d)) c.That an insurance solicitor is a natural person employed to aid an insurance agent or insurance broker in transacting insurance other than life, disability, or health (California Insurance Code section 1624)
    • 8.Regarding insurance agent’s errors & omissions insurance, be able to identify: a.The types of coverages available b.The types of losses commonly covered and not covered c.The need for the coverage
    • 9.Be able to identify acts prohibited (unless a surplus line broker) regarding nonadmitted insurers (California Insurance Code section 703)
    • 10.Be able to identify the prohibitions of free insurance (California Insurance Code section 777.1)
    • 11.Be able to identify the Code requirements for the following: a.An agency name, use of name (California Insurance Code sections 1724.5,1726, and 1729.5) b.Change of address (California Insurance Code section 1729) c.Filing license renewal application (California Insurance Code section 1720) d.Printing license number on documents (California Insurance Code section 1725.5)
    • 12.Be able to identify the records an insurer and agents must maintain (California Insurance Code sections 10508 through 10508.5)
    • 13.Be able to identify the requirements applicable to an insurer for life insurance policy illustrations (California Insurance Code sections 10509.950 through 10509.965)
    • 14.Be able to identify the Code specifications regarding producer application investigation, denial of applications, and suspension or revocation of license (California Insurance Code sections 1666, 1668 through 1669, and 1738)
    • 15.Be able to identify the importance and the scope of the Code regarding: a.The filing of a notice of appointment to transact insurance (California Insurance Code section 1704 through 1705) b.An inactive license (California Insurance Code section 1704(b)) c.Cancellation of a license by the licensee by written notice thereof delivered to the Commissioner (California Insurance Code section 1708)
    • 16.Be able to identify the scope and effect of the Code regarding termination of a (producer’s) license, including when producers dissolve a partnership (California Insurance Code sections 1708 through 1712.5)
    • 17.Be able to identify and apply: a.The definition of the term “fiduciary” b.Producer fiduciary duties described in the Code (California Insurance Code sections 1733 through 1735)
    • 18.Be able to identify the continuing education (CE) requirements for an individual licensed as a life agent (California Insurance Code sections 1749.3 through 1749.33): a.Life agents also licensed as a property and casualty must complete 24 hours of continuing education in either license type, three (3) hours of which must be in ethics (California Insurance Code sections 1749.3(b) and 1749.33(a)) b.A life agent who sells annuity products to individual consumers must complete: i. Eight (8) hours of initial training prior to soliciting for sales ii.Four (4) hours of subsequent training every two years prior to license renewal (California Insurance Code section 1749.8) c.The total hours of continuing education required for the life agent are not increased by the above
    • 19.Be able to describe the differences between benefits provided under an accelerated death benefit rider for chronic illness under California Insurance Code section 10295 et seq. and benefits provided under long-term care insurance under California Insurance Code section 10234.93, including but not limited to, the following: a.Long-term care training requirements i.Long-term care training is required if an agent is transacting accelerated death benefit provisions or riders that require the provision of personal care services to a chronically ill insured ii.Long-term care training is not required when transacting accelerated death benefit provisions or riders that do not require any provision of personal care services to an insured 1)The insured may take the accelerated death benefits in a lump sum when the individual qualifies (California Insurance Code section 10295.1), as well as choose the option to receive the benefit in periodic payments that is provided for a certain period only 2)Insurers are required to ensure that agents offering, marketing, or selling accelerated death benefits on their behalf are able to describe the differences between benefits provided under an accelerated death benefit and benefits provided under long-term care insurance (California Insurance Code section 10295.12) Life producers must communicate: (a)Differences between the benefits afforded to an insured through an accelerated death benefit and a long-term care insurance policy or rider (b)Differences between benefit eligibility criteria (c)Whether an elimination period applies to either an accelerated death benefit or long-term care insurance and a description of the elimination period (d) The benefits under the accelerated death benefit or long-term care insurance if benefits are never needed (e)The benefits under the accelerated death benefit or long-term care insurance if benefits are needed (f) Restrictions on benefit amounts (g) Tax treatment of benefits and premiums (h) Income and death benefit considerations
    • 20.Be able to identify the definition of “[third party] administrator” (California Insurance Code section 1759)
    • 21.Concerning a life and disability insurance analyst license, be able to identify requirements and prohibitions for charging fees (California Insurance Code section 1848) The following Examination Objectives are derived from the California Insurance Code and codes of ethics of major industry organizations. These form the basis for life examination questions.
    • 22.Be able to identify and apply the meaning of the following: a.Place the customer's interest first b.Know your job and continue to increase your level of competence c.Identify the customer’s needs and recommend products and services that meet those needs d.Accurately and truthfully represent products and services e.Use simple language; talk the layman’s language when possible f.Stay in touch with customers and conduct periodic coverage reviews g.Protect your confidential relationship with your client h.Keep informed of and obey all insurance laws and regulations i.Provide exemplary service to your clients j.Avoid unfair or inaccurate remarks about the competition
    • 23.Be able to identify that the California Insurance Code and the California Code of Regulations identify many unethical and/or illegal practices, but they are NOT a complete guide to ethical behavior
    • 24.Be able to identify special ethical concerns that may occur when dealing with Senior Citizens (California Insurance Code sections 785 through 789.10)
    • Insurers
    • 1.Be able to differentiate between: a.Admitted and nonadmitted insurers (California Insurance Code sections 24 and 25) b.Domestic, foreign, and alien insurers (California Insurance Code sections 26, 27, and 1580) c.Regulation of an admitted insurer and non-admitted insurer, and the potential consequences for consumers (California Insurance Code sections 24, 25, and 1760 through 1780)
    • 2. Be able to identify the penalty for unlawfully acting as an agent for a non-admitted insurer (California Insurance Code section 703)
    • 3.Be able to identify the functions of the following major operating divisions of insurers: marketing or sales, underwriting, claims, and actuarial
    • 4.Be able to identify that a primary insurer (i.e., ceding company) is the insurance company which transfers some or all of its loss exposure to another insurer in a reinsurance transaction
    • 5.Know that any person, association, organization, partnership, business trust, limited liability company, or corporation capable of making a contract may be an insurer (California Insurance Code sections 19 and 150)
    • 6.Be able to differentiate between mutual, stock, and fraternal insurers: a.Earned surplus b.Divisible surplus as policyholder dividends c.Divisible surplus as shareholder dividends
    • Market Regulation – General
    • 1.Be able to identify: a.The California Insurance Code and how it may be changed b.California Code of Regulations, Title 10, chapter 5, and how it may be changed c.How the Insurance Commissioner is selected, the term of office, and the responsibilities of the position (California Insurance Code sections 12900 and 12921)
    • 2.Be able to identify the correct application of the Unfair Practices article, including its prohibitions and penalties (California Insurance Code sections 790 through 790.15) a.Know that only the Commissioner may enforce the provisions of the Unfair Practices Act b. Know that the Commissioner may conduct hearings to identify additional unfair acts or practices and determine their enforcement
    • 3. Be able to identify the privacy protection provisions of: a.The Gramm-Leach-Bliley Act (GLBA)/California Financial Information Privacy Act (California Financial Code sections 4050 through 4060) b.Insurance information and Privacy Protection Act regarding practices, prohibitions, and penalties (California Insurance Code sections 791 through 791.26)
    • 4.Be able to define an insolvent insurer (California Insurance Code section 985): a.Know the definition of paid-in capital (California Insurance Code section 36) b.Know that it is a misdemeanor to refuse to deliver any books, records, or assets to the Commissioner once a seizure order has been executed in an insolvency proceeding (California Insurance Code section 1013)
    • 5.Be able to identify the scope and correct application of the conservation proceedings described in the Code (California Insurance Code sections 1011, 1013, and 1016)
    • 6.Be able to identify the purpose and scope of the California Insurance Code concerning the California Life and Health Insurance Guarantee Association (CLHIGA) (California Insurance Code sections 1067.02(a)(1) and 1067.02(b)(1)) a. Basic coverages and exclusions of CLHIGA (California Insurance Code sections 1067 through 1067.18)
    • 7.Be able to identify the scope and correct application of the False and Fraudulent Claims article of the Code (California Insurance Code sections 1871 and 1871.4): a.Efforts to combat fraud (California Insurance Code sections 1872, 1874.6, 1875.8, 1875.14, 1875.20, and 1877.3(b)(1)) b.If an insured signs a false claim form, the insured may be guilty of perjury
    • 8.Be able to identify the requirements for discontinuance of group life insurance (California Insurance Code section 10128.1 through10128.4)
    • 9.Be able to identify discriminatory practices prohibited by the Code (California Insurance Code sections 10140 through10145)
    • 10.Be able to identify the difference between shall and may (California Insurance Code section 16)
    • 11.Be able to identify the requirements for notice by mail and by electronic transmission (California Insurance Code sections 38 and 38.6)
    • Fair Claims Settlement Practices Regulations (California Code of Regulations, Title 10, chapter 5, subchapter 7.5, article 1)
    • 1.Be able to identify a definition of the following: a.Claimant (California Code of Regulations, Title 10, section 2695.2(c)) b.Notice of legal action (California Code of Regulations, Title 10, section 2695.2(o)) c.Proof of claim (California Code of Regulations, Title 10, section 2695.2(s))
    • 2.Be able to identify file and record documentation (California Code of Regulations, Title 10, section 2695.3)
    • 3.Be able to identify duties upon receipt of communications (California Code of Regulations, Title 10, section 2695.5)
    • 4. Be able to identify standards for prompt, fair and equitable settlements (California Code of Regulations, Title 10, sections 2695.7(a), (b), (c), (g), (h))
  • Life Insurance
    • Life Insurance - Basics
    • Be able to identify examples or definitions of: a.Life insurance b.Applicant, policy owner, insured, beneficiary
    • 2.Be able to identify the elements of the personal insurance planning process: a.Overall financial objectives b.Development and implementation of an insurance plan to accomplish the objectives
    • 3.Be able to identify the two approaches used to determine life insurance amounts: a.Human life value approach, or b.Needs approach
    • 4.Be able to identify methods of managing risk: a.Avoidance b.Retention c.Sharing d.Reduction e.Transferring
    • 5.Be able to identify the following business funding uses of life insurance: a.Key person insurance b.Buy-sell agreements c.Other uses (e.g., split dollar, deferred compensation, business overhead, salary continuation)
    • 6.Be able to identify the meaning of term limit of liability in a life policy
    • 7.Know when insurable interest is required to exist under life insurance policies (California Insurance Code section 10110)
    • 8.Be able to identify: a.The term mortality b.The term mortality table and how it is developed
    • 9.Be able to identify the meaning of the statement “Life insurance creates an immediate estate”
    • Types of Life Policies
    • 1.Be able to differentiate between the following types of life insurance policies: a.Participating and non-participating b.Individual c. Group
    • 2.Be able to identify and differentiate between the key features of each of the following general classes and their appropriate uses: a.Term b.Whole life c.Universal life d.Indexed universal life e.Variable life and variable universal life f.Graded death benefits
    • 3.Be able to differentiate between common modes of premium payment: a.Single premium b.Limited pay c.Modified premium d.Level e.Fixed vs. flexible f.Initial premium and guaranteed maximum premium
    • 4.Be able to identify each of the following special coverages and when they are appropriate: a.Mortgage redemption b.Family protection, family policy, and family rider c.Juvenile policies (including jumping juvenile, payor Rider) d. Return of premium e.Joint life and survivorship policies
    • 5.Be able to identify the following types of term products: a.Level term i.Guaranteed level premium ii.Non-guaranteed premium iii.Indeterminate premium b.Renewable term c.Convertible term d.Decreasing term e.Universal life designed as term (e.g., Guaranteed Universal Life, Survivorship Guaranteed Universal Life)
    • Annuities
    • 1.Be able to identify a definition of an annuity a.Accumulation period and distribution phase
    • 2. Be able to identify the parties to an annuity: a.Annuitant b.Owner c.Beneficiary
    • 3.Be able to identify the business and personal uses for annuity products
    • 4.Be able to differentiate the different types of annuities: a.Fixed – general account b.Variable – separate account c.Equity indexed
    • 5.Be able to identify the different annuity distribution choices and funding mechanisms: a.Immediate – the first payment from a single premium immediate annuity must be made within twelve (12) months of the contract date b.Deferred (single premium, flexible premium)
    • 6.Be able to identify: a. Qualified vs. nonqualified annuities b. Group vs. individual annuities c. Market value adjusted annuities d. Tax sheltered annuities (Internal Revenue Code section 403(b) plan)
    • 7.Be able to identify and differentiate between different types of annuity payment options: a.Life b.Life with period certain c.Period certain d.Life with refund e.Joint life and joint and survivor annuities
    • 8.Know that any unpaid annuity benefits following the death of the annuitant are paid to the beneficiary and are taxable.
    • 9.Be able to identify the following: a.The required suitability information to be obtained prior to making recommendations to a consumer (California Insurance Code sections 10509.913(i)(1-14)): i.Age ii.Annual income iii.Financial situation and needs, including the financial resources used for the funding of the annuity iv.Financial experience v.Financial objectives vi.Intended use of the annuity vii.Financial time horizon viii.Existing assets, including investment and life insurance holdings ix.Liquidity needs x.Liquid net worth xi.Risk tolerance xii.Tax status xiii.Whether or not the consumer has a reverse mortgage xiv.Whether or not the consumer intends to apply for means-tested government benefits, including but not limited to, Medi-Cal or the veterans’ aid and attendance benefit b.Exceptions to suitability as stated in California Insurance Code section 10509.912 c.The need for consumer’s awareness of liquidity limitations or surrender charges d.The standards for determining whether agent’s recommended transactions meet consumer’s insurance needs and financial objectives
    • 10.Be able to identify the rules regarding conduct with seniors 65 and older (California Insurance Code sections 785 through 789.10) a.Know what types of disclosures are required if the applicant requests an immediate investment of funds in a variable annuity (California Insurance Code section 10127.10)
    • Life Insurance and Annuities – Policy Replacement and Cancellation
    • 1.Be able to identify the insured’s rights to cancel a recently purchased life policy, when insured is: a.An individual 60 years of age or older (California Insurance Code section 10127.10) b.An individual under 60 years of age (California Insurance Code section 10127.9)
    • 2.Be able to identify the notice requirements and penalties of the Requirements for Replacement of Life Insurance and Annuity Policies article (California Insurance Code sections 10509 through 10509.09)
    • The Individual Life Insurance Contract
    • 1.Regarding life insurance applications, be able to identify: a.The types of information required on the application b.A "non-medical application" and why a medical examination may be required c. Required signatures d.Changes to the application e.Why insurers attach the application to a life policy f. Conditional receipt vs. binding receipt i. Binders are prohibited in life and disability insurance g.Temporary insurance agreement and the insurer’s conditions for a temporary insurance agreement to be in effect
    • 2.Be able to identify the life insurance policy disclosures (California Insurance Code sections 10509.950, 10509.955, and 10509.970 through 10509.975): a.Requirements for using illustrations b.Buyer’s guide c.Cost indexes d. Surrender charges e.Surrender period
    • 3.Be able to define a life settlement contract and know what its purpose and suitability are a.Possible alternatives to life settlements b. Owners’ rescission rights c. Fraudulent life settlements (including stranger originated life insurance) d.Know that a life agent must also be licensed as a life settlement broker in order to transact life settlements on behalf of a policy owner
    • 4.Regarding insurable interest, be able to identify the requirements for the: a.Policy owner b.Insured
    • 5.Regarding the life insurance policy, be able to identify: a.The types of information recorded on the policy specification page b.That there are no “standard” life policies (unlike property and casualty insurance) c.premium payment mode (annual, semiannual, quarterly, and monthly)
    • 6.Regarding policy delivery, be able to identify: a.The acceptable methods for delivery of a life policy to the owner of the policy (California Insurance Code section 10113.6) b.The purpose of a delivery receipt
    • 7.Be able to identify the following “common provisions” of life policies: a.Insuring clause b.Free look c.Consideration clause d.Owner’s rights, including: i.Assignment or transfer of policy ii.Selecting or changing payment mode iii.Selecting or changing beneficiaries iv.Conversion privilege (when applicable) v.Cash values vi.Dividends vii.Surrender charges and periods e.Beneficiary designations, including: i.Eligible beneficiaries ii.Primary and contingent (secondary) iii.Common disaster clause (Uniform Simultaneous Death Act) iv.Spendthrift clause v.Revocable vs. irrevocable vi.Be able to identify per capita vs. per stirpes vii.Be able to identify the rights of beneficiaries and creditors f.Grace period g.Automatic premium loan h.Reinstatement i.Policy loan j.Incontestability k.Suicide l.Misstatement of age or sex
    • 8.Be able to differentiate the three nonforfeiture options: a.Cash surrender b.Reduced paid up c.Extended term
    • 9.Be able to identify the common death benefit and annuity settlement options and why each might be selected: a.Lump sum b.Fixed amount c.Fixed period d.Life income e.Interest only
    • 10.Be able to identify the dividend options that may be available to policy owners, including: a.Cash payments b.Accumulation at interest c.Paid-up additions d.Reduced premium payment e.One-year term
    • 11.Common Policy Exclusions a.War or military service b.Aviation c.Illegal activity d.Know that suicide during the contestability period usually results in a refund of premiums paid, not payment of the death benefit e.Know that hazardous hobbies or occupations may result in the exclusion of certain causes of death by endorsement, resulting in a refund of premiums paid
    • Taxation of Life Insurance and Annuities
    • 1.Be able to identify the tax treatment regarding: a.Premium payments b.Cash value accumulation or dividends c.Death benefit proceeds d.Surrender and mature policy values eAnnuity payments to the annuitant or the beneficiary f.Group life insurance g.Internal Revenue Code (IRC) section 1035 exchanges i.Know what policy exchanges are or are not permitted, and how they are affected
    • 2.Be able to identify the IRC definition of modified endowment contract, including what effect this might have on a policyholder (IRC section 7702)
    • Group Life Insurance Plans
    • 1.Be able to differentiate between the basic characteristics of group and individual policies concerning: a.An individual insurance policy vs. group master contract vs. individual certificate of insurance b. Medical examinations and eligibility c. Contributory and non-contributory plans d.Employer responsibilities i. Selection of coverage ii.Non-discrimination within a class of employees iii.Recordkeeping iv. Enrollment
    • 2.Know the following characteristics of group life insurance: a.Eligible groups (California Insurance Code sections 10202.5, 10270.505, 10270.55, and 10270.57) b.Coverage for dependents of insureds (California Insurance Code section 10270.65) c.Types of life policies (California Insurance Code section 10200) d.Incontestability of the policy (California Insurance Code section 10350.2) e.Exclusions for war, military, and aviation risk (California Insurance Code section 10206.5) f.Misstatement of age (California Insurance Code section 10369.3) g.Conversion privilege (California Insurance Code section 10209) h.Grace period coverage (California Insurance Code section 10209) i.Blanket life insurance (California Insurance Code section 10270.2) j.Domestic partnership (California Insurance Code section 381.5)
    • 3.Be aware that life insurance can be held within a qualified plan under very limited circumstances
    • Social Security Disability Program (1 question)
    • 1.Be able to identify the Social Security System’s requirements to be currently insured vs. fully insured for disability and survivors’ benefits. a.Know that the minimum requirement for workers under age 24 to obtain “currently insured” status is 6 credits in the last three years b. Know that beginning at age 24 additional credits are required to obtain “currently Insured” status based on the worker’s age at the time of disability c.Know that 40 credits is the requirement for fully insured status in order to obtain disability, retirement, premium-free Medicare Part A benefits, and eligibility for Medicare Part B
    • 2.Be able to identify the kinds of benefit payments paid and the insured status required for the following types of benefits: a.Survivor i. income benefits (spouse and minor children, and the effect of the “Blackout Period”) ii. Lump sum death benefit b.Disability income c.Retirement income
    • Individual Underwriting, Pricing, and Claims
    • 1.Purpose of underwriting a.Prevention of adverse selection b.Properly classify risks i.Be able to differentiate between preferred, standard, and substandard risk classification
    • 2.Process of underwriting a.Be able to identify the responsibility of the agent as the field underwriter i.Field underwriting prior to application ii.Application must be completed accurately and truthfully to the best of the agent’s ability iii.Agent’s report iv.Know that the insurers must not make unfair distinctions between individuals in underwriting for the risk of human immunodeficiency virus (HIV) and acquired immune deficiency syndrome AIDS (California Insurance Code section 799) v.Know that insurers may not unfairly discriminate on the basis of tests of a person’s genetic characteristics (California Insurance Code section 10146). “Genetic characteristics” means any scientifically or medically identifiable gene or chromosome that is known to be a cause of a disease or disorder that is presently not associated with any symptoms of any disease or disorder (California Insurance Code section 10147(b)) b. Completing the application i. Know that basic underwriting requirements will vary based on the company ii.Know that the applicant’s signature attests to the accuracy of the information in the application c.Know that additional information may be required if an application reveals certain health conditions or other risk exposures i. MIB, Inc. report ii. Attending physician’s statement (APS) iii.Credit and/or inspection report iv. Department of Motor Vehicle (DMV) report v. Hazardous activity questionnaires (e.g., aviation, skydiving, scuba diving, auto/boat/motorcycle racing, mountain climbing) vi. Additional medical testing (e.g., electrocardiogram (EKG), treadmill examination, physician examination)
    • 3.Underwriting outcomes for: a.Insurer b.Insured c.Agent
    • 4.Be able to identify the following rate-making components: a.Mortality b. Insurer expenses c. Investments
    • Financial Structure of Insurers
  • Life Policy Riders
    • 1.Be able to identify which of an applicant's needs might be fulfilled by each of the following riders or clauses: a.Disability income b.Waiver of premium or waiver of monthly deduction in universal life policies c. Accidental death d.Cost of living e.Accelerated death benefits (living need rider, terminal illness rider and/or critical illness rider) f.Guaranteed insurability (guaranteed purchase options) g.Long-term care (LTC) i.LTC training is required when an agent is transacting accelerated death benefit provisions or riders that requires services to the chronically ill insured (1)Eight (8) hours of LTC training prior to soliciting individual consumers for the sale of LTC insurance (2)Eight (8) hours of LTC training each of the first four years of licensing (3)Eight (8) hours of LTC training every two-year license term, beginning with the fifth year of licensing ii.LTC training is not required when transacting accelerated death benefit provisions or riders that do not require services h.No-lapse guarantees (universal life policies) i.Guaranteed minimum income and guaranteed minimum withdrawal riders in life and annuity contracts i.Know what affects these riders have on death or annuity benefits

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