California Life, Accident, and Health Insurance Final

Exam Questions and Answers with complete solution

What distinguishes a deferred annuity from an immediate annuity? ✔Ans✔ The time at which

benefit payments start

Cindy buys a 10-year certain annuity with an installment refund. After receiving monthly

payments for 5 years, Cindy dies. How many remaining payments will the insurer make to her

beneficiary? ✔Ans✔ 60 payments

What is a common reason people purchase an annuity? ✔Ans✔ To protect against the risk of

outliving their financial resources

What kind of annuity pays income to two annuitants until their deaths? ✔Ans✔ Joint and

survivor annuity

What is a joint and survivor annuity? ✔Ans✔ Provides payments the annuity to two people. If

either person dies, the same income payments continue to the survivor for life. When the

surviving annuitant dies, no further payments are made to anyone.

Victoria owns a life annuity and elects to receive annuity payments monthly for the remainder

of her life with "ten years certain". Her annuity will make payments ✔Ans✔ for a minimum of

120 months and a maximum of the remainder of her life

Which of the following statements regarding a life insurance policy dividend is TRUE? ✔Ans✔ It

is the distribution of excess of funds accumulated by the insurer on participating policies.

An insured owned by its policyholders is called a ✔Ans✔ mutual insurer

An insurer enters into a contract with a third party to insure itself against losses from insurance

policies it issues. What is the agreement called? ✔Ans✔ Reinsurance

What is reinsurance? ✔Ans✔ An arrangement by which an insurance company transfers a

portion of a risk it has assumed to another insurer

Which of the following is NOT a characteristic of reinsurance? ✔Ans✔ Increases the unearned

premium reserve

Which of the following is a contract that involves one party which indemnifies another when a

loss arises from an unknown event? ✔Ans✔ Insurance policy

What is an insurance policy? ✔Ans✔ A contract where one party promises to indemnify

another against loss that arises from an unknown event

What is residual disability income insurance payments based on? ✔Ans✔ The amount of the

insured's income is reduced by the disability

Manuel is considered to be a disabled person as defined by the Americans with Disabilities Act

(ADA). As such, he is unable to perform any of the following life activities EXCEPT ✔Ans✔

Driving

Which of the following is NOT a provision in a disability income policy? ✔Ans✔ Deductible and

coinsurance provision

Which of these statements is NOT true concerning recurrent disabilities? ✔Ans✔ The insurer

continues coverage after a new elimination period