hi everyone my name is Sarah Smith I am a licensed life insurance agent here in California and I am going to teach you guys how to pass the Life Insurance exam now of course like I said I'm here in California so these questions that I have are some of them California specific but not all of them so anything that does not say California on it should pertain to everybody in every state now of course no matter what you're using exam effects Excel whatever you're going to have a chapter specific to your state and your state laws so definitely study I know North Carolina you guys are super different so definitely make sure that you are reading up on your personal state laws everything else should be general knowledge and it should help you guys pass the first time now um my story and my background I took the insurance exam before I took my real estate exam but after I started studying for my real estate exam because covid pushed it back so this test was extremely easy after studying for the real estate exam I ended up getting a 94 on my test the first time I took it so when my team was saying we need to see more licensing conversion I said let me go ahead and start teaching a class and just see if it helps people pass their exams and it ended up having some pretty great success so while I do not have the time in my day to actually go on zoom and teach the class anymore I figured I could just record videos upload them to YouTube and then anybody anywhere could have access and hopefully be able to pass their test the first time and I hope that I can help somebody out there now when I would teach that class I would always say when you're learning a foreign language what do they make you do obviously you study your vocab so I created a vocab Quizlet with all of the vocab words that I could find I went through my old Excel account and I just any single word that I could find I put it into this Quizlet so I'm going to link it in the description box below I'm not sure if you guys will be able to access it I think you will if you can't somebody just comment and I'll do what I can to fix that but I definitely recommend starting by knowing your vocab the minute you know your vocab well enough you're going to look at these questions and be able to pick out a key phrase or keyword and you'll see that the questions basically will start answering themselves and that is what I hope that I'm going to be able to help you guys realize with this series of videos now I've got 200 questions here so I'm going to do 25 questions per video it should come out to eight videos and if you stick around to the end of the last video I'm going to give you guys my test taking secret to help you guys alleviate your test taking anxiety I did this little trick when I took my real estate exam and my life insurance exam and I passed both the first time so I gave it out the end of every class and people were like it's like so simple so hopefully that it can help you guys too so without further Ado I'm going to share my screen and show you guys the questions I will read the questions but I'm not going to read through all the answers um for my auditory Learners that way you don't hear a bunch of stuff you just say this is the question that's the answer and you connect the two all righty guys all right so let's move me up here Julie has a 100 000 30-year mortgage on her new home What type of life insurance could she purchase that is designed to pay off the loan balance if she dies within that 30-year period if you said decreasing term insurance you are correct let's go into that decreasing term insurance is obviously going to decrease the amount of coverage that you have over time why is that useful if you're protecting a mortgage well of course let's say you have a 30-year mortgage and it's for five hundred thousand dollars after 15 years of paying off that mortgage you're going to owe roughly half right of what you started with so probably 250 000 after 15 years so you can see over time as you're paying down your mortgage and your balance gets lower decreasing term insurance makes sense because the amount of coverage that you need over time will also decrease two which of the following is considered to be a situation that has the potential for loss if you said loss exposure you would be correct now if you are let's talk about let's say you're terrified of getting in a car accident I've been in a couple since I've moved to California every single time I get into a car I am exposing myself to boss right so if I want to eliminate that loss exposure I will stop driving my car stop riding in cars anytime let's say you go to Hawaii and there's like a volcano and it's active whatever you understand loss exposure anytime you put yourself in a situation you'll have that potential for loss you're exposing yourself to that risk three Which social security status does a worker with six quarters of coverage during the last 13 quarter period half now this one is a memorized memorization one you're just gonna have to memorize it don't really know how to sit here and like work it out for you guys this one's going to be currently insured now let's take a look at number four because number three and number four are just the inverse of each other in order to be considered currently insured under Social Security an individual must be credited with and if you look at the question beforehand you would know that the answer is six quarters of coverage during the last 13 quarter period so I guess it's like 10 o'clock at night here I just want to get this done for you um so this leads me to one of my tips and tricks when you take the test you should be taking it electronically and when I took it they allowed you to check a box that said like this one's a problem I want to come back to it so you can take the test the whole way through check the ones that are kind of giving you an issue that you want to come back to and if you see between three and four how they literally are just the inverse of each other you might see three and not know and then you get to four and say oh my goodness now I know they're just they're answering each other essentially so as you go through the test sometimes you'll find that a different answer is gonna like an answer further down will or a question further down will answer a question that you have earlier on that you didn't quite know how to answer so be vigilant be on the lookout for that five an insurance company entitled to transact business in California is called what now for those of you that are visual Learners I would always try to give little like I said tips and tricks so this is what I would do when I would come across this question what do you do if you are uh you know you hold open a door for somebody when you're going into a place and you want to let them go first right you just say oh after you so you are admitting them into the place so an insurance company entitled to transact business in a different state admitted right they are admitted okay what is an insurance solicitor authorized to do not solicit Insurance sorry guys this one's going to be help an agent or broker sell insurance which of the following is not considered a definition of risk and this one's going to be the cause of a loss now if you look at the word risk obviously risk means the potential for danger right so the potential for loss the exposure to danger or uncertainty all of these can be definitions of risk right but however the cause of a loss is not a definition of risk because it has already happened now it's in the past so it's no longer a potential for loss we actually have a loss and this is the cause a life insurance policy where the insured can choose where the cash value can be invested is called what this was going to be variable now again you'll have keywords key phrases as you're going through and you'll have little light bulb moments so the light bulb moment that I would teach here is your key phrase that you're looking at is choose where cash value can be invested we know that variable is a security right so I have a life license I do not have a Securities license so I cannot sell variable products variable meaning obviously it's going to go up and down with the market you might win some you might lose some so if you are choosing where the cash value could be invested your light bulb in your head goes off for variable and I have a different key phrase a different word for whole life and a different key phrase and a different word for universal life you will see in later videos as we get to those questions I don't want to confuse you now foreign which of the following is not a requirement of a contract now um taking my real estate licensing test well second but studying for it first helped me with things like this because we had to know the legal requirements of a contract so I'm going to go through those with you guys right now and then we're going to get into the question so let measure my whiteboard so there's four requirements of a legal contract I'm gonna do the best I can drawing this for you okay so number one is legal purpose you have to enter into a contract that is created for a legal reason right so a contract to kill is not a legal contract I can't hire Tim to go and kill Jim pay Tim and then if Tim does not follow through and killing Jim I can't go and Sue Tim because he didn't fulfill our contract to kill right I can't go to a court and say judge you know Tim didn't kill Jim for me but I had already paid him he's going to be like you're going to jail right because that's not legal uh it's not legal for me to hire it man so you have to enter into a contract that has a legal purpose you also have to have competent party parties now person to person that just means that we're both of sound mind right so we don't have something like um dementia we're not under the influence of alcohol or drugs there's no reason that any person would say you know you were temporarily insane or you don't have the capacity to enter into this contract we have to be good right now when you're thinking about it from a life insurance standpoint you have a person entering into a contract with a company so the person must be of sound mind but the company must be what we call solvent I cannot as a life insurance company enter into a contract or write a life insurance policy for someone for five hundred thousand dollars if I don't have the means to pay out that 500 000 right basically I'd be defrauding that person so the company itself has to be solvent it has to have the money to be able to pay out that claim to that person you have to have consideration which basically just means something of value now learning real estate and taking that exam it's funny because most people would say oh will you buy a house for money right but love and affection is actually illegal piece of consideration that I could buy a house for so let's say my mom wants to sell me her house she could sell me her house for my love and affection and to her that could be just as important as my money so consideration just means something of value is being exchanged it does not have to be equal and then the last one is offer and acceptance except for my life insurance policy standpoint I'm going to put in my application for coverage right so let's say me Sarah I want to apply for half a million dollars of coverage and my agent ran quotes for me and she said um based on your age and your health you can get half a million for 25 a month so I put in that application and the company comes back and says actually we went through your medical records and we think that we're going to offer you that 500 000 but you have to pay 50 a month for it so that's their offer to me and then if I want to accept it I would pay my premium and we would be entered into a legal contract because I accepted their offer so any contract has to have these four requirements legal purpose competent parties consideration and offer and acceptance so now that you guys know your four requirements of a legal contract oh what is the answer to this question which of the following is not a requirement of a contract and you guys all know that the answer is be equal consideration is required between the involved parties because while consideration is a requirement it does not have to be equal um and think about that from a life insurance standpoint if I'm paying a company 25 or 50 a month for half a million dollars that's not equal right I could pay my 25 once on a Monday and my contract to my policy could go in force on that Monday and then I could be killed on that Friday and they would owe my family half a million dollars when I only ever paid them 25. that makes sense how it's not equal a representation may be altered or withdrawn when now this is where your vocab it's like the first time that vocab is really important right that's where it comes to play so a representation is any way that you are representing yourself to this company so I'm Sarah you know I'm 28 I Was Born This Day this year this month I have asthma I don't have dementia I don't have diabetes I don't have you know any X Y and Z right so anything that I am um telling the company is true about myself is a representation that I am making to that company now let's say um I get something wrong I forget that I have a condition that you know might have been from five years ago or um let's say my agent gets something wrong right so I can go back and we can change that representation but when when does that have to happen I think this one's pretty obvious it's C only before the insurance is in effect if the insurance has already gone into effect you go back and you say oh my goodness this isn't right you would have to cancel out that policy and get a new one according to the California insurance code what is the maximum penalty per violation for anyone who unwillfully commits an unfair method of competition of course this is a California specific one so if you're not California feel free to fast forward so if you are in California this one is going to be five thousand dollars there's only two that you have to remember it's five thousand dollars and ten thousand and we will get to the ten thousand dollar violation later in a different video but this one unwillfully commits an unfair method of competition five thousand dollars penalty number 12. Tim was recently terminated from his employment and opted to change his existing group term life insurance into individual permanent life insurance what is that process called and it's going to be conversion better known as the conversion privilege now I'm going to not go too too deep into this but I am going to give you a little explanation on why it is a privilege to be able to convert now in a private insurance setting a private insurance company they're going to say you should go through underwriting or you have to go through medical underwriting right so sometimes you have to do blood and urine in labs and sometimes you don't so if you have something like diabetes or cancer or a life-threatening illness that that company says you're too big of a risk for us we just can't offer you coverage however you are grandfathered into your employer's life insurance policy where you can get 50 000 or up to a year of your salary and your grandfathered in and then you end up quitting or you lose your job and you decide to exercise your conversion privilege you do not have to go through medical underwriting so the privilege part is you've got your you know 30 31 days to go ahead and convert but you also don't have to worry about the fact that you might have this condition that a private company won't accept you for so now you can get this individual coverage without having to medically underwrite and you could have life insurance whereas before you might not have been able to qualify so that is a pretty good privilege in my opinion so sorry which of the following describes a contributory Group insurance plan now of course the word contributory should probably set off your little radar um contributory means that yes we the employee are going to be contributing so it is the part of the premium is paid by the employee which of the following acts is not a federal offense committed by an insurance agent this one's pretty easy right so we know that embezzlement any type of Fraud and falsifying records would all be Federal offenses however misrepresentation on an insurance application sometimes we can't control that right sometimes people forget or they're not completely honest with us so misrepresenting something about your client on an insurance application is not a federal offense but you do want to make sure that your applications that go into these companies are as accurate as possible because you don't want anything delaying coverage or possibly keeping your client from being able to get coverage even if it's not a federal event Dorian exercised a non-forfeiture option by using his life policies cash value to purchase an extended term insurance option when the term insurance expires what happened now this is a pretty good example of how they're going to attempt to confuse you um there's a lot of words here but your key phrase is when the term insurance expires that is the question that you guys are focusing on we all know that when term insurance expires your protection ends simple as that California insurance code defines policy as a what we know that it hits uh policy hits those four contract requirements so the answer is C written contract 17 which policy provision protects the policy owner from unintentional lapse of the contract grace period free look period and contestability or settlement options I wanted to go through the answers for this one because that's a really really good example of knowing your vocab so unintentional lapse at the contract this is going to be your grace period right they're giving you the grace because you might not have paid but you don't want your contract to lapse so you've got a little bit of a grace period to go back and pay that which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive endowment policy basically they're just like congrats on our success you made it to 100 here's your money Sharon is the policy owner of a fifty thousand dollar life insurance policy her son Mike is the beneficiary if Sharon must obtain Mike's signature in order to change the beneficiary what kind of beneficiary designation is this now we know if Sharon must obtain Mike's signature to change the beneficiary it is an irrevocable beneficiary designation because she can't take it back without his permission 20 an annuitant is guaranteed to not outlive their benefits with guaranteed to not outlive their benefits guaranteed lifetime withdrawal benefit pretty simple straightforward who does a life settlement broker represent all right now this is one of those that I do want to draw to kind of explain to you guys so life settlement is one way of saying it and biatical settlement is another the words are pretty much interchangeable so um the answer is going to be D an individual wanting to sell their life policy to a third party so let's go a little bit deeper on this okay so let's say you are 40 and you've got a permanent life insurance policy for half a million dollars let's say so permanent is going to stay with you for your life let's say you are now 75 and you get diagnosed with cancer and you need money for chemo treatments you have this half a million dollar life insurance policy but there's no living benefits it's only going to pay you out after your family out after you pass away right so it's not really any good to you right now while you need these cancer treatments so what these life settlement or viatical settlement companies do is they come along and they say you have a half a million dollar life insurance policy right you need money right now we are willing to purchase your life insurance contract we want to be the beneficiary we will give you let's say 350 000 right now while you're alive but we're your beneficiaries so the minute you pass away we get that 500 000 so you get the 350 000 that you need right now while you're alive to go and pay for chemo and you know schedule Affairs in order and then as soon as you pass away they get the balance so 500 000 minus 350 that's going to be 150 000 that they make in profit right so that is how biotical settlement um and life settlement companies work so the answer to that question is an individual wanting to sell their policy to a third party right that's who the life settlement broker is going to represent you wanting to sell your policy that you need the money for to that third party company they're the broker in the middle what area of group health insurance is regulated under the Employee Retirement Security Act of 1974 or orisa now I always would say this as a disclaimer I don't think that this particular question will show up just on the life only exam if you're taking life and health you might get this one but the answer either way is disclosure and Reporting that's just a memorization one I don't really have a way to go and explain it I never do I just say disclosure and Reporting is your answer go and memorize it a guaranteed issue insurance policy has no what medical underwriting there's no need to mentally underwrite you and make you go through Labs if it's guaranteed issue right it would be too many steps no reason which of these is considered to be a living benefit option in a life insurance policy living benefit option accelerated death benefit now these accelerated death benefits um or accelerated benefit Riders abrs as we call them are What drew me into this industry I was in a pretty bad car accident and I wound up like I said I was in a lot of car accidents I wound up in the hospital um and it was forty seven thousand dollars just for the one night I had Insurance of course but they only do so much um and they wouldn't cover exist at my car insurance was responsible so when I was told that living benefits were an option in life insurance policies I definitely jumped on wanting to get my license to spread the word and tell more people about it so if the company that you're working with does not have living benefits you might want to take that under consideration so living benefits will pay out for a terminal illness critical illness or chronic illness or critical injury if you need the money for something that falls into one of those categories and is covered by your policy while you're still alive so technically it's called an accelerated death benefit because let's say you've got a million dollar policy but you need you know chemotherapy treatment for most companies a certain portion of your million dollar death benefit will be available to you to cover something like a terminal illness like needing chemo treatments or um in the event of a chronic illness where it's obviously going to be ongoing a portion of your death benefit will be payable while you're still alive every single month that way you have a study you know flow of income coming in every single month to help you pay for medicines and Medical Treatments because of your chronic illness and so on and so forth what is the insurance term the state of California uses for an insurer that is eligible to transact business in this state now this one is a repeat question sorry about that guys but if you remember from earlier our little hand signal that we do the answer to this one is a admitted carrier right all right that is number 25 so that concludes the first video I'm probably not going to film the second one tonight because I'm getting a little bit tired um but yeah be on the lookout for um Parts two through eight and if you guys have any questions feel free to leave a comment down below and I will get to as many of them as I possibly can thank you so much for watching and I really really hope that this helps you pass your test the first time like I did it's an easy test I will admit but it's not a fun one right so have a great day everybody and we'll see you in part two