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1|Page CA STATE LIFE HEALTH AND DISABILITY INSURANCE EXAM|| ACCURATE AND FREQUENTLY TESTED QUESTIONS AND 100% CORRECT ANSWERS WITH RATIONALES|| LATEST AND COMPLETE UPDATE WITH EXPERT VERIFIED SOLUTIONS|| SURE PASS!! What is the limit of liability in a term life insurance policy? A) The total cash value B) The face amount of the policy C) The total amount of the premiums paid D) The face amount plus the premiums paid - ANSWER: The correct answer is: The policy's face amount. Every policy has a face amount that does not change. The face amount is defined as the limit of liability. Premiums paid do not add extra on top of the face amount's liability limit, so stating "the face amount plus the premiums paid" is a great trick answer to check who knows the definition of face amount. For income taxes, premiums for personal life insurance are A) Tax deferred B) Not deductible. C) Excluded from the adjusted gross income D) Deductible to the extent that they exceed 7.5% of the adjusted gross income ANSWER: The correct answer is: Not deductible.