Florida Life and Health Insurance Exam

Florida Life and Health Insurance Exam

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Florida Life and Health Insurance Exam

• The transfer of risk from one party to another through a legal contract.

Answer: Concept of insurance

• The larger the number of risks insured in the same risk pool; the more predictable losses

become.

Answer: Law of Large Numbers

• An immediate, specific event that causes a loss.

Answer: Peril

• An unintended, unforeseen reduction, or destruction of financial or economic value.

Answer: Loss

• Creates an increased possibility that a peril (a cause of a loss) will actually occur.

Answer: Hazard

• Is any event that causes a loss.

Answer: Occurrence

• Risk is defined as the potential or uncertainty for loss.

Answer: Risk

• A situation in which either profit or loss is possible, not insured.

Answer: Speculative risk

• Issues very small face amounts, such as $1,000 or $2,000. Premiums are paid weekly and

collected by debit agents. They were designed for burial coverage.

Answer: Industrial life insurance

• Life insurance of commercial companies not issued on the weekly premium basis. It is

made up of several types of individual life insurance, such as temporary (term), permanent (whole).

Answer: Ordinary life insurance

• Insurance written for members of a group, such as a place of employment, association, or a

union. Coverage is provided to the members of that group under one master contract. The group is underwritten as a whole, not on each individual member. One of the benefits of group life coverage is usually there is no evidence of insurability required.

Answer: Group life insurance

• Life insurance that pays a death benefit if the policyholder dies within a specific time

period but has no remaining value at the end of this time.

Answer: Term life insurance

• Sometimes called straight life insurance or ordinary life insurance; can provide lifetime

insurance coverage; in this case, fixed premiums are paid for life; pays interest on the cash value portion with a guaranteed minimum interest rate during life of the contract.

Answer: Whole life insurance

• Cover the lives of two individuals and saves on premium costs by averaging the ages of

the two insureds. Joint Life Survivor or Last Survivor policies only pay the death benefit upon the death of the last insured person. For example, say B and M purchase a joint life survivor policy. If B were to die first and then M died 10 years later, no benefits would be paid out from the policy until M died. A Joint Life and Survivor policy covers two lives but only pays benefits after the death of the last insured.

Answer: Joint survivor or last survivor life policies

• Pays a monthly income from the date of death of the insured to the end of the preselected

period.

Answer: Family maintenance policy

• Combines Whole Life insurance with a Decreasing Term Rider also written on the same

person.

Answer: Family income policy

• Whole life insurance policy, but you can change your policy as your needs change. You can

change your premium payments to increase or decrease coverage.

Answer: Adjustable life policy

• Incorporates flexible premiums and an adjustable death benefit. The in- vestment gains

from a Universal Life Policy usually go toward the cash value. The policy owner can use the cash value to manipulate the flexible aspects of a universal life insurance policy. A customer who wants a policy that gives them the most options and the most control would be looking for a Universal Life Policy. Universal policies use gains to fund the cash value and give the policy owner options for flexible premiums and adjustable death benefits.

Answer: Universal life insurance policy

• Life insurance in which the benefits are a function of the returns being generated on the

investments selected by the policyholder.

Answer: Variable Life Insurance

• Combines most of the features, benefits, and security of traditional life insurance with the

potential of earned interest based on the upward movement of an equity index.

Answer: Equity index universal life insurance

• The equity amount or "savings" accumulation in a whole life policy.

Answer: Cash value

• Is a contract providing for payment of the face amount at the end of a fixed period, at a

specified age of the insured, or at the insured's death before the end of the stated period.

Answer: Endowment policy

• Contract that promises to pay at the insured's death the face amount of the policy plus a

sum equal to the policy's cash value.

Answer: Face amount plus cash value policy

• Written on the lives of children who are within specified age limits and generally under

parental control.

Answer: Juvenile Insurance

• Typically does not require a medical exam and tends to be more expensive than medically

underwritten policies. The insurer will average out everyone's risk and charge accordingly.Although insurers typically will not require a medical exam, they will still inquire about the applicant's medical history and lifestyle.

Answer: Non-medical life insurance

• Is a suggested premium used in Universal Life policies. It does not guaran- tee there will be

adequate funds to maintain the policy to any time, especially to life. It may give an indication of what will be needed (under conservative estimates), to maintain the policy.

Answer: Target premium

• Pays a multiple of the death proceeds if the cause of death is a covered accidental event.

Answer: Accidental death benefit rider

• Allows the insured to receive a portion of the death benefit before death if the insured has

a terminal illness and is expected to die within 1-2 years. Whatever amount is withdrawn in an accelerated death benefit will decrease the death benefit when death occurs.

Answer: Accelerated benefits rider

• Allows dividends to accumulate interest. Interest is the ONLY thing you can be charged tax

on.

Answer: Accumulate interest options

• An overdue premium is automatically borrowed from the cash value after the grace period

expires.

Answer: Automatic premium loan provision

• The "cash" dividend option allows the policy owner to cash out the dividends they

receive.

Answer: Cash option

• A nonforfeiture option that allows whole life insurance policy owners to receive a payout

of their policy's cash values.