LIFE INSURANCE EXAM NOTES

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LIFE INSURANCE EXAM NOTES

Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -100 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: IMPLIED Authority

Answer:

NOT in Writing

Question 2: Actuaries

Answer:

place Individuals into Groups then Study the results to determine the Risk Factor, known as Morbidity Units (Life Insurance) NEVER study Individuals.To buy a policy you must have an Insurable Interest, a valid legal purpose. You must face the Risk of Financial Loss. If someone's sickness or death causes you Financial Loss, the Risk would be ascertainable.

Question 3: ENTITY PURCHASE PLAN

Answer:

partnership is the owner, beneficiary, and premium payer on all partners lives business buys the insurance using business money

Question 4: RETURN OF CASH VALUES

Answer:

beneficiary would receive the FULL FACE AMOUNT plus the CASH VALUES rather than the premiums paid

Question 5: GROSS Premium

Answer:

Premium that the Company Charges

Question 6: ACCELERATED DEATH BENEFITS OR LIVING NEEDS

Answer:

If individual is in NEED of a MAJOR OPERATION EXPECTED TO DIE within 12 MONTHS NURSING HOME for the REST OF THEIR LIFE if ADDED or PROVIDED insured can ADVANCE on the DEATH BENEFIT TAX FREE PERCENTAGE usually 50% to 75% while they are STILL ALIVE can use the money for Anything

Question 7: LIMITED PAY

Answer:

premiums are met over a certain number of years It does not mature until age 100

Question 8: Independent Producers

Answer:

represent more than one company own their Book of Business and renewals responsible for their own operating expenses

Question 9: Entire Contact

Answer:

Policy & Application, any attached papers and Riders Rider adds on Waiver takes away Estoppel=once you have surrendered CANNOT be enforced at a later date

Question 10: REPRESENTATIONS

Answer:

statements based on their Best Knowledge and Belief.

Question 11: COERSION

Answer:

Causing duress or selling by threat

Question 12: REINSURANCE

Answer:

where companies SHARE RISKS between one another. It does not affect the Insured. A company that Insures another company would be a Reinsurer. When Partners Share Risk this is Risk Sharing.

Question 13: ADJUSTABLE LIFE

Answer:

simultaneous CHANGES for both FACE AMOUNT and PREMIUMS or CONVERSION from WHOLE LIFE to TERM and back to WHOLE LIFE coverage during bad economic times (if you are laid off) reduced face amount DO NOT NEED evidence of insurability increased, you do cannot change the named insured

Question 14: ACCUMULATE CASH VALUES

Answer:

adds to original policy and INCREASING TERM Term coverage - Increase to match the CASH VALUE or the PREMIUMS PAID in Death benefits paid combination of yours and theirs

Question 15: SETTLEMENT OPTIONS

• Cash

2.Interest Only 3.Interest only with right of withdraw 4.Life Income

• Fixed period settlement option
• Fixed amount settlement option

Answer:

company must settle up when insured lives and contract dies

• CASH - Beneficiary receives the full face 1 lump sum

Less any outstanding PREMIUMS or LOANS PROCEEDS received would be TAX FREE unless paid to estate

EMERGENCIES would NOT BE a consideration when choosing a LUMP SUM CASH BENEFIT

• INTEREST ONLY - The BENEFICIARY leaves the money with the company and it EARN INTEREST.

primary beneficiary dies - contingent will then receive the face amount of the policy INTEREST RECEIVED TAXED as ordinary income

3. INTEREST ONLY WITH RIGHT OF WITHDRAWAL

BENEFICIARY reserves the RIGHT TO WITHDRAW all or part of the money AT ANY TIME INTEREST RECEIVED TAXED as ordinary income

• LIFE INCOME - The beneficiary receives and INCOME for the remainder of their LIFE.

payment is based on the AGE OF THE BENEFICIARY and the amount PRINCIPAL amounts received would be TAX FREE interest received taxed as ORDINARY INCOME

• FIXED PERIOD SETTLEMENT OPTION - beneficiary receives FACE AMOUNT plus INTEREST

PERIOD OF TIME.

Interest is taxed as ordinary income

• FIXED AMOUNT SETTLEMENT OPTION - The beneficiary receives FACE AMOUNT plus interest in

PAYMENTS of a CERTAIN or SPECIFIED AMOUNT until EXHAUSTED Minimum amount is $1,000 per month

Question 16: LOAN VALUE

Answer:

CASH VALUE LESS INTEREST

Question 17: GROUP LIFE

• Contributory Plan
• Non- Contributory plan
• Franchise Groups
• Multiple Employer Trusts

Answer:

written as Annually Renewable Term requires 10 or more participants benefit an Employer provides for his Employees does not allow Part Time or Retired Employees to participate contract between Insurer & Employer NEVER use an ANNUITY to fund group Insurance he Insurance Commissioner does not regulate group rates