.png){kind=logo}
PDF Download
LIFE INSURANCE EXAM VOCAB
Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -100 Questions and Answers
-Format: Multiple-choice / Flashcard
Question 1: beneficiary
Answer:
the party designated to receive the policy's proceeds upon the insured's death
Question 2: Policy Loan
Answer:
The policy owner is entitled to borrow an amount equal to the available cash value *If not repaid by the time the insured dies, the loan balance and any interest accrued are deducted from the policy proceeds at the time of the claim
Question 3: Legal Purpose
Answer:
To be valid, the object of the contract and the reason the parties enter into the contract must be legal
Question 4: Annuitant
Answer:
Income recipient of an annuity
Question 5: Conditional Receipts
Answer:
indicates that certain conditions must be met in order for the insurance coverage to go into effect. There
are 2 types: insurability receipt or an approval receipt.
Question 6: Indemnity Contract
Answer:
agreement by one person, for consideration, to pay another person a sum of money in the event that the other person sustains a specified loss
Question 7: Reinstatement
Answer:
Act of putting a lapsed policy back in force by producing satisfactory evidence of insurability and paying any past-due premiums
Question 8: Insurable Interest Exists (Types)
Answer:
-Unlimited insurable interest in oneself -Husband/ Wife can insure spouse -Parents can insure children -Children can insure parents -Business can insure key employees -Business partners can insure each other -Creditor can insure debtor for term of the debt
Question 9: Grace Period
Answer:
a defined amount of time after the premium is due in which a policyholder can make a premium payment without coverage lapsing
Question 10: Policy Effective Date
Answer:
it identifies when the coverage is effective, but also it establishes the date by which future annual premiums must be paid. The policy will not be truly effective until it is delivered to the applicant, the first premium is paid, and a statement of continued good health is obtained.
Question 11: Owner's right provision
Answer:
Defines the person who may name and change beneficiaries, select options available under the policy and receive any financial benefits from the policy
Question 12: Loss
Answer:
loss of assets resulting from a pure risk
Question 13: Insuring Clause
Answer:
A general statement that identifies the basic agreement made by the insurance company to pay benefits upon the insured's death, usually located on the first page of the policy.
Question 14: Policyowner (policyholder)
Answer:
The person who has the right to exercise the privileges and rights in the policy contract.
Question 15: Factors that Impact Premium Amounts (5 Types)
Answer:
-Age -Gender -Health -Occupation -Hobbies
Question 16: Consideration Clause
Answer:
states that the policyowner's consideration consists of completing the application and paying the initial premium
Question 17: Mutual Company
Answer:
Company that is owned by its policy owners and usually issues participating insurance
Question 18: Aletory
Answer:
A contract with an element of chance and potential for unequal exchange of value or consideration for both parties
Question 19: Elements of a legally binding contract (4)
Answer:
1) Competent Parties
2) Consideration
3) Legal Purpose
4) Offer & Acceptance
Question 20: Risk Reduction
Answer:
when the chances of loss are lessened Ex) Changing one's lifestyle to minimize a known risk
Question 21: Death Benefit Payment Options (5 Types)
Answer:
-Lump Sum -Interest Only -Fixed Period -Fixed Amount -Life Income
Question 22: Speculative Risk
Answer:
a risk that presents the chance of both loss and gain; it is not insurable
Question 23: Conversion Period
Answer:
Individual must apply for individual coverage within 31 days after the date of the group coverage termination
Question 24: Absolute Assignment
Answer:
A transfer by the policyholder of all control and rights to a third party- it is absolute and irrevocable
.png)