LIFE INSURANCE EXAM - WISCONSIN

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LIFE INSURANCE EXAM - WISCONSIN

Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -88 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: Parol Evidence Rule

Answer:

Prevents parties to a contract from changing the meaning of a written contract by introducing oral or written statements made prior to the formation of the contract that are not part of the contract

Question 2: Waiver and Estoppel

Answer:

Waiver is surrendering a known right. Waiver occurs intentionally and voluntarily. Estoppel is the legal process of preventing one party from reclaiming a right that was waived

Question 3: Subrogation

Answer:

The right of the insurer to assume the rights of the insured and sue the responsible third party for damages inflicted upon the insured.

Question 4: Viatical Settlement

Answer:

A terminally or chronically ill insured can sell their life insurance policy to a third party in exchange for payment of a large portion of the death benefit

Question 5: Loading

Answer:

Insurers expenses

Question 6: Eligibility Period

Answer:

If eligible individuals do not enroll during the eligibility period, then they will be required to undergo a medical exam- otherwise no medical exam

Question 7: Return of Premium Rider

Answer:

Pays the total amount of premiums paid into the policy as long as the insured dies within a certain time period specified in the policy- death benefit is the face amount plus total premiums paid- most policies drop the return of premium rider when the insured reaches age 60

Question 8: Accelerated Living Benefit Rider

Answer:

Allows the insured to receive a portion of the death benefit prior to death if the insured has a terminal illness

Question 9: Return of Cash Value rider

Answer:

Allows a whole life policy's cash value to be included in the death benefit- the rider doesn't actually return the policy owner's cash value; instead, the rider provides the additional benefit through an increasing term rider that always equals the policy's cash value

Question 10: Non-participating life insurance

Answer:

Pays dividends to shareholders

Question 11: Provisions

Answer:

The characteristics, privileges, duties of all parties, and rights of a policy

Question 12: Payor Rider

Answer:

Used for juvenile life insurance- The payor rider states that if the individual paying the premiums becomes disabled or dies before the child reaches a certain age, such as 21 or 25, the policy premiums will be waived until the child reaches the specified age

Question 13: Annuity

Answer:

Annuities protect against the risk of living longer than expected. Annuities provide a guaranteed life income to protect against the risk of depleting retirement funds

Question 14: Cash Surrender Option

Answer:

Allows the policyowner to receive the policy's cash value- cash value must begin to accrue cash value by the end of the third policy year

Question 15: Cash Payment

Answer:

With the cash payment option, the policyowner receives a check for the amount of the dividend

Question 16: Warranty

Answer:

Statements that are guaranteed to be true and are part of the legal contract. Breach of warranty voids an insurance contract

Question 17: Straight Life Annuity

Answer:

If no guarantee is desired, the life annuity payout option is straight life- the annuitant receives annuity payments for their entire life

Question 18: Apparent Authority

Answer:

Is a situation in which the insurer gives the customer a reasonable belief that an agent has the power and authority to bind the principal, even in cases where the agent does not have such authority

Question 19: Immediate Annuity

Answer:

Annuity payments that begin immediately after the annuity is purchased- no accumulation period

Question 20: Term Rider

Answer:

Adds term coverage to an existing life insurance policy- kinds of term riders include: spouse/other insured, children, family, return of premium, and return of cash value

Question 21: Surrender

Answer:

The entire amount of premiums paid into the annuity, minus the surrender charges and prior withdrawals, will be refunded in a lump sum- the surrender charges are for the lost investment value- there is also a 10% tax penalty for surrendering a deferred annuity before the age of 59 ½

Question 22: Accumulation Phase

Answer:

When you put money in- makes premium payments into the annuity- the premium makes interest Question 23: Coverage is not effective:

Answer:

-Without collection of the initial premium -Approval of the application -Policy issuance and delivery

Question 24: Fixed Annuites

Answer:

Premiums grow at a fixed interest rate during the accumulation phase, and guaranteed fixed benefit amounts are paid out during the annuity phase- may not be sufficient to offset the effects of inflation

Question 25: Aleatory contract

Answer:

There is an unequal exchange of value. One party has the potential to receive more benefit than the other