LIFE INSURANCE LICENSE EXAM

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LIFE INSURANCE LICENSE EXAM

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

-Format: Multiple-choice / Flashcard

Question 1: Effective Date

Answer:

The date when an insurance policy begins (also known as the inception date).

Question 2: Insolvent Organization

Answer:

A member organization which is unable to pay its contractual obligations and is placed under a final order of liquidation or rehabilitation by a court of competent jurisdiction.

Question 3: Basic Illustration

Answer:

A ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and nonguaranteed elements.

Question 4: Alien Insurer

Answer:

An insurance company that is incorporated outside the United States.

Question 5: Adverse Selection

Answer:

The tendency of risks with higher probability of loss to purchase and maintain insurance more often than the risks who present lower probability.

Question 6: Hazard

Answer:

A circumstance that increases the likelihood of a loss.

Question 7: Expiration

Answer:

The date specified in the policy as the date of termination.

Question 8: Express Authority

Answer:

The authority granted to an agent by means of the agent's written contract.

Question 9: Investigative Consumer Reports

Answer:

A report similar to consumer report, but one that also provides information on the consumer's character, reputation and habits.

Question 10: Aleatory

Answer:

A contract in which participating parties exchange unequal amounts. Insurance contracts are aleatory in that the amount the insured will pay in premiums is unequal to the amount the insurer will pay in the event of a loss.

Question 11: Buyer's Guide

Answer:

A booklet that describes insurance policies and concepts, and provides general information to help an applicant make an informed decision.

Question 12: Beneficiary

Answer:

The person who receives the proceeds from the policy when the insured dies.

Question 13: Accidental Death Benefits

Answer:

A policy rider that states that the cause of death will be analyzed to determine if it complies with the policy description of accidental death.

Question 14: Grace Period

Answer:

Period of time after the premium due date during which premiums may still be paid, and the policy and its riders remain in force.

Question 15: Director

Answer:

The chief executive and administrative officer of the Insurance Department (in some states, known as the Commissioner or Superintendent).

Question 16: Foreign Insurer

Answer:

An insurance company that is incorporated in another state.

Question 17: Fixed Annuity

Answer:

An annuity that offers fixed payments and guarantees a minimum rate of interest to be credited to the purchase or payments.

Question 18: Adhesion

Answer:

A contract offered on a "take-it-or leave-it" basis by an insurer, in which the insured's only option is to either accept or reject the contract. Any ambiguities in the contract will be settled in favor of the insured.

Question 19: Endorsement

Answer:

A form changing the provisions of and attached to a life insurance policy (also known as a rider).

Question 20: Coverage

Answer:

The inclusion of causes of loss (perils) which are covered within a scope of a policy.

Question 21: Broker

Answer:

An individual who represents an insured in the process of purchasing and negotiating a contract of insurance.

Question 22: Convertible

Answer:

A policy that may be exchanged for another type of policy by contractual provision, at the option of the policyowner, and without evidence of insurability (i.e. term life changed to a form of permanent life).

Question 23: Administrator

Answer:

An individual appointed by a court as a fiduciary to settle the financial affairs and estate of a deceased person.

Question 24: Domicile of Insurer

Answer:

Insurer's location of incorporation and the legal ability to write business in a state.

Question 25: Countersignature

Answer:

The act of signing an insurance policy by a licensed resident agent.

Question 26: Coercion

Answer:

A unfair trade practice in which an agent uses physical or mental force with the intent of inducing an applicant to purchase insurance.

Question 27: Buy-Sell Agreement

Answer:

A legal contract that determines what will be done with a business in the event that an owner dies or becomes disabled.

Question 28: Commissioner

Answer:

The chief executive and administrative officer of a state insurance department (in some states, known as Director or Superintendent).