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LOUISIANA LIFE, HEALTH, AND ACCIDENT INSURANCE
LICENSING EXAM
Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -100 Questions and Answers
-Format: Multiple-choice / Flashcard
Question 1: Annual Renewable Term (ART)
Answer:
premium will increase each year because of an increase in age, although the face amount will remain the same can become unaffordable at older ages
Question 2: producer authority
Answer:
expressed implied apparent
Question 3: preferred risk
Answer:
better than average health, is likely to receive a premium discount
Question 4: Misstatement of Age Clause
Answer:
If the insured understates his/her age, the face amount is reduced
Question 5: Life Insurance Premiums are based on....
Answer:
mortality (death) + company expenses - interest earned on company investments
Question 6: Business Use of Life Insurance
Answer:
- Buy-sell agreements funded by life policies
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Question 7: Individual vs. Group
Answer:
Individual are more expensive, require proof of insurability, and more stringent underwriting Group life is cheaper, doesn't require proof of insurability, and has almost no underwriting.
Question 8: Mortgage Protection Life Insurance Policy
Answer:
decreasing term policy, face amount will decrease at the same rate the mortgage balance declines
Question 9: Suicide Clause
Answer:
In most states, suicide is covered after 2 years. If the insured commits sucicide within the first 2 years, benefits are not payable, but premiums are refunded to the beneficiary
Question 10: Legal Discimination in Life Insurance
Answer:
physical hazard (age or health)
Question 11: Level Term Policy
Answer:
The premium and the amount of coverage are level throughout the term
Question 12: Community rating
Answer:
Based on individuals covered by that particular insurer.
Question 13: Absolute Assignment
Answer:
owner transfers all policy ownership rights to another person
Question 14: Agent requirement to sell variable life products...
Answer:
FINRA - Financial Industry Regulatory Authority
Question 15: insurance contracts are
Answer:
contracts of adhesion ("take it or leave it"), therefore policy ambiguities always favor the insured; unilateral contracts (only the insurer has a legal obligation to uphold)
Question 16: Variable Products
Answer:
- have no guarentees, and arent't backed by the guarenty fund
- can be considered a hedge against inflation
- allow the insured to self-direct cash value invesmtments
Question 17: Principle of Indemnity
Answer:
the purpose of insurance is to restore the insured to the same position as before the loss occurred
Question 18: government insurance offering
Answer:
offers insurance for social needs (eg. flood insurance, workers compensation), but doesn't offer to prevent fraud
Question 19: Consideration Clause
Answer:
something of value must be exchanged, though it does not have to be equal; policy can't be voided for unequal consideration
Question 20: Warranty
Answer:
a sworn truth, guaranteed to be true, and if a breach of warranty is found, it could potentially makes the contract voidable.
Question 21: Life Insurance Grade Period
Answer:
standard provision, policyowner has 30 days to pay unpaid premium before policy lapses If insured dies during grace peirod, the face amout will be paid to the benefciary, minus the overdue premium payment
Question 22: hazard
Answer:
something that increases the chance of loss eg. presence of physical hazard increases the chance of a loss occuring
Question 23: Experience Rating
Answer:
Based on large groups, lower risk
Question 24: Pure Risk
Answer:
the chance of loss without any chance of gain; insurable
Question 25: Survivorship Life
Answer:
commonly used in estate planning so the death benefit of the policy can be used to pay estate taxes when due Pays when the surviving insured dies
Question 26: Beneficiary proceeds cannot be...
Answer:
Standard Provision
- attacked by creditors
- paid to a minor child (minor can't sign a release)
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