MASS STATE LIFE INSURANCE EXAM

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MASS STATE LIFE INSURANCE EXAM

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

-Format: Multiple-choice / Flashcard

Question 1: Dividends from a mutual insurance company are paid to whom?

Answer:

Policyholders Question 2: At what point are death proceeds paid in a joint life insurance policy?

Answer:

When the first insured dies

Question 3: apparent authority

Answer:

appearance or assumption of authority given based on the actions or words of the principal -ex. when an insurance company furnishes an agent with a rate book, applications and sales literature, the insurance company cannot later deny that a relationship existed

Question 4: Which of the following is NOT an example of risk retention?

Answer:

Not doing a business deal after deciding it would be too risky

Question 5: conditional

Answer:

insurance contracts are conditional because certain contracts must be met by all parties when a loss occurs, otherwise the contract would not be legally enforceable -if the policy owner is past due on his payments and the insured dies, the insurance company does not

have to pay the death benefit because a condition was not met

Question 6: features of whole life - living benefits

Answer:

Another unique feature of whole life insurance is the living benefits it can provide. Through the cash value accumulation build-up in the policy, a policyowner has a ready source of funds that may be borrowed at reasonable rates of interest. These funds may be used for a personal or business emergency. For example, they could be used to help pay for a child's education or to pay off a mortgage. It is not a requirement of the policy that the loan be repaid. However, if a loan is outstanding at the time the insured dies, the amount of the loan plus any interest due will be subtracted from the death benefit before it is paid.

Question 7: agent's authority

Answer:

an agent is a licensed insurance producer, whose been appointed to represent an insurance company -as a rep of the insurer, agents are given certain authority to perform acts on behalf of the insurance company -agent is always considered to be acting on the behalf of the insurance company, also referred to as the principal

Question 8: How can an insurance company minimize exposure to loss?

Answer:

Many insurers are able to minimize exposure to loss by reinsuring risks.

Question 9: level term insurance

Answer:

Level term insurance provides a level amount of protection for a specified period, after which the policy expires.Level term policies are able to offer level premiums because the premiums are averaged over the term of the policy.A $100,000 10-year level term policy, for example, provides a straight, level $100,000 of coverage for a period of 10 years. A $250,000 term to age 65 policy provides a straight $250,000 of coverage until the insured reaches age

• If the insured under the $100,000 policy dies at any time within those 10 years, or if the insured

under the $250,000 policy dies prior to age 65, the insured's beneficiaries will receive the policy's face amount

benefits.If the insured lives beyond the 10-year period or past age 65, the policies expire and no benefits are payable.

Question 10: entire contract provision

Answer:

found at the beginning of the policy, states that the policy document, the application (which is attached to the policy), and any attached riders constitute the entire contract. Nothing may be "incorporated by reference," meaning that the policy cannot refer to any outside documents as being part of the contract.

Question 11: implied authority

Answer:

authority not expressed or written into the agent contract, but which the agent is assumed to have in order to transact the businesss of the insurance for the principal -it comes from the express authority, since not every single detail of an agent's authority can be spelled out in the agent's written contract

Question 12: group insurance

Answer:

written for employer, employee groups, associations, unions, and creditors to provide coverage for a number of individuals under one contract. Underwriting is based on the group, not the individuals who are insured.

Question 13: personal contract

Answer:

insurance contracts are personal contracts between an individual and the insurance company, and cannot transfer owner ship without the insurance company's written consent

Question 14: estopel

Answer:

the legal process used to prevent a party from reclaiming a right or privilege that was already waived

Question 15: nonforfeiture options

Answer:

Cash Surrender Option- Policyowners may request an immediate cash payment of their cash values when their policies are surrendered.The amount of cash value the policyowner receives is reduced by any outstanding policy loans or debts.Insurers are required to make cash surrender values available for ordinary whole life insurance after the first three policy years. However, most policies begin to generate cash values in as little as one year.Reduced Paid-Up Option A second nonforfeiture option is to take a paid-up policy for a reduced face amount of insurance. By doing this, the policyowner does not pay any more premiums but still retains some amount of life insurance.In essence the cash value is used as the premium for a single-premium whole life policy at a lesser face amount than the original policy.When this option is exercised, the paid-up policy is the same kind as the original, but for a lesser amount of coverage. Riders and accidental death benefits from the original policy are excluded. Once the paid-up policy has been issued, the new face value remains the same for the life of the policy, which also builds cash values.Extended Term Option The third nonforfeiture option is to use the policy's cash value to purchase a level term insurance policy in an amount equal to the original policy's face value, for as long a period as the cash value will purchase. When the level term insurance expires, there is no more protection. Moreover, all supplemental benefits included with the original policy, such as a term rider or accidental death or disability benefits, are dropped.

Question 16: payor provision rider

Answer:

usually available with such policies, providing for waiver of premiums if the adult premium-payor should die or, with some policies, become totally disabled. Typically, this payor provision extends until the insured child reaches a specified age, such as 21 or 25.

Question 17: concealment

Answer:

a legal term for the intentional withholding of information, which is crucial in making a decision -a withholding of information by the applicant that results in an inaccurate underwriting decision and can void the policy