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A comprehensive exam covering key concepts in insurance principles and practices. It includes multiple-choice questions with detailed answers, providing insights into various aspects of insurance, such as contracts, risk, types of insurance, and policy features. The exam is designed to assess understanding of fundamental insurance concepts and their application in real-world scenarios.
Typology: Exams
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A producer who is acting as an agent is representing: A The insured, the applicant and the beneficiary B Always the insured C The insured and the insurer D Always the insurer - correct answer ✔✔D In order to be valid, a contract must be between individuals considered legally able to enter into an agreement. This principle is known as: A Restricted persons B Considerations C Competent parties Agreement - correct answer ✔✔C A company that is licensed to sell insurance in a particular state is: A A domiciled company B.A nonadmitted company C An authorized company
D A foreign company
Withholding of known material facts C Intentional material misrepresentation with the intent of causing injury to another party An individual warrants a fact stated on the application - correct answer ✔✔D Legally speaking, a producer has a duty when handling life insurance premiums and applications for an insurer. A Fiduciary B Undisputed C Negotiated D Professional - correct answer ✔✔A refers to the jurisdiction where an insurer was formed or incorporated. A Authorized B Approved C
Domicile Admitted - correct answer ✔✔C To address adverse selection what can an insurer legally do? A Limit the amount of coverage issued B Raise the premium higher than most people can afford to pay C Establish and enforce sound underwriting practices D Not offer policies to those over age 55 - correct answer ✔✔C The relationship of a person who acts on behalf of a company whereby the person's actions can bind the company is known as: A Surplus lines or excess insurance B The law of large numbers C The law of agency Brokerage business - correct answer ✔✔C consists of groups of underwriters called syndicates, each of which specializes in insuring a particular type of risk.
Legal Purpose C Offer and Acceptance D Conditions - correct answer ✔✔D The most effective way to ensure that the applicant will accept the policy when it is issued is: A To collect the initial premium upon policy delivery, not at the time of application B To deliver the policy with a gift certificate to a local restaurant C Offer to pay the first premium for them D To have the applicant pay the initial premium at the time of application - correct answer ✔✔D
Which of the following is NOT a characteristic of life insurance as property? A It may be paid for in installments B It requires a fund portfolio manager C It creates an immediate estate D It requires no physical maintenance - correct answer ✔✔B Which of the following statements about the average number of people who die each year is true? A It is called the mortality rate B It is called the principle of indemnity C It is called the predictability rate D It is called the principle of life insurance - correct answer ✔✔A
The amount of money the insurance company reserves for expected mortality costs B The amount the company anticipates for dividend payout C Assignment of the appropriate share of the company's operating expenses to each policy D Surrender charges applied to the cash surrender of the policy - correct answer ✔✔C Which statement best describes the term reserve? A That amount that enables the insurer to provide sales bonuses and incentives for their commissioned sales staff B That amount that, when increased by future premiums on outstanding policies, and interest on those premiums will enable the company to meet future death claims C That amount, required by law, that the company must hold in reserve to pay only cash value accumulations on permanent insurance policies D That amount insurer's maintain in reserve to guarantee that they can profit from future death claims - correct answer ✔✔B
Controlled business may be defined as insurance sold: A To individuals needing an increased amount of term insurance B To existing clients only C To anyone willing to buy D To the producer, the producer's family and friends, and the producer's business associates - correct answer ✔✔D Which of the following policies could be expected to have the lowest premium? A Whole life B Endowment to age 65 C Single pay life D 10 - pay life - correct answer ✔✔A
Cancel the waiver of premium rider - correct answer ✔✔B D Provides a variety of living benefits - correct answer ✔✔C The waiver of premium rider normally expires at age: A 55 B 60 C 70 D 65 - correct answer ✔✔B Term insurance differs from permanent insurance in that term: A Builds cash value and provides limited death benefit options only B Costs more than permanent insurance C Builds no cash value, pays a death benefit only
The third year - correct answer ✔✔D If Greg's policy on his own life has a guaranteed insurability rider, it means that he can purchase more insurance: A On his own life at certain specified ages without proof of insurability B On his own life at specified periods of time at a fixed guaranteed premium C Anytime before the age of 65 D On his own life at specified periods, but must prove insurability - correct answer ✔✔A In many jurisdictions, permanent policies are required to have some cash value by the end of: A The fourth year B The first year C The second year
Allen purchases an estate builder (jumping juvenile) policy for his 5 - year old son, Donald. Suppose that when Donald reaches age 21 his father presents him with the policy as a gift. Which of the following statements is NOT correct? A Donald has enjoyed protection against the problems of premature death B The premium will continue to be based on his original age of 5 C The face value of Donald's policy has increased by 5 times D Donald must change the beneficiaries immediately - correct answer ✔✔D The type of policy that can be changed from one that does not accumulate cash values to one that does is a: A Universal life policy B Variable life policy C Permanent policy
Convertible term policy - correct answer ✔✔D With a modified premium whole life contract, premium payments: A Are lower in the early years of the contract B Are invested in the stock market C Never change for the life of the policy D Are modified throughout the life of the plan and may fluctuate at the insurer's discretion - correct answer ✔✔A With regard to the waiver of premium rider, after the disability a policyowner normally: A Must prove insurability to continue the policy on an annual basis B Must reapply for the insurance C Need not repay the premiums paid by the company during disability
The loan value of a policy cannot exceed the current cash value Reduced paid up policy - correct answer ✔✔C Each of the following is a source of life insurance policy dividends, except: A Guaranteed cash value accumulations B Reductions in operating expenses C Savings in mortality D Additional interest earnings - correct answer ✔✔A Each of the following statements about policy loans is correct, except: A A policy loan cannot be made on a policy until it has been in force long enough to accumulate some cash value B If a policy has cash value, the insurance company cannot refuse to lend the policyowner money
Encumbering the proceeds of the policy Policy loans may be made on any type of policy - correct answer ✔✔D Why should a policyowner be especially careful when deciding to increase the amount of an outstanding policy loan? A If the loan amount, plus interest charged exceeds the face amount at death, the beneficiary would owe the insurance company the balance of the loan B If the outstanding loan balance, plus interest, equals or exceeds the cash value of the policy, the company could cancel the insurance C If a loan payment is not established within one year, the insurance company may cancel the policy - correct answer ✔✔B The main purpose of the spendthrift clause contained in a settlement option is to prevent the beneficiary from doing all of the following, except: A Purchasing a new car once the claim has been settled and proceeds have been paid out according to the beneficiary designations B Transferring the proceeds of the policy