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Life Insurance Exam Questions and
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life insurance ✔✔insurance that pays to a named beneficiary or the deceased's estate upon the death of the insured,may b annuity or endowment, may incl benef for accident death/dismemberment, disability, protects against risk pf premature death which exposes a finNcial riskto family or business. ie:burial expenses, pay debts, loss of family inc/business profits
insurance ✔✔content that indemnifies another against loss, damage, liab arising from unknown event
indemnify ✔✔make a person whole by restoring that person to the same financial poistion that existed. 4 the loss
insured ✔✔policy owner
premium ✔✔set amount of money payable for policy/coverage
insurance company ✔✔insurer
policy ✔✔agreement insurer and insured, agreeement/contract
loss ✔✔reduction in value and asset
claim ✔✔demand for payment of insured benefit to person named in policy
risk ✔✔uncertainty of financial loss when one or more outcome is possible. must be element of doubt and uncertainity
pure risk ✔✔only a chance of loss, only pure risk is insurable, risk associated with chance of loss
speculative risk ✔✔involves both uncertain of loss and gain ie betting at a race track/ investing in the stock market
peril ✔✔immediate specific event causing loss and giving rise to risk. ie building burns as a result of "fire" or person dies as a result of "death"
avoidance of risk ✔✔abstenance
reduction of risk ✔✔smoke alarm to reduce potential loss
retention of risk ✔✔do nothing, assume part of risk yourself ie: deductible
law of large numbers ✔✔ins co cannot predict loss expected for a given individual using this law, insurers can predict how many losses will occur with this law
exposure unit ✔✔item of property or insured person
insurable interest ✔✔must have this to preserv life or property of insured
insurable interest for life insurance ✔✔must exist at time of app notnecessary T time of death
insurable risk ✔✔large #s of homogenous units in order for pooling & insurance mechanismsof insurance to function
insurable risk ✔✔loss must bemeasureable, place a specific amount tp calculate premiums and claims settlement
insurable risk ✔✔loss must be uncertain not deliberate act of destruction
insurable risk ✔✔must be an econimic hardship must suffer significant loss to your own self
foreign insurer ✔✔licensed to conduct business in states and dist of columbia or other US territories other than the one it is inc
domestic insurer ✔✔conducting bus within the state it is inc
alien insurer ✔✔companies inc in a country other than US, dist of columbia or any US territorial possesion
"admitted" ✔✔a company is a legal insurer who recieves a license to do business in a state is considered this
exclusive or captive agents ✔✔represent only one company, career agents
general agents or managing general agents ✔✔hire supervise train other career agents within a certain geograph area
MGA ✔✔managing general agent
MGA ✔✔compensated by comissions earned on business sold by herself as well as an overriding commission on commiss produced by other agents managed by the general agent
direct writing company ✔✔usually pays salaries to employees whos job is to sell company's insuranceroducts
agency systems ✔✔ins agents,
forms of mass marketing ✔✔direct response, franchise
direct response ✔✔conducted by mail, ads,newspaper, magazines, tv, radio having limited benefits and low premium ie disability only
franchise marketing ✔✔provides cov to employees of small firms or to members of assoc receive indiv policies that vary according to indiv needs. employers can offer employees insur at a lower prem, poss ddeducted from their payck
producer ✔✔agent repres ins co or broker rep potential insd
categories of producers ✔✔life and health,prop n cas, brokers, soilcitors, ins consultants
life and health agent ✔✔usually rep insurer to the buyer and do not have authority to issue or modify ins contracts
prop and cas agents ✔✔granted more authority by ins co, may bind or commit co by oral or written agreement, accept risks, collect premiums, issue contracts
brokers ✔✔reps for buyer to insurer who select ins coverages from various cos for their. clients
McCarran ferguson act ✔✔1945 enacted by congress:fed govt has roght to regulate bus of ins that is not regulated by state law
privacy ✔✔disclosure authorization, penalties
privacy ✔✔protect the public frominaccurate or misused info
disclosure authorization ✔✔producers respons to explain to applicant various resources from which insurer will obtain info regarding that applicants insurability
disclosure authorization ✔✔forms must be furnished stating who is author to disclose personal info, kimf of info that may be disclosed, reason info is being colllected, how it will b used
penalty for any one person who obtains info about a client without having a legit reason to recv it ✔✔$10000 or up to one year on jail
fair credit reporting act ✔✔...all insurers must comply with this. ..regarding info obtained from a third party concerning the applicant
consumer rights ✔✔persons may dispute info they feel is inaccurate or imcomplete and may require reporting agency to correct or delete info.
notice to applicant ✔✔informs applicant a report will b ordered concerning past credit report history and any other life and health insurance for which they have aplied
violators of fair reporting act ✔✔$5000 fine, pay damages suffered by consumer, attny fees punitive damages, imprisonment for one yr for obtaining info under false pretenses
consumer report ✔✔contains a persons credit info, character reputation , habits used or collected to determine whether a person is elegible for credit, insurance, employment or other purposes
investigate consumer report ✔✔includes info re persons character, personal habits, and mode of living obtsined thru investigation ie: interviews with assoc , friends person must be informed to obtain info
pretext interview ✔✔someone pretends to b someone else to obtain info about another person, pretends to b someone else, misreps the purpose of interview, refuses to properly identify themself
graham leach blilely act ✔✔passed n 1999 to remove depressn area barriers between commercial banking investment banking and insurance to allowstate ins regulators to oversee banks as a holding co for ins purposes
financial holding co has minimal financial standards for financial privacy ✔✔ensure security and confidentiality of customer srecords and info, protect against threats or hazards to security of records and protect against unauth use of records that could damage consumer
consumer ✔✔anyone about a comapny collects infoand who has an ongoing relationship with a financial institution
opt out ✔✔opportunity for consumer to keep company from sharing info about them
GLBA requires the company make two primary disclosures to customer/company - fed regulation ✔✔company gives customer a clear conspicuious explanation of policies and procedures for customer pricacy and customers roght to opt out
**products that are regulated by both fed state ✔✔Securities Exchange Commisssion and State insurance dept'svariable contracts, variable lif annuities and var life insurance co products
body of laws at state level that administers and enforces ins laws, states how co must b organized,requirements for inc,amts for minimum capital and surplus ✔✔state insurance code
statutes ✔✔body of law developed by legislative branch of govt that outline duties of commissioner and activities of dept of ins
rules and regulations ✔✔developed by dept of ins to expand upon statutory requirements and legislative intent
commisioner, superintendent or director of insurance ✔✔supervises and regulates ins affairs at state level
duties of ins commissioner ✔✔issues certificate of authority,examirs boks docs, of insurer broker oragent
guaranty associations ✔✔organization to protect claimants, policy holders, annuitants, creditors of fiancially impaired or insolvent insurers by providingfunds for the paymentof claims and other related policy benefits
advertisements cannot ✔✔be misleading,obscure or use deceptive illustrations amd must clearly putline policy coverages ie:preexisting limits on coverage
most states require insurers to keep an advertising file for how long? ✔✔usually 2 or 3 years
buyer's guide ✔✔doc providing basic info about ins policy
life ins policy summary ✔✔written statement describing elements of policy being sold including agents name and address, name and ofc address of insurer, generic name of policy and each rider
agents represent ✔✔ins co
brokers represent ✔✔client
state law supplement ✔✔contains info on license fpregulations in your state
insurance producer requires and people who are not paid commissions (enrollers)to sell ins do not need... ✔✔license
licensed producer can ✔✔sell, solicit, negotiate insurance
reciprocity ✔✔mutual exchange of privileges
a non resident or resident producer that moves from one state to another must provide .. ✔✔change of address and new certification from new state
info re reciprocation must be provided within how much time? ✔✔within 30 days of change of legal residence
is there an app or licence fee for reciprocation ✔✔no fee
