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Life Insurance Exam Questions and Answers: A Comprehensive Guide, Exams of Insurance law

A comprehensive overview of life insurance concepts, including definitions, key terms, and exam-style questions and answers. It covers essential topics such as risk management, types of insurance, and regulatory frameworks. Valuable for students seeking to understand the fundamentals of life insurance and prepare for exams.

Typology: Exams

2024/2025

Available from 02/09/2025

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Life Insurance Exam Questions and
Answers Already Passed
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
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Life Insurance Exam Questions and

Answers Already Passed

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