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Life Insurance Exam (Texas) Key
Questions with 100% Correct
Answers.
_____________Quiz____________? Insurance (General concept) -
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- transfers the risk of loss from an individual to an insurer
- based on the principle of indemnity
- based on the principle of risk (risk pooling) _____________Quiz____________? insurable interest (General Concept) -
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- must exist at the time of the application
- insuring one's own life, family member, or a business partner _____________Quiz____________? Solicitation and sales presentation -
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- illustration- presentation of nonguaranteed elements
- buyer's guide is generic information about life polices which must be provided at the time of application
- policy summary is a description of features and benefits of the policy being issued and must be provided when the policy is delivered. _____________Quiz____________? Underwriting (Field underwriting (by agent) -
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- application completed and signed
- agent's report: agent's observation about the application that can assist in underwriting
- premiums with application and conditional receipts _____________Quiz____________? underwriting ( company underwriting) -
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- multiple sources of information: applications, consumer reports, MIB (Medical Information Burea)
- Risk Classification: 3 types of risk : standard, substandard, preferred _____________Quiz____________? Underwriting (Federal Regulation) -
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- Fair Credit Reporting Act: protect consumers against circulations of inaccurate or obsolete information
- USE PATRIOT Act/ Anti-money Laundering and Suspicious Activity Reports Rules _____________Quiz____________? Premium Determination -
Broker -
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an insurance producer who is not appointed by an insurance company and who represents the client _____________Quiz____________? Death benefits -
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the amount paid upon death of the insured in a life insurance policy _____________Quiz____________? Estate -
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a person's net worth _____________Quiz____________? Insurance policy -
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a contact between a policyowner (and/or insured) and an insurance company which agrees to pay insured or the beneficiary for loss caused by specific events. _____________Quiz____________? Insured -
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a person covered by the insurance policy; may or may not be the policyowner _____________Quiz____________? insurer (principal) -
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the company who issues an insurance policy _____________Quiz____________? Lapse -
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policy termination due to nonpayment of premium _____________Quiz____________? Life insurance -
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coverage on human lives _____________Quiz____________? Policyowner -
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the person entitled to exercise the rights and privileges in the policy _____________Quiz____________? Premium -
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the money paid to the insurance company for the insurance policy _____________Quiz____________? Underwriting -
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is the risk selection and classification process
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the cash value of a whole life policy has reached the contractual face amount _____________Quiz____________? Level premium -
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the premium that does not change throughout the life of a policy _____________Quiz____________? Liquidation of an estate -
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converting a person's net worth into a cash flow _____________Quiz____________? Mature -
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the time when the policy's face amount is paid out upon the death of the insured or policy endowment _____________Quiz____________? Nonforfeiture values -
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benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses _____________Quiz____________? Policy Maturity -
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in life polices, the time when the face value is paid out _____________Quiz____________? Qualified Plan -
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a retirement plan that meets IRS guidelines for receiving favorable tax treatment _____________Quiz____________? Securities -
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financial instrument that may trade for value (for example, stock, bonds options _____________Quiz____________? Suitability -
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a requirement to determine if an insurance product is appropriate for a customer _____________Quiz____________? Variable life insurance -
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contracts in which the cash value accumulate based upon a specific portfolio of stocks without guarantees of performance _____________Quiz____________? Types of insurance -
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- term/temporary
- permanent/ whole life
Survivorship life _____________Quiz____________? Basic Annuity Terms -
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Annuity Annuitant Accumulation/Pay-in period Annuitization/liquidation/pay-out period Beneficiary Owner _____________Quiz____________? Types of Annuities -
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Deferred Annuity fixed annuity general account immediate annuity indexed annuity separate account variable annuity _____________Quiz____________? General characteristics (Term life) -
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- pure protection
- lasts for specific term
- no cash value _____________Quiz____________? Level premium Term (Term life) -
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level death benefit and level premium _____________Quiz____________? Annually Renewable Term (Term life) -
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- renews each year without proof of insurability
- premiums increase due to attained age _____________Quiz____________? Decreasing Term (Term life) -
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coverage gradually decrease at predetermined times; best used when the need for protection declines from year to year _____________Quiz____________? Increasing Term (Term life) -
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coverage increase each year _____________Quiz____________? Features of term policies (term life) -
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- renewable: renew the policy without evidence of insurability
_____________Quiz____________? General Characteristics (Flexible Premium) -
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- types of whole life insurance
- flexible premium _____________Quiz____________? Adjustable life (Flexible premium) -
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- policyowner may adjust the premium and premium- paying period, the face amount, and the period of protection
- can be converted from term to whole life and vice versa
- cash value only develops if the premiums paid are more than the cost of the policy _____________Quiz____________? Universal life (Flexible premium) -
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- an insurance component in the form of annually renewable term
- 2 death benefit options: options A level death benefits, and options B- increasing death benefit
- can make partial surrender/ cash withdrawal _____________Quiz____________? Variable Life (other types of polices) -
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- fixed premium, minimum death benefits
- cash value and the actual amount of the death benefits are not guaranteed
- assets in separate accounts
- agents must be dually licensed in insurance and in securities _____________Quiz____________? Combination Plans (other types of polices) -
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- Joint life: - premium is based on the joint average age of the insured ;death benefit upon the first death only
- Survivorship Life: - premium is based on the joint average of the insured; death benefit upon the last death _____________Quiz____________? Phases (Annuities) -
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- accumulation (pay-in): payment made into the annuity
- annuitization (pay-out): payment made to the annuitant from the annuity _____________Quiz____________? parties (annuities) -
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- annuitant: insured (must be a person); policy issued on annuitant's life
- Beneficiary: will receive any amount contributed to annuity (plus any gain) if annuitant dies during accumulation period
- Owner- has all rights to policy (usually annuitant); can be corporation or trust _____________Quiz____________? Types of Annuities -
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- fixed annuities: guaranteed, fixed payment amount; premiums in general account
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transfer of right of policy ownership _____________Quiz____________? Consideration -
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something of value that each party gives to the other (binding force in any contract) _____________Quiz____________? Indemnity -
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a principle of reimbursement of which insurance is based; in the event of loss, an insurer reimburses the insureds or beneficiaries for the loss _____________Quiz____________? Lump sum -
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payment of the entire benefit in one sum _____________Quiz____________? Minor -
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a person under legal age _____________Quiz____________? NAIC -
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National Association of Insurance Commissioners, an organization composed of insurance commissioners from all states and jurisdictions formed to resolve insurance regulatory issues _____________Quiz____________? Principal -
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the face value of the policy; the original amount invested before the earnings _____________Quiz____________? Nonforfeiture options -
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- cash
- extended terms (automatic)
- reduced paid up _____________Quiz____________? Dividend options -
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- cash
- reduction of premium
- accumulation at interest
- paid up additions (automatic)
- paid up insurance
- one year term _____________Quiz____________? Settlement options -
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_____________Quiz____________? Accessing cash value -
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policy loan automatic premium loan withdrawal partial surrender _____________Quiz____________? Policy options -
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- nonforfeiture
- dividend
- settlement _____________Quiz____________? consideration (standard provision ) -
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parties to a contact exchange something of value _____________Quiz____________? entire contact (standard provision) -
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policy (with riders and amendments) and copy of the application _____________Quiz____________? Grace period (standard provision) -
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time period after the premium is due during which the policy will not lapse _____________Quiz____________? incontestability (standard provision) -
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insurer cannot contest misstatements on the application after a time period _____________Quiz____________? Insuring clause (standard provision) -
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basic agreement between the insurer and the policyowner _____________Quiz____________? misstatement of age or gender (standard provision) -
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death benefits is adjusted according to the correct age and gender at policy issue _____________Quiz____________? payment of premiums (standard provisions) -
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premiums are paid in advance _____________Quiz____________? Reinstatement -
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a policy can be restored within a specified period of time with proof of insurability _____________Quiz____________?
