Alabama Life Insurance Exam

Which clause allows the insured to change an existing policy to any other policy of any type as long as the new policy has a higher premium, without any proof of insurability? - Answer- Privilege of change clause The extended term nonforfeiture option provides: - Answer- Paid-up term coverage equal to that of the original policy With a collateral assignment of a life policy to a creditor: - Answer- You assign a partial amount of the policy values to the creditor An accounting measure used to determine a contract owner's interest in the separate account of a variable annuity before payments begin is called: - Answer- An accumulation unit Group Insurance Market: A certificate of insurance is issued to whom? - Answer- Each individual covered by the group life insurance The principal difference between an entity purchase and a cross purchase buy-sell agreement is: - Answer- The identity of the policy owner (the main difference is who owns the policy) How long is the probationary period for group life insurance? - Answer- The probationary period is usually 90 days. What is the primary purpose of a section 303 redemption? - Answer- To provide liquidity to pay estate taxes and administration and funeral costs What is it called when an insurance company sells part of their risk to another insurance company? - Answer- Reinsurance (also, risk-sharing) The policy conditions represent the obligation of whom? - Answer- Both the insured and the insurer Does social insurance provide equal benefits to all citizens that contribute? - Answer- No. As income is re-distributed through the governmental system, insureds who put less into the system such as the poor, elderly, and those with dependents get proportionately greater benefits. In determining whether disability is permanent, most companies call for a waiting period of how long? - Answer- 3 to 6 months