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Illinois Life Insurance Exam With complete solutions 2024_2025
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Illinois Life Insurance Exam With complete solutions 2024_2025
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Illinois Life Insurance Exam With completesolutions 2024/2025
Transfer of Risks - ANSWER-Through insurance individuals transfer to insurance
companies financial risk they cannot individually afford
Pooling of risks - ANSWER-when a large group of people contribute money to a
fund out of their losses can be paid
Premium - ANSWER-The money paid by the policyowner to the insurance
company in exchange for the policy
Lapse - ANSWER-When a policy is terminated due to non-payment of premiums
Policyowner - ANSWER-The person or organization that applies to the policy and
pays the premiums. Can also be known as a policyholder.
Insured - ANSWER-The person at whose death the insurance company will pay
benefits to a beneficiary
Beneficiary - ANSWER-The person or organization to whom the benefits are
payable to at the death of the insured
Rider - ANSWER-A form that can be added to an insurance policy. It is usually
added for an extra premium chard to add coverage. It can however sometimes be
added to limit coverage.
, Actuarial tables - ANSWER-statistical tables that are used when calculating
premium rates and mortality loss reserves. They tell insurance companies how
many claims are likely to be made each year enabling the insurance companies to
estimate what their losses will be.
Mortality actuarial tables - ANSWER-actuarial tables that tell the insurance
companies how many people fo each age and sex are likely to die each year
Law of large numbers - ANSWER-says that the more people that an insurance
company insures, the more accurate the actuarial tables will become and the
losses will become more predictable and manageable
Premature death - ANSWER--dying before the normal age according to the
mortality actuarial tables
-also dying with unsatisfied financial responsibilities to either family or creditors
Premature death - ANSWER-through life insurance policies, which are issued y
life insurance companies, insureds transfer to insurance companies the financial
risks of premature death in a defined amount.
4 premature death risks - ANSWER--loss of income
-unsatisfied major obligations (debts)
-Incomplete financial goals (child Educ, fin security, spouse independence.)
-final expenses (funeral, burial, illness or injury, taxes, unpaid bills, legal, taxes).
Final expenses can be paid at an individual's death in 4 ways - ANSWER--in cash
out of the decease's personal savings
-borrowing
-by liquidating property, investments, business
-life insurance benefits (timely, immediate estate, discounted dollars, avoid
probate, tax advantages)
Life annuity - ANSWER-protects an individual against the financial risk of
outliving a normal life expectancy according to the mortality actuarial tables and
running out of money in old age
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