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LOMA 281 Practice Test with Complete Solutions Graded A+
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LOMA 281 Practice Test with Complete Solutions Graded A+ Premium reduction dividend option - Answer-A policy dividend option under which the insurer applies policy dividends toward the payment of renewal premiums Policy loan repayment dividend option - Answer-A policy dividend option under ...

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  • September 7, 2024
  • 23
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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LOMA 281 Practice Test with Complete
Solutions Graded A+
Premium reduction dividend option - Answer-A policy dividend option under which the
insurer applies policy dividends toward the payment of renewal premiums

Policy loan repayment dividend option - Answer-A policy dividend option under which
the insurer applies policy dividends toward the repayment of an outstanding policy loan

Accumulation at interest dividend option - Answer-A policy dividend option under which
the policy dividends are left on deposit with the insurer to accumulate at interest

Paid up additional insurance dividend option - Answer-A policy dividend option under
which the insurer uses any declared policy dividend as a net single premium to
purchase paid up additional insurance on the insured's life; issued on the same plan as
the basic policy and in whatever face amount the dividend can provide at the insured's
attained age.

This is typically what happens under most policies

Additional term insurance dividend option - Answer-A policy dividend option under
which the insurer uses each policy dividend as a net single premium to purchase one
year term insurance on the insured's life

Settlement options provision - Answer-A life insurance policy provision that grants a
policy owner or a beneficiary several choices as to how the insurance company will
distribute the proceeds of a life insurance policy

Settlement methods - Answer-Alternative methods that the owner or beneficiary of a life
insurance policy can elect for receiving payment of the policy proceeds

Payee - Answer-For a life insurance policy, the person/party who is to receive the policy
proceeds under a settlement option

For an annuity, a natural person or legal entity designated by the contract owner to
receive annuity payments if the annuitant does not receive them

Contingent payee - Answer-The person or other entity who will receive any remaining
annuity payments upon the death of the payee

Interest option - Answer-A Life insurance settlement option under which the insurer
invests the policy proceeds and periodically pays interest on those proceeds to the
payee

,Fixed period option - Answer-A life insurance policy settlement option under which the
life insurance company agrees to pay policy proceeds in equal installments to the payee
for a specified period of time

Fixed amount option - Answer-A life insurance policy settlement option under which the
insurance company pays equal installments of a stated amount until the policy proceeds
plus the interest earned are exhausted

Life income option - Answer-A life insurance policy settlement option under which the
insurance company agrees to pay the policy proceeds in periodic installments over the
payee's lifetime

Assignment - Answer-An agreement under which an insurance policy owner transfers
some or all of his ownership rights in the policy to another party

Assignor - Answer-The policy owner who makes an assignment of a life insurance
policy

Assignee - Answer-The party to whom life insurance property rights are transferred

Assignment provision - Answer-A life insurance policy provision which describes the
roles of the insurer and the policy owner when the policy is assigned

Absolute assignment - Answer-An assignment of a life insurance policy under which the
policy owner transfers all policy ownership rights to the assignee

Endorsement method - Answer-A method of transferring ownership of a life insurance
policy under which the ownership change becomes effective when the policy owner
notifies the insurer in writing of the change and the insurance company notes the
ownership change in its records

Group insurance - Answer-A method of providing life or health insurance coverage for a
group of people under one insurance contract

Master group insurance contract - Answer-An insurance contract that insures a number
of people

Group insured - Answer-An individual covered by a group insurance policy

Group policyholder - Answer-The person or organization that decides what types of
group insurance coverage to purchase for a specific group, negotiates the terms of the
group insurance contract and purchases the group insurance coverage. The
group/organization and the insurer are parties to the contract, NOT the actual insureds

Certificate of insurance - Answer-A document that describes the coverage that the
group insurance contract provides and a group insured's rights under the contract

, Noncontributory plan - Answer-A group insurance plan for which insured group
members are not required to pay any part of the group insurance premium

Contributory plan - Answer-A group insurance plan under which insured group members
must pay part or all of the premium for their coverage

Self administered plan - Answer-A group insurance plan for which the group
policyholder is responsible for handling the administrative and record keeping aspects
of the plan

Insurer administrated plan - Answer-A group insurance plan for which the insurer is
responsible for handling the administrative and record keeping aspects of the plan

Probationary period - Answer-The length of time that a new group member must wait
before becoming eligible to enroll in the group insurance plan

Eligibility period (enrollment period) - Answer-A specified period of time during which a
new group member may first enroll for group insurance coverage in a contributory group
insurance plan

Pure risk - Answer-Risks that involve either a loss or no loss

Speculative risk - Answer-Risk that can result in a loss, gain or no change

Insurance - Answer-A method for transferring risk from an individual to an insurance
company

Premium - Answer-The amount that the insured pays in exchange for a promise of
money

Risk pooling - Answer-Insurers collect premiums from all insured people and spread the
cost of the relatively few anticipated losses among all insureds

Annuity - Answer-A financial product under which an insurer promises to make a series
of periodic payments to a named person or entity in exchange for a premium or series
of premiums

Policy benefit - Answer-The amount of money that an insurer promises to pay if a
covered loss occurs

Third Party Policy - Answer-An insurance policy that one person purchases on the life of
another person

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