Life Insurance Exam-Illinois Study Guide Questions Solved Correctly.
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Course
Illinois Life Insurance
Institution
Illinois Life Insurance
Pooling of Risks - Answer A large group of people contribute money to a fund out of which their losses can be paid
Policyowner - Answer is the person or org that applies for the policy and pays the premium
Actuarial Tables - Answer Are statistical tables that are used when calculatin...
Life Insurance Exam-Illinois Study Guide
Questions Solved Correctly.
Pooling of Risks - Answer A large group of people contribute money to a fund out of which their losses
can be paid
Policyowner - Answer is the person or org that applies for the policy and pays the premium
Actuarial Tables - Answer Are statistical tables that are used when calculating premium rates and
mortality loss reserves
Life Insurance Policies transfer: - Answer financial risks of premature death on a defined amount
Loss of income - Answer the face amount of life insurance is determined as a multiple of income
Life annuity - Answer contract which is issued by a life insurance company 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
Life annuity - Answer guarantees monthly income benefits to the annuitant for the rest of his/her life
no matter how long he/she lives
Insurable interest - Answer a person must be in a position where he/she will lose money should loss
occur only at the time the policy is issued
Who must have insurable interest? - Answer the policy owner; he/she will lose money should hte
insured die prematurely
tax qualified plans - Answer contributions can be deducted
non qualified plans - Answer contributions cannot be deducted
, tax deferred plans - Answer tax on the interest and/or earnings is postponed as it compounds and
accumulates until it is withdrawn
tax free - Answer no tax on benefits
cost basis - Answer total contributions made to the plan
Tax: premiums paid on individual life insurance policies... - Answer cannot be deducted (non-qualified)
Tax: the benefits paid to the beneficiary at the insured's death... - Answer is usually not taxed (tax free)
Participating policy - Answer pays a dividend
Tax: dividends paid to the policyowner on participating policies... - Answer are usually not taxed (tax
free)
Modified Endowment Contract - Answer The IRS has written rules that define when a life insurance
policy does not have a real, valid life insurance purpose and is in substance an investment or savings plan
If a cash value life insurance policy does not have a valid life insurance purpose, the IRS classifies it as a -
Answer modified endowment contract
Underwriter - Answer is an insurance company employee who reviews applications and additional
information and decides whether the applicant is acceptable and what the correct premium rate should
be
Medical reports can be (3 items) - Answer health questionare, paramedic examiner's report, and
physician's report
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