This document contains a compilation of practice test for the LIFE INSURANCE board exam. This prep exam questions will improve your knowledge and understanding on LIFE INSURANCE topics.
Attained Age - insured's age at the time the policy is issued or renewed
Cash Value - A policy's savings element or living benefit.
Face Amount - The amount of benefit stated in the life insurance policy.
Fixed life insurance - contracts that offer guaranteed minimum or fixed benefits.
Deferred - with-held or postponed until a specified time or event in the future.
Endow - the cash value of a whole life policy has reached the contractual face amount.
Level Premium - the premium that does not change throughout the life of a policy.
Liquidation of an estate - converting a person's net worth into a cash flow.
Non-forfeiture values - benefits in a life insurance policy that the policy owner cannot
lose even if the policy is surrendered or lapses.
Policy maturity - in life policies, the time when the face value is paid out.
Qualified plan - a retirement plan that meets IRS guidelines for receiving favorable tax
treatment
Securities - financial instruments that may trade for value (ex: stocks, bonds, options).
Suitability - a requirement to determine if an insurance product is appropriate for a
customer
variable life insurance - contracts in which the cash values accumulate based upon
specific portfolio of stocks without guarantees of performance.
Term life - is temporary protection because it only provides coverage for a specific
period of time. Also known as; provide for the greatest amount of coverage for the
lowest premium as compared to any other form of protection. Usually a max age
offered.
,Term Life - Provide pure death protection - if the insured dies during the term, the policy
pays the death benefit to the beneficiary.
Types of Term Life - Level, Increasing, Decreasing
Level term insurance - is the most common type. the word level refers to the death
benefit that does not change throughout the life of the policy.
Annually Renewable term (ART) - Is the purest form of term insurance - the death
benefit remains level (in the sense it's level term policy). The policy may be guaranteed
to be renewable each year with out proof of insurability - but the premium increases
annually according the the attained age - as the probability of death increases.
Decreasing Term - policies feature a level premium and a death benefit that decreases
each year over the duration of the policy term. Primarily used when the amount of
needed protection is time sensitive. Ex: mortgage or other debts. - The amount of
coverage thereby decreases as the outstanding loan balance decreases each year.
Usually convertable - however it is usually not renewable since the death benefit is $0 at
the end of the policy term.
Which of the following statements is TRUE concerning the Accidental Death Rider?
A. It is also known as a triple indemnity rider
B. This rider is only available to insureds over the age of 65
C. It is only available in group insurance
D. IT WILL PAY DOUBLE OR TRIPLE THE FACE AMOUNT - D. It will pay double or
triple the face amount.
An agent and an applicant for a life insurance policy fill out and sign the application.
However, the applicant does not wish to give the agent the initial premium, and no
conditional receipt is issued. When will coverage begin?
A. When the agent submits the application to the company and the company issues a
conditional receipt.
B. When the agent delivers the policy, collects the initial premium, and the applicant
completes an acceptable Statement of Good Health.
C. On the designated effective date.
D. On the application date. - B. When the agent delivers the policy, collects the initial
premium, and the applicant completes an acceptable Statement of Good Health.
Individual and group accident and sickness policies that cover what kinds of losses
must also provide for newborns, from the moment of birth, with all health insurance
benefits applicable to children?
A. specified child-related losses.
B. Health-related losses for the mother
, C. Maternity Losses
D. Losses that happen to family members. - D. Losses that happen to family members
until 31 days.
Which provision allows the policyholder a period of time, while coverage is in force, to
examine a health insurance policy and determine whether or not to keep it?
A. Free Look Period
B. Grace Period
C. Elimination Period
D. Probationary Period - A. Free Look Period
All of the following and dividend options except?
A. Reduction of premium
B. Paid-up additions
C. Fixed-period installments
D. Accumulated at interest - C. Fixed-period installments
An insured wants to name her husband as the beneficiary of her health policy. She also
wishes to retain all of the rights of ownership. The insured should have her husband
name as what type of beneficiary?
A. Primary
B. Contingent
C. Irrevocable
D. Revocable - D. Revocable.
A father owns a life insurance policy on his 15-year old daughter. The policy contains
the optional Payor Benefit rider. If the father becomes disables, what will happen to the
life insurance premiums?
A. The insured will have to pay premiums for 6 months. If at the end of this period the
father is still disabled, the insured will be refunded the premiums.
B. The insured's premiums will be waived until she is 21.
C. The premiums will become tax deductible until the insured's 18th birthday.
D. Since it is the policyowner, and not the insured, who has become disabled, the life
insurance policy will not be affected. - B. The insured's premiums will be waived until
she is 21.
An applicant for a health insurance policy returns a completed application to her agent,
along with a check for the first premium. She receives a conditional receipt two weeks
later. Which of the following has the insurer done by this point?
A. Approved the application
B. Issued the policy
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