CO Life Producer License Study Guide Questions And Actual Answers.
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Course
COLORADO LIFE INSURANCE
Institution
COLORADO LIFE INSURANCE
What is insurance? - Answer Insurance transfers the risk of loss from an individual or business to an insurance company, which in turn spreads the cost of unexpected losses to many individuals
what are the 4 elements of an insurance contract? - Answer Agreement - offer and acceptance, cons...
CO Life Producer License Study Guide
Questions And Actual Answers.
What is insurance? - Answer Insurance transfers the risk of loss from an individual or business to an
insurance company, which in turn spreads the cost of unexpected losses to many individuals
what are the 4 elements of an insurance contract? - Answer Agreement - offer and acceptance,
consideration, competent parties and legal purpose
what is consideration? - Answer Consideration is something of value that each party gives to the other.
Insured pays premium
Insurer promises to pay in event of loss
What is Aleatory Contract? - Answer there is an exchange of unequal amounts or values. (insurance
contacts are aleatory)
What does representation mean and how does it differ from a warranty? - Answer Representations are
statements made that are believed to be true to the best of ones knowledge.
A warranty is an absolutely true statement upon which the validity of the insurance policy depends
Who is the field underwriter? - Answer agent is the field underwriter because they have solicited the
potential insured.
How do you make changes on an application? - Answer start over with a fresh one or draw a line
through the incorrect answer, fill in the correct answer and have applicant initial
What is replacement? - Answer terminating an existing policy and obtaining a new one. Done by
borrowing cash values to pay for a new policy or putting old policy into extended term or reduced payed
up.
The application is what in underwriting? - Answer primary source of information
,What is consumer report? - Answer includes info on consumer credit, character, reputation, habits
What is the purpose of the Fair Credit Act Report? - Answer protects against the circulation of
inaccurate information
When would an insured need to sign a statement of good health? - Answer Upon delivery of policy if
the policy wast prepaid
Is a person with HIV automatically declined? - Answer No. The person may be declined for medical
coverage solely based on HIV status, that would be discrimination
What is MIB (medical information bureau)? - Answer Nonprofit trade organization. Used when
underwriter needs more info on the applicants health history.
What is the Buyers guide and when do you give it to the applicant? - Answer Buyers guide gives generic
info on life insurance policies. Must be given to prospective applicants prior to them accepting their
initial premium. If a policy has a free look period than the buyers guide can be delivered with the policy
When was USA Patriot Act enacted? - Answer Oct 26, 2001
If full premium was submitted with application and policy was issued 2 weeks later, when does the policy
coverage begin? - Answer application date
Are illustrations required to be apart of the contract? - Answer NO
When is a misrepresentation considered fraud? - Answer when it is intentional or material
What are the three basic types of term? - Answer Level, increasing and decreasing. Regardless of type,
premium is always level
, What is Return of Premium life insurance? - Answer increasing term insurance policy that pays
additional death benefit to beneficiary equal to amount of premiums paid
Who bears all of the investment risk in a fixed annuity? - Answer Insurance company.
who is the annuitant? - Answer person who recieves benefit or payment from annuity and whom
annuity is written. Annuiant and owner do not need to be same person but usually are.
what is annually renewable term insurance (ART)? - Answer term insurance where death benefit
remains the same and policy may be renewed each year without proof of insurability but premiums
increase
what policy is classified as a traditional level premium contract? - Answer straight life
Describe survivorship life and how it differs to joint life - Answer Survivor life insured 2 or more lives for
a premium that is based on a joint age. Survivorship pays on the last death rather than the first death
resulting in a lower premium.
what are the 2 phases of annuity ? - Answer accumulation: payments made into annuity
annuitization -payments made to annuitant from annuity
what is the difference between fixed and variable annuities? - Answer fixed is guaranteed, fixed
payment and premiums are in general account.
variable annuities payment is not guaranteed, premium in separate account and invested in stocks and
bonds
describe indexed annuities - Answer Fixed annuity that invest aggressively for a higher return. Has
guaranteed min interest rate. less risky than variable annuity but expected to earn higher interest rate
than fixed.
when does a immediate annuity pay and when does a deferred annuity pay? - Answer immediate-
purchased with single premium and payed within 12m
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