PRIMERICA LIFE INSURANCE EXAM
QUESTIONS AND ANSWERS
1. mutual
Answer Funds not paid out after paying claims and other operating costs are returned to the policy owners in the
form of a dividend if all funds are paid out, no dividends are paid.
2. reduction
Answer The insured's change in lifestyle and habits would likely reduce the chances of health problems.
3. offer in insurance
Answer An applicant submits an application to the insurer; acceptance takes place when an insurer's
underwriter approves the application and issues a policy.
4. perils
Answer Perils are the causes of loss insured against in an insurance policy.
5. express authority
Answer Express powers are written into the contract between the insurer and the agent.
6. domestic
, Answer A company is domestic when doing business within the state in which it is incorporated.
7. discriminatory factors in underwriting
Answer Race, religion, sexual orientation, etc. are considered discriminatory because there is not
sound statistical data to show that they attect the probability of loss.
8. fiduciary responsibility
Answer An agent's fiduciary responsibility includes handling insurer funds in a trust capacity.
9. agents contract with the principal
Answer The principal grants authority to an agent through the agent's contract.
10. initial premium
Answer The insurer approves the application and receives the initial premium.
11. age in underwriting
Answer Age provides sound statistical data for determining the probability of loss.
12. medical history in underwriting
Answer Medical history provides sound statistical data for determining the probability of loss.
13. sex in underwriting
, Answer Sex provides sound statistical data for determining the probability of loss.
14. implied authority
Answer Authority that is not explicitly stated but is assumed to be granted to an agent.
15. apparent authority
Answer Authority that others believe an agent has based on the agent's actions.
16. losses
Answer Losses refer to the financial impact of perils covered by an insurance policy.
17. risks
Answer Risks refer to the uncertainty regarding financial loss.
18. hazards
Answer Hazards are conditions that increase the likelihood of a peril occurring.
19. transfer
Answer A method of dealing with risk where the risk is shifted to another party, typically through insurance.
20. avoidance
Answer A method of dealing with risk where the risk is eliminated entirely.
, 21. retention
Answer A method of dealing with risk where the individual or organization assumes the risk.
22. adhesion
Answer a contract of adhesion is prepared by only the insurer; the insured's only option is to accept or reject the
policy as its written.
23. stock insurance companies
Answer only stock insurance companies are owned and controlled by stockhold- ers.
QUESTIONS AND ANSWERS
1. mutual
Answer Funds not paid out after paying claims and other operating costs are returned to the policy owners in the
form of a dividend if all funds are paid out, no dividends are paid.
2. reduction
Answer The insured's change in lifestyle and habits would likely reduce the chances of health problems.
3. offer in insurance
Answer An applicant submits an application to the insurer; acceptance takes place when an insurer's
underwriter approves the application and issues a policy.
4. perils
Answer Perils are the causes of loss insured against in an insurance policy.
5. express authority
Answer Express powers are written into the contract between the insurer and the agent.
6. domestic
, Answer A company is domestic when doing business within the state in which it is incorporated.
7. discriminatory factors in underwriting
Answer Race, religion, sexual orientation, etc. are considered discriminatory because there is not
sound statistical data to show that they attect the probability of loss.
8. fiduciary responsibility
Answer An agent's fiduciary responsibility includes handling insurer funds in a trust capacity.
9. agents contract with the principal
Answer The principal grants authority to an agent through the agent's contract.
10. initial premium
Answer The insurer approves the application and receives the initial premium.
11. age in underwriting
Answer Age provides sound statistical data for determining the probability of loss.
12. medical history in underwriting
Answer Medical history provides sound statistical data for determining the probability of loss.
13. sex in underwriting
, Answer Sex provides sound statistical data for determining the probability of loss.
14. implied authority
Answer Authority that is not explicitly stated but is assumed to be granted to an agent.
15. apparent authority
Answer Authority that others believe an agent has based on the agent's actions.
16. losses
Answer Losses refer to the financial impact of perils covered by an insurance policy.
17. risks
Answer Risks refer to the uncertainty regarding financial loss.
18. hazards
Answer Hazards are conditions that increase the likelihood of a peril occurring.
19. transfer
Answer A method of dealing with risk where the risk is shifted to another party, typically through insurance.
20. avoidance
Answer A method of dealing with risk where the risk is eliminated entirely.
, 21. retention
Answer A method of dealing with risk where the individual or organization assumes the risk.
22. adhesion
Answer a contract of adhesion is prepared by only the insurer; the insured's only option is to accept or reject the
policy as its written.
23. stock insurance companies
Answer only stock insurance companies are owned and controlled by stockhold- ers.
