Life Insurance Exam (Texas) 2023 with 100% correct questions and answers

Insurance (General concept) - transfers the risk of loss from an individual to an insurer - based on the principle of indemnity - based on the principle of risk (risk pooling) insurable interest (General Concept) - must exist at the time of the application - insuring one's own life, family member, or a business partner Solicitation and sales presentation - illustration- presentation of nonguaranteed elements - buyer's guide is generic information about life polices which must be provided at the time of application - policy summary is a description of features and benefits of the policy being issued and must be provided when the policy is delivered. Underwriting (Field underwriting (by agent) - application completed and signed - agent's report: agent's observation about the application that can assist in underwriting -premiums with application and conditional receipts underwriting ( company underwriting) - multiple sources of information: applications, consumer reports, MIB (Medical Information Burea) - Risk Classification: 3 types of risk : standard, substandard, preferred Underwriting (Federal Regulation) - Fair Credit Reporting Act: protect consumers against circulations of inaccurate or obsolete information - USE PATRIOT Act/ Anti-money Laundering and Suspicious Activity Reports Rules Premium Determination - 3 key Factors for life insurance: mortality, interest, and expense - Mode: the more frequently premium is paid, the higher the premium Policy Issue and Delivery Effective date of coverage - if the premium is not paid with the application, the agent must obtain the premium and a statement of continued good health at the time of the policy delivery Agent/ Producer a legal representative of an insurance company; the classification of producers usually includes agents and brokers' agents are the agents of the insurer Applicant of proposed insured a person applying for insurance Beneficiary a person who receives the benefits of an insurance policy Broker an insurance producer who is not appointed by an insurance company and who represents the client Death benefits the amount paid upon death of the insured in a life insurance policy Estate a person's net worth Insurance policy a contact between a policyowner (and/or insured) and an insurance company which agrees to pay insured or the beneficiary for loss caused by specific events. Insured a person covered by the insurance policy; may or may not be the policyowner insurer (principal) the company who issues an insurance policy Lapse policy termination due to nonpayment of premium Life insurance coverage on human lives Policyowner the person entitled to exercise the rights and privileges in the policy Premium the money paid to the insurance company for the insurance policy Underwriting is the risk selection and classification process Attained age the insured's age at the time the policy is issued or renewed cash value a policy's saving element or living benefit Face amount the amount of benefits stated in the life insurance policy Fixed life insurance contracts that offer guaranteed minimum or fixed benefits Deferred withheld 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 Mature the time when the policy's face amount is paid out upon the death of the insured or policy endowment Nonforfeiture values benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses Policy Maturity in life polices, 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 instrument that may trade for value (for example, stock, bonds options Suitability a requirement to determine if an insurance product is appropriate for a customer Variable life insurance contracts in which the cash value accumulate based upon a specific portfolio of stocks without guarantees of performance Types of insurance -term/temporary - permanent/ whole life Types of term policies -level term - annually renewable term - decreasing term - increasing term Whole Life insurance - straight life - limited payment - single premium Flexible- premium policies - adjustable life - universal life : options A, option B - Variable Life insurance - Variable Universal life insurance other polices Joint Life