Webce Life And Health Exam With 100% Correct Answers 2023

WEBCE LIFE AND HEALTH EXAM WITH 100% CORRECT ANSWERS 2023 Representations and Warranties - Correct Answer-Representations are statements the applicant makes on an application that are deemed to be true to the applicant's best knowledge. Warranties are statements the insurer makes in the contract. Underwriting vs. Actuarial Departments - Correct Answer-Two related insurance company functions. Through the process of _________, applications are assessed for insurability and to assign premium rates. The ________ department analyzes data to help estimate future losses and to produce rate tables. Managerial System vs. General Agency System - Correct Answer-Two variations of the career agency system in which producers represent a single company. One is headed by a company employee called a general manager (GM), the other by an independent contractor called a general agent (GA). Fraternal Insurance Company - Correct Answer-A non-profit form of insurance provider sponsored by an organization of people who share a common ethnic, religious, or vocational affiliation. Peril and Hazard - Correct Answer-Two related general insurance terms: Peril is the immediate cause of a loss (and the event that is insured against). Hazard is any condition that increases the risk of incurring a loss. Contract of adhesion - Correct Answer-A type of contract in which one party (the offeror) drafts the terms that must be accepted as-is by the offeree. Insurance policies are this type. Mutual Insurance Company - Correct Answer-A form of insurance company that is owned by policyowners. May distribute policy dividends (non-taxable) through participating policies. Independent Agency System - Correct Answer-An insurance distribution system in which the manager and producers are fully independent and not affiliated with any single insurer. Buyer's Guide and Policy Summary - Correct Answer-Two related disclosure documents that are required by most states to be presented to life and health insurance applicants at some point during the buying process. Risk - Correct Answer-A basic insurance term referring to the possibility of incurring a loss. Law of Large Numbers - Correct Answer-A mathematical principle that is the basis for predicting the odds of a loss occurring in a certain population in any given year. Social Security (OASDI) - Correct Answer-A federal insurance program that provides disability, death, and retirement benefits to covered workers and their qualifying beneficiaries. Agents vs. Brokers - Correct Answer-Two basic types of insurance producer: an ______ represents a single insurer and a _____ sells policies from multiple insurers. Reinsurance - Correct Answer-The process through which insurance companies spread large risks among other insurers. Domestic, Foreign, and Alien Insurers - Correct Answer-Insurers can be categorized by their state of domicile. There are three categories, known as _____, _____, and _____. Stock Insurance Company - Correct Answer-A form of insurance company that is owned by stockholders who may or may not also be policyowners. May distribute stock dividends (taxable). Admitted Insurer - Correct Answer-An insurer that has a certificate of authority in a given state is said to be an___________ insurer in that state. Express, Implied, and Apparent Authority - Correct Answer-Express authority—The right to sign an application as an agent for the insurer. Implied authority—Using a computer program to identify insurance needs and to recommend solutions. Apparent authority—Advising the applicant to not disclose on the application any important health facts that might reduce his or her insurability. Indemnity vs. Valued Contract - Correct Answer-Two forms of insurance contract. An indemnity contract bases policy benefits on reimbursement of actual losses. A valued contract bases benefits on a stated amount without regard for the value of the loss. Loss - Correct Answer-An unplanned reduction in economic value resulting from the occurrence of a covered peril. Medicare - Correct Answer-A federal insurance program that provides medical care benefits to covered workers (retirees). Underwriting - Correct Answer-The process by which an insurance company assesses an application to determine if it represents an insurable risk. Risk Management - Correct Answer-The natural process by which people contend with the perils faced daily, of which there are five common techniques. The five basic elements of a valid contract - Correct Answer-Offer, acceptance, consideration, competent parties, and legal purpose Concealment - Correct Answer-The willful nondisclosure of material facts on an application for the purpose of obtaining insurance. Insurable Risk (5 Criteria) - Correct Answer-Loss must be definable and measurable. The covered peril must be accidental or outside the insured's control. The risk must be shared by a large group of similar risks. The loss must not be catastrophic. The risk must not be generally excluded from coverage. Needs Approach - Correct Answer-The needs approach to determining life insurance needs is based on a detailed review of a person's specific situation. It examines personal and family income, liabilities, and assets, as well as future financial goals, to calculate the right amount of life insurance. Bring-Back Rule - Correct Answer-In estate planning, this rule requires life insurance policies transferred from the insured within 3 years before death to be returned to the decedent's estate for valuation purposes. Life Insurance "Living Benefits" - Correct Answer-Living benefits are made possible by the policy's cash value, which is always available to the policyowner through policy loans, withdrawals, and partial surrenders. The funds may be used for any purpose. Key Person Life Insurance - Correct Answer-If a key employee ends his or her employment, the employer can continue the policy in force. However, many employers choose to: sell the policy to the insured for an amount equal to its cash value surrender the policy or change insureds if allowed by the insurance company and applicable state law Annuity - Correct Answer-An insurance contract between a person and an insurer to distribute an accumulated sum of money over a certain period, including the person's lifetime. Annuities come in many forms, but they all have two common purposes: to accumulate money on a tax-deferred basis to distribute the accumulated money as income in a guaranteed amount for a guaranteed period (including the annuitant's life) Decreasing Term Life Insurance - Correct Answer-This form of term life features a death benefit that diminishes over time and premium that remains level for the term of the policy. Fully Insured Status (Social Security) - Correct Answer-To be considered fully insured, a worker must have 40 quarters of coverage. A fully insured worker is eligible for disability, retirement, and death benefits. Cross-Purchase Buy-Sell Agreement - Correct Answer-A type of buy-sell agreement in which each owner purchases a life insurance policy on each of the other owners. ERISA - Correct Answer-The Employee Retirement Income Security Act of 1974 (ERISA) protects the rights of employees covered under an employer-sponsored plan by stipulating minimum participation, vesting, and funding requirements. Irrevocable Beneficiary - Correct Answer-This beneficiary designation cannot be changed by the policyowner without that beneficiary's permission. Guaranteed Insurability Rider - Correct Answer-This life policy rider guarantees that additional coverage can be added to a whole life policy even if the insured has become uninsurable. Annuity Beneficiary - Correct Answer-The person the annuity owner chooses to receive the annuity contract's values if either the owner or the annuitant dies before annuitization. Whole Life Insurance - Correct Answer-Whole life insurance features a guaranteed cash value, a fixed guaranteed death benefit, level premiums, and coverage that can remain in effect as long as the insured lives (up to age 120). Its most basic form is called straight (or ordinary) whole life insurance. Buy-Sell Agreement - Correct Answer-A legal agreement through which two or more owners of a business arrange for the disposition of each owner's share of the business upon death. Expense Charge (Load Factor) - Correct Answer-The load factor reflects the costs the insurer expects to incur on the policy. In determining its load factor, an insurer is generally guided by three objectives: to cover total operating costs to provide a safety margin to contribute to profits or surplus Term Life Insurance - Correct Answer-This basic form of life insurance provides temporary protection and does not include a cash value while the insured is alive. Insurable Interest - Correct Answer-The financial interest a policyowner has in a person or property being insured, justifying the purchase of insurance. Annuitization - Correct Answer-The process through which a sum of money is converted into periodic payments through an annuity contract. Different for every age and annuity income option, annuity purchase rates are defined in terms of income dollars per $1,000 of accumulation. Variable Annuity - Correct Answer-An investment-focused annuity whose contract values vary in response to the contract's underlying assets and are therefore not guaranteed. Accelerated Benefit Rider - Correct Answer-Also available through a policy provision, the typical accelerated benefit rider allows up to 50 percent of the death benefit to be available to the eligible insured, though some policies allow up to 100 percent. This money may be used for any purpose. Third-Party Policy Ownership - Correct Answer-A policy ownership situation in which the life insurance policyowner and insured are two different people. In third-party ownership, the three parties to the contract are: the insurer, the owner, and the insured Premium Receipt - Correct Answer-Given to the applicant in return for the initial premium, this item provides interim coverage during underwriting. There are two basic types. The conditional receipt provides interim coverage only as long as the applicant is found to be insurable. The binding receipt (also called temporary insurance agreement) provides coverage regardless of insurability. Policy Dividend Options - Correct Answer-The five different ways in which a participating whole life policyowner may elect to receive policy dividends. Policy dividends are not guaranteed, but when they are paid, there are five common ways the policyowner may elect to receive them: take the cash reduce the premium accumulate at interest buy paid-up life insurance buy one-year term insurance Right to Examine ("Free Look") Provision - Correct Answer-his contract provision gives new policyowners a certain time within which to decide whether to keep the policy or to return it for a full refund. The free-look period begins when the policy is delivered to the owner. While 10 days is the shortest free-look period permitted in any state, some states require a longer freelook period in certain situations. Viatical Settlement - Correct Answer-An arrangement in which a noninsurance company or group of investors purchases a life insurance policy from a chronically or terminally ill insured. Viatical settlements provide chronically or terminally ill insureds a sum of money greater than their policy's cash value, making it more financially advantageous than simply surrendering the policy. How much is actually paid depends on factors that include the estimated life expectancy. Individual Retirement Account (IRA) - Correct Answer-The basic form of individual retirement plan available to individuals. These plans are also available to employees within certain types of small-employer retirement plans. Fair Credit Reporting Act (FCRA) - Correct Answer-This federal law sets forth procedures that credit reporting companies must follow to ensure confidentiality, accuracy of reporting, and proper use of credit information. The FCRA requires insurers that seek a credit report to notify the applicant about the request within three days. The requestor must disclose what the report will cover and must notify the applicant that s/he may request a summary of what the requestor learned in the credit report. The summary must be provided within five business days of the request. Immediate Annuity - Correct Answer-An immediate annuity is purchased only to distribute guaranteed income. Because immediate annuities are bought with a lumpsum single premium payment, they are often referred to as a single premium immediate annuities, or SPIAs.) Cash Value Withdrawal - Correct Answer-How a universal life policyowner can access the policy's cash value for living benefit purposes. Traditional policy loans are not available with UL insurance. Instead, UL policyowners who want to access their cash value may do so only through a cash value withdrawal, which removes money from the cash value and immediately reduces the policy's face amount by that same amount. STOLI (stranger-originated life insurance) - Correct Answer-A disreputable form of thirdparty ownership of life insurance in which an investor(s) arranges for a consumer to buy a life insurance policy that is then purchased by the investor(s). Variable Universal Life Insurance (VUL) - Correct Answer-This flexible permanent life insurance combines the premium flexibility of universal life insurance and the investment opportunity of variable life insurance. Like variable life, VUL policies invest their premiums in separate (nonguaranteed) investment accounts. Like universal life, VUL policies feature premium flexibility; the policy remains in force as long as its cash value covers the monthly insurance deductions. To sell VUL insurance, a producer must hold both a state life insurance license and a FINRA securities registration. Currently Insured Status (Social Security) - Correct Answer-This Social Security insured status makes workers eligible for death benefits only. To be considered currently insured, a worker must have 6 quarters of coverage in the 13-quarter period before death. A currently insured worker is not eligible for retirement or disability benefits. Suicide Clause - Correct Answer-This life insurance policy provision excludes coverage if the cause of the insured's death within the first two policy years is suicide. Equity-Indexed Life Insurance (EIL) - Correct Answer-This newer form of flexible permanent life insurance ties the policy's interest rate to a specific equity index (such as the S&P 500). Equity-indexed life insurance can be one of two basic forms: universal life, where the premium payments are flexible whole life, where the premium payments are fixed Although the interest rate is derived through a stock index, EIL is regulated as a fixed interest product. Cash Value Loan - Correct Answer-The basic way in which the owner of a whole life insurance policy may access the policy's cash value while the insured is alive. Cash values loans are loans from the insurer, which uses the cash value as loan collateral. With traditional whole life, the entire cash surrender value (less any prior policy debt) may be borrowed. With variable life insurance, loans are usually limited to 90% or less of the cash value. Rollover IRA - Correct Answer-A form of IRA into which a participant's retirement plan funds are transferred after the participant leaves the company. An IRA rollover is the process through which retirement funds are transferred tax free from one IRA to another. Rollover IRAs have no contribution limit. Strict rules govern the transfer, including the need to complete the transaction within 60 days of distribution. Guaranteed Minimum Withdrawal Benefit (GMWB) - Correct Answer-A variable annuity rider that guarantees that the owner can withdraw a minimum amount annually without a surrender charge. Annual withdrawals are usually limited to a specified percentage, such as 5 to 10 percent, of total premiums paid. Indexed Whole Life - Correct Answer-A form of whole life insurance that ties its death benefit and premiums to changes in a specified index, most commonly the consumer price index (CPI). An indexed whole life policy's face amount increases automatically with CPI increases. Insurers use one of two common pricing methods to cover face amount increases: The premium increases with each increase in the face amount. The premium remains level but is higher at policy issue than the first method. Endowment Policy - Correct Answer-A form of life insurance that matures ("endows") at an age younger than age 120, typically age 65, and pays the policy face amount if the insured is alive at that age. Beneficiary - Correct Answer-In life insurance, this is a person or entity identified as an intended recipient of the policy's death benefit. Nonforfeiture Options - Correct Answer-The different ways a policyowner can receive a whole life insurance policy's cash value upon policy surrender. There are three standard life insurance nonforfeiture options: cash surrender option (lump sum cash payment) extended term insurance option (coverage continues for a limited time as term insurance with the same face amount) reduced paid-up insurance option (reduced permanent coverage becomes fully paid up) Field Underwriting - Correct Answer-Refers to the activities producers undertake when completing insurance applications. These activities provide insurers with additional information that is important to the underwriting process. Increasing Term Life Insurance - Correct Answer-This form of term life features a death benefit that rises over time. The increasing term insurance death benefit increases over the term to a preset amount or at a preset rate. It is most commonly used as a "cost-of-living increase" rider on a permanent life insurance policy. The premium normally remains level, though at a higher level than either level or decreasing term. 10-Year Certain and Life Annuity Income Option - Correct Answer-An annuity payment option that provides guaranteed income for the life of a single annuitant, with payments guaranteed for 10 years. Sources of Underwriting Information - Correct Answer-These various sources of information about the applicant help the underwriter assess the applicant's insurance risk