Primerica - Life Insurance EXAM 70 QUESTIONS AND CORRECT ANSWERS 2023.

Primerica - Life Insurance EXAM 70 QUESTIONS AND CORRECT ANSWERS 2023. 1. What is insurance?: Transfer of the possibility of loss (risk) to an insurance company. 2. What is a risk?: The uncertainty of financial loss 3. There are two types of loss: Pure and Speculative 4. Which type of loss is insurable?: Pure 5. Why is Pure loss insurable?: Loss must be financial and uncertain. No financial gain can occur. 6. What causes loss?: Peril; such as fire, accident or flood 7. What causes a peril?: A hazard 8. What is a hazard?: Increases the likelihood of a loss; such as smoking 9. What is the concept called, that predicts the appropriate number of deaths that should occur within a similar group of people (exposure) within a given period of time?: Law of Large Numbers 10. What is adverse selection?: People in bad health keep their policy in force longer than people in good health 11. As an agent, you are a legal representative of the ______________.: company 12. The person who pays for the policy of insurance is the: policy owner 13. The _____________ is the person who receives the benefits from the insurance policy: beneficiary 14. The person covered by the insurance policy is the ____________.: insured 15. The insurance company is the ___________.: insurer 16. To buy insurance, the policyowner must have ______________ in the insured at the _________________________________________________.: insurable interest; time of purchase but not at time of insured's death. 17. The 5 recognizable areas of insurable interest are ___________.: 1. your own life 2. family members 3. business partners 4. key employee cial obligation. 1 / 11 Primerica - Life Insurance Exam 18. What is person called who holds a position of special trust and confidence?: Fiduciary 19. Waiver vs. Estoppel: Waiver is when you voluntarily give up your legal right. Estoppel is when you are denied the right to enforce a legal right that you have previously given up. Estoppel AKA The Loss of Defense 20. What are the business uses of life insurance?: 1. Key Employee 2. Buy and Sell Agreement 3. Cross Purchase Plan 4. Split Dollar Plan 21. Key Employee: Company is owner and Beneficiary Employee is Insured Premium NOT tax deductible to Company Third Party Ownership 22. Buy and Sell Agreement: NOT INSURANCE - A legal document that states WHO may purchase a deceased partners share of the business and for HOW MUCH MONEY Life Insurance can be used to fund a Buy and Sell Agreement Drawn up by an