PRIMERICA LIFE INSURANCE EXAM QUESTIONS AND ANSWERS 100% well verified byDOCWISE

insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? A. Mutual B. Reciprocal C. Nonprofit service organization D. Stock The answer is: A. Mutual 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 implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe? A. Retention B. Reduction C. Transfer D. Avoidance The answer is: B. Reduction The insured's change in lifestyle and habits would likely reduce the chances of health problems In insurance, an offer is usually made when A. An applicant submits an application to the insurer B. The insurer approves the application and receives the initial premium C. The agent hands the policy to the policyholder D. An agent explains a policy to a potential applicant The answer is: A. An applicant submits an application to the insurer In insurance, the offer is usually made by the applicant in the form of an application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy The causes of loss insured against in an insurance policy are known as A. Perils B. Losses C. Risks D. Hazards The answer is: A. Perils NURSINGENIUS 2 Perils are the causes of loss insured against in an insurance policy What documentation grants express authority to an agent? A. Agents contract with the principal B. Agents insurance license C. Fiduciary contract D. State provisions The answer is: A. Agents contract with the principal The principal grants authority to an agent through the agent's contract Which of the following best describes an insurance company that has been formed under the laws of this state? A. Domestic B. Sovereign C. Alien D. Foreign The answer is: A. Domestic A company is domestic when doing business within the state in which it is incorporated Which of the following factors is NOT considered by an underwriter when determining the premium rates for an individual seeking insurance? A. Medical history B. Sex C. Age D. Race The answer is: D. Race Age, medical history, and sex provide sound statistical date for determining the probability of loss. Race, religion, sexual orientation, etc. Are the factors that cannot be used because there is not sound statistical data to show that they effect the probability of loss; therefore, they are considered to be discriminatory In insurance transactions, fiduciary responsibility means A. Handling insurer funds in a trust capacity B. Maintaining good credit record C. Being liable with respect to payment of claims D. Commingling premiums with agents personal funds The answer is: A. Handling insurer funds in a trust capacity An agents fiduciary responsibility includes handling insurer funds in a trust capacity The authority granted to an agent through the agent's contract is referred to as NURSINGENIUS 3 A. Absolute authority B. Express authority C. Apparent authority D. Implied authority The answer is: B. Express authority Express powers are written into the contract between the insurer and the agent Insurance policies are not drawn up though negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe? A. Unilateral B. Conditional C. Personal D. Adhesion The answer is: D. Adhesion 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 Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting? A. Reciprocal B. Fraternal C. Stock D. Mutual The answer is: C. Stock Only stock insurance companies are owned and controlled by stockholders Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company? A. Subrogation B. Warranty C. Aleatory D. Adhesion The answer is: C. Aleatory An insurance contract is an aleatory contract in that it requires a relatively small amount of premium for a large risk When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? NURSINGENIUS 4 A. Legal purpose B. Contract of adhesion C. Acceptance D. Consideration The answer is: D. Consideration Consideration is something of value that each party gives to the other. The consideration on the part of the insured is the payment of premium and the representations made in the application Which of the following would qualify as a competent party in an insurance contract? A. The applicant is intoxicated at the time of application B. The applicant is 12 year old student C. The applicant is under the influence of a mind-impairing medication at the time of application D. The applicant has a prior felony conviction The answer is: D. The applicant has a prior felony conviction When an insurer and insured enter into a contract, both parties must be legal of age and mentally competent. It is legal for a person convicted of a felony to buy an insurance contract. An intoxicated person, however, may not be mentally competent, a 12 year old student is considered to be underage in most states and a person under mind-impairing medication most likely would not be mentally competent An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? A. Representation B. Adhesion C. Consideration D. Good health The answer is: C. Consideration The binding force in any contract is consideration. Consideration on the part of the insureds the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the even of loss Which of the following is a primary source of information used for insurance underwriting? A. Application B. Applicant interviews C. Medical records. D. Private investigations The answer is: A. Application The application contains most of the information used for underwriting purposes. This is why its completeness and accurarcy are so critical NURSINGENIUS 5 Which of the following is the best reason to purchase life insurance rather than annuities? A. To liquidate a sum of money over a period of year B. To create regular income payments C. To liquidate a sum money over a lifetime D. To create an estate The answer is: D. To create an estate With insurance, the death creates an immediate estate should the insured die A producer is helping a married couple determine the financial needs of their children in the event of one or both should die prematurely. This is a personal use of life insurance known as A. Survivorship insurance B. Juvenile