2-14 Insurance License Exam questions
and answers
401K Plan - answer-A qualified retirement plan in which the employee
can set aside a portion of their income with pre-tax dollards
Absolute Assigment vs. Collateral Asssigment - answer-Absolute: A
permanent and irrevocable transfer of rights and/or benefits by the
policyowner.
Collateral: A temporary and/or revocable transfer of benefits by the
policyowner.
Accelerated Death Benefit - answer-Policy provision that allows full or
partial payment of the policy's death benefit before the insured's death
if he/she is terminally ill.
Accidental Death Benefit - answer-An extra cost rider that requires the
insurance company to pay an additional benefit in the event that the
insured dies within 90 days of an accident as a direct result of the
accident.
Accumulate at Interest - answer-The Dividend Option where the
policyowner leaves the dividens with the insurer to invest and earn
interest
Adhesion - answer-Since the insurer created all the documents of the
contract, any ambiguities in the contract will be settled in favor of the
insured. Since the insurer wrote the contract they are stuck with it.
,Adverse Selection - answer-The tendency for less favorable risks to
seek or continue insurance to a greater extent than more favorable
risks
Agency Agreement or Agency Contract - answer-A legal document
containing the terms of the agreement between the agent and the
insurance company. It clearly defines what an agent can and cannot
do, and how he/she will be compensated.
Agent Authorities - answer-Expressed: Power or authority specifically
granted in writin to an agent by the insurance company in their Agency
Agreement.
Apparent: Power or authority that the public reasonably assumes an
agent has based upon his/her actions.
Implied: Power or authority that is not expressely granted by the
company but that an agent can assume or that are implied he/she has
in order to transact insurance business.
Agent/ Producer - answer-Anyone who sell or aids in the selling of
insurance. Legally represents the company
Agent's Report - answer-A written report from the agent submitted to
the insurer along with the application disclosing what the agent knows,
observed, or learned about the proposed insured's risks.
Aleatory - answer-Unequal exchange of value. One party may obtain a
far greater value than the other under the contract.
Annual Renewable Term - answer-A Term Life Insurance contract
which gives the policyower the option to revew the policy each year
without showing proof of insuranbility. Premiums increase at each
renewal.
,Annuitant - answer-The person that buys an annuity; may or may not
be an annuity's policyowner.
Annuity - answer-A contract/policy that guarantees to pay income for a
specified period of time or for the life of the annuitant. Designed to
prevent people from the outliving their savings.
Appointment - answer-Authorization of an agent/producer by an
insurer to represent the company
Blackout Period - answer-The period of time between the youngest
child turning 16 and the widow(er) reaching retirement age during
which no Social Security Survivor Benefits are paid to the surviving
spouse.
Buy-Sell Agreement - answer-Business use of Life Insurance where
partners in a business buy life insurance on each other. They agree
that when one of them dies the survivors have the right to purchase
the deceased partner's share of the business. The death benefit from
the insurance is used to finance the purchase.
Cash Nonforfeiture Option - answer-Policyowern receives a lump-sum
payment of the current cash value of the policy upon surrender of the
policy. The policy cannot be reinstated.
Cash Settlement Option - answer-Upon maturity of an insurance
policy the beneficary receives a lump-sum payment of the entire policy
proceeds due.
Cash Value - answer-The part of an insurance policy that is the equity
amount legally available to the policyowner. The cash value
, accumulates throughout the duration of the policy. Also known as
living benefit or policy savings.
Commissioner - answer-Public official in charge of the state's
department of insurance. Charged with regulating the insurance
industry in his/her state by enforcing the insurance laws.
Conditional - answer-Certain conditions must be met in order for policy
to pay-out
Condiitional Receipt - answer-An interim insuring agreement under
which the insurance company agrees to start coverage on the later of
either the date of application or the date of the medical exam IF the
proposed insured is found to be insurable on that date.
Consideration - answer-A necessary element of a contract; something
of value exchanged for the transfer of risk. Insured's consideration is
payment of premiums and truthful statements on the application.
Insurer's consideration is promises contained in the contract.
Contingent Beneficiary - answer-An alternate benefiary designated to
receive the policy proceeds in the event that the primary beneficiary
dies before the insured.
Contributory Plan vs. Noncontributory Plan - answer-Contributory:
Group insurance plan under which the employees contribute to the
payment of premiums.
Noncontributory: A group insurance plan in which the employer pays
all the premiums for the policy.
and answers
401K Plan - answer-A qualified retirement plan in which the employee
can set aside a portion of their income with pre-tax dollards
Absolute Assigment vs. Collateral Asssigment - answer-Absolute: A
permanent and irrevocable transfer of rights and/or benefits by the
policyowner.
Collateral: A temporary and/or revocable transfer of benefits by the
policyowner.
Accelerated Death Benefit - answer-Policy provision that allows full or
partial payment of the policy's death benefit before the insured's death
if he/she is terminally ill.
Accidental Death Benefit - answer-An extra cost rider that requires the
insurance company to pay an additional benefit in the event that the
insured dies within 90 days of an accident as a direct result of the
accident.
Accumulate at Interest - answer-The Dividend Option where the
policyowner leaves the dividens with the insurer to invest and earn
interest
Adhesion - answer-Since the insurer created all the documents of the
contract, any ambiguities in the contract will be settled in favor of the
insured. Since the insurer wrote the contract they are stuck with it.
,Adverse Selection - answer-The tendency for less favorable risks to
seek or continue insurance to a greater extent than more favorable
risks
Agency Agreement or Agency Contract - answer-A legal document
containing the terms of the agreement between the agent and the
insurance company. It clearly defines what an agent can and cannot
do, and how he/she will be compensated.
Agent Authorities - answer-Expressed: Power or authority specifically
granted in writin to an agent by the insurance company in their Agency
Agreement.
Apparent: Power or authority that the public reasonably assumes an
agent has based upon his/her actions.
Implied: Power or authority that is not expressely granted by the
company but that an agent can assume or that are implied he/she has
in order to transact insurance business.
Agent/ Producer - answer-Anyone who sell or aids in the selling of
insurance. Legally represents the company
Agent's Report - answer-A written report from the agent submitted to
the insurer along with the application disclosing what the agent knows,
observed, or learned about the proposed insured's risks.
Aleatory - answer-Unequal exchange of value. One party may obtain a
far greater value than the other under the contract.
Annual Renewable Term - answer-A Term Life Insurance contract
which gives the policyower the option to revew the policy each year
without showing proof of insuranbility. Premiums increase at each
renewal.
,Annuitant - answer-The person that buys an annuity; may or may not
be an annuity's policyowner.
Annuity - answer-A contract/policy that guarantees to pay income for a
specified period of time or for the life of the annuitant. Designed to
prevent people from the outliving their savings.
Appointment - answer-Authorization of an agent/producer by an
insurer to represent the company
Blackout Period - answer-The period of time between the youngest
child turning 16 and the widow(er) reaching retirement age during
which no Social Security Survivor Benefits are paid to the surviving
spouse.
Buy-Sell Agreement - answer-Business use of Life Insurance where
partners in a business buy life insurance on each other. They agree
that when one of them dies the survivors have the right to purchase
the deceased partner's share of the business. The death benefit from
the insurance is used to finance the purchase.
Cash Nonforfeiture Option - answer-Policyowern receives a lump-sum
payment of the current cash value of the policy upon surrender of the
policy. The policy cannot be reinstated.
Cash Settlement Option - answer-Upon maturity of an insurance
policy the beneficary receives a lump-sum payment of the entire policy
proceeds due.
Cash Value - answer-The part of an insurance policy that is the equity
amount legally available to the policyowner. The cash value
, accumulates throughout the duration of the policy. Also known as
living benefit or policy savings.
Commissioner - answer-Public official in charge of the state's
department of insurance. Charged with regulating the insurance
industry in his/her state by enforcing the insurance laws.
Conditional - answer-Certain conditions must be met in order for policy
to pay-out
Condiitional Receipt - answer-An interim insuring agreement under
which the insurance company agrees to start coverage on the later of
either the date of application or the date of the medical exam IF the
proposed insured is found to be insurable on that date.
Consideration - answer-A necessary element of a contract; something
of value exchanged for the transfer of risk. Insured's consideration is
payment of premiums and truthful statements on the application.
Insurer's consideration is promises contained in the contract.
Contingent Beneficiary - answer-An alternate benefiary designated to
receive the policy proceeds in the event that the primary beneficiary
dies before the insured.
Contributory Plan vs. Noncontributory Plan - answer-Contributory:
Group insurance plan under which the employees contribute to the
payment of premiums.
Noncontributory: A group insurance plan in which the employer pays
all the premiums for the policy.
