Webce Life and Health exam with correct
answers
Representations and Warranties - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔A form of insurance company
that is owned by policyowners. May distribute policy dividends (non-taxable)
through participating policies.
,Independent Agency System - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔A basic insurance term referring to the possibility of
incurring a loss.
Law of Large Numbers - .......ANSWERS 🔷🖊✔✔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) - .......ANSWERS 🔷🖊✔✔A federal insurance program that
provides disability, death, and retirement benefits to covered workers and their
qualifying beneficiaries.
Agents vs. Brokers - .......ANSWERS 🔷🖊✔✔Two basic types of insurance producer:
an ______ represents a single insurer and a _____ sells policies from multiple insurers.
Reinsurance - .......ANSWERS 🔷🖊✔✔The process through which insurance
companies spread large risks among other insurers.
Domestic, Foreign, and Alien Insurers - .......ANSWERS 🔷🖊✔✔Insurers can be
categorized by their state of domicile. There are three categories, known as _____,
_____, and _____.
Stock Insurance Company - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔An unplanned reduction in economic value resulting
from the occurrence of a covered peril.
Medicare - .......ANSWERS 🔷🖊✔✔A federal insurance program that provides
medical care benefits to covered workers (retirees).
Underwriting - .......ANSWERS 🔷🖊✔✔The process by which an insurance company
assesses an application to determine if it represents an insurable risk.
Risk Management - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔Offer,
acceptance, consideration, competent parties, and legal purpose
Concealment - .......ANSWERS 🔷🖊✔✔The willful nondisclosure of material facts on
an application for the purpose of obtaining insurance.
Insurable Risk (5 Criteria) - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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" - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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)
answers
Representations and Warranties - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔A form of insurance company
that is owned by policyowners. May distribute policy dividends (non-taxable)
through participating policies.
,Independent Agency System - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔A basic insurance term referring to the possibility of
incurring a loss.
Law of Large Numbers - .......ANSWERS 🔷🖊✔✔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) - .......ANSWERS 🔷🖊✔✔A federal insurance program that
provides disability, death, and retirement benefits to covered workers and their
qualifying beneficiaries.
Agents vs. Brokers - .......ANSWERS 🔷🖊✔✔Two basic types of insurance producer:
an ______ represents a single insurer and a _____ sells policies from multiple insurers.
Reinsurance - .......ANSWERS 🔷🖊✔✔The process through which insurance
companies spread large risks among other insurers.
Domestic, Foreign, and Alien Insurers - .......ANSWERS 🔷🖊✔✔Insurers can be
categorized by their state of domicile. There are three categories, known as _____,
_____, and _____.
Stock Insurance Company - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔An unplanned reduction in economic value resulting
from the occurrence of a covered peril.
Medicare - .......ANSWERS 🔷🖊✔✔A federal insurance program that provides
medical care benefits to covered workers (retirees).
Underwriting - .......ANSWERS 🔷🖊✔✔The process by which an insurance company
assesses an application to determine if it represents an insurable risk.
Risk Management - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔Offer,
acceptance, consideration, competent parties, and legal purpose
Concealment - .......ANSWERS 🔷🖊✔✔The willful nondisclosure of material facts on
an application for the purpose of obtaining insurance.
Insurable Risk (5 Criteria) - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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" - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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 - .......ANSWERS 🔷🖊✔✔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)
