Indiana Life and Health Insurance Exam 89 Questions with
Verified Answers
Participating Insurance Policy - CORRECT ANSWER may pay dividends to the
policyowner
Material Misrepresentation - CORRECT ANSWER misstatement to a question
asked in the application process; death benefit claim will likely be denied
Law of Large Numbers - CORRECT ANSWER the larger a group becomes, the easier
it is to predict losses; used to predict certain types of losses and set appropriate
premiums
Substandard Risk - CORRECT ANSWER results in higher premium
Standard Risk - CORRECT ANSWER results in standard premium
Preferred Risk - CORRECT ANSWER results in lower premium
Expense Loading - CORRECT ANSWER combined with premiums to spread the
operating costs of a business to all insureds
Net Premium - CORRECT ANSWER premiums without expense loading
Concealment - CORRECT ANSWER occurs when a person withholds a material fact
that is crucial to making a decision; in insurance, this involves withholding
information that would be crucial to underwriting decisions
Warranty - CORRECT ANSWER a statement guaranteed to be true
Representation - CORRECT ANSWER a statement true to the best of an applicant's
knowledge
3 Basic Types of Term Life Insurance - CORRECT ANSWER level, increasing, and
decreasing
, Level Term - CORRECT ANSWER death benefit doesn't change throughout the life
of the policy
Annually Renewable Term (ART) - CORRECT ANSWER premium increases annually
according to attained age; policy may be guaranteed to be renewable each
without proof of insurability
Re-entry Option - CORRECT ANSWER the insured, upon the end of a term policy
with guaranteed renewable option, may qualify for a discounted premium rate
with proof of insurability
Decreasing Term - CORRECT ANSWER death benefit decreases each year over
duration of the policy term; typically used when the amount of needed protection
is time sensitive, or decreases over time
Increasing Term - CORRECT ANSWER death benefit increases each year over
duration of the policy term (usually by specific amount or percentage of original
amount); often used by insurance companies to fund certain riders that provide a
refund of premiums of a gradual increase in total coverage, such as the cost of
living or return of premium riders
Convertible Term - CORRECT ANSWER provides the policy owner with the right to
convert the policy to a permanent insurance policy without evidence of
insurability; premium will be based on the insured's attained age at the time of
conversion
Continuous Premium (Straight Life or Ordinary Life) - CORRECT ANSWER basic
whole life policy; will typically have the lowest annual premium
Limited Payment - CORRECT ANSWER premiums for coverage paid-up before age
100; higher premium and cash value builds up faster; 20-pay life, life paid-up at 65
(LP-65);
Single Premium Whole Life (SPWL) - CORRECT ANSWER provides level death
benefit to the insured's age 100 for a one-time, lump-sum payment; policy
completely paid-up after one premium and generates immediate cash
Verified Answers
Participating Insurance Policy - CORRECT ANSWER may pay dividends to the
policyowner
Material Misrepresentation - CORRECT ANSWER misstatement to a question
asked in the application process; death benefit claim will likely be denied
Law of Large Numbers - CORRECT ANSWER the larger a group becomes, the easier
it is to predict losses; used to predict certain types of losses and set appropriate
premiums
Substandard Risk - CORRECT ANSWER results in higher premium
Standard Risk - CORRECT ANSWER results in standard premium
Preferred Risk - CORRECT ANSWER results in lower premium
Expense Loading - CORRECT ANSWER combined with premiums to spread the
operating costs of a business to all insureds
Net Premium - CORRECT ANSWER premiums without expense loading
Concealment - CORRECT ANSWER occurs when a person withholds a material fact
that is crucial to making a decision; in insurance, this involves withholding
information that would be crucial to underwriting decisions
Warranty - CORRECT ANSWER a statement guaranteed to be true
Representation - CORRECT ANSWER a statement true to the best of an applicant's
knowledge
3 Basic Types of Term Life Insurance - CORRECT ANSWER level, increasing, and
decreasing
, Level Term - CORRECT ANSWER death benefit doesn't change throughout the life
of the policy
Annually Renewable Term (ART) - CORRECT ANSWER premium increases annually
according to attained age; policy may be guaranteed to be renewable each
without proof of insurability
Re-entry Option - CORRECT ANSWER the insured, upon the end of a term policy
with guaranteed renewable option, may qualify for a discounted premium rate
with proof of insurability
Decreasing Term - CORRECT ANSWER death benefit decreases each year over
duration of the policy term; typically used when the amount of needed protection
is time sensitive, or decreases over time
Increasing Term - CORRECT ANSWER death benefit increases each year over
duration of the policy term (usually by specific amount or percentage of original
amount); often used by insurance companies to fund certain riders that provide a
refund of premiums of a gradual increase in total coverage, such as the cost of
living or return of premium riders
Convertible Term - CORRECT ANSWER provides the policy owner with the right to
convert the policy to a permanent insurance policy without evidence of
insurability; premium will be based on the insured's attained age at the time of
conversion
Continuous Premium (Straight Life or Ordinary Life) - CORRECT ANSWER basic
whole life policy; will typically have the lowest annual premium
Limited Payment - CORRECT ANSWER premiums for coverage paid-up before age
100; higher premium and cash value builds up faster; 20-pay life, life paid-up at 65
(LP-65);
Single Premium Whole Life (SPWL) - CORRECT ANSWER provides level death
benefit to the insured's age 100 for a one-time, lump-sum payment; policy
completely paid-up after one premium and generates immediate cash
