Key Concepts in Life Insurance and Annuities Exam
Questions With Accurate Answers.
Absolute Assignment - accurate answers-A permanent and irrevocable
transfer of rights and/or benefits by the policyowner.
Collateral Assignment - accurate answers-A temporary and/or revocable
transfer of benefits by the policyowner.
Accelerated Death Benefit - accurate answers-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 - accurate answers-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 - accurate answers-The Dividend Option where the
policyowner leaves the dividends with the insurer to invest and earn interest.
Adhesion - accurate answers-Since the insurer created all the documents of
the contract, any ambiguities in the contract will be settled in favor of the
insured.
Adverse Selection - accurate answers-The tendency for less favorable risks to
seek or continue insurance to a greater extent than more favorable risks.
Agency Agreement or Agency Contract - accurate answers-A legal document
containing the terms of the agreement between the agent and the insurance
company.
Agent Authorities - accurate answers-Expressed: Power or authority
specifically granted in writing 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 expressly 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 - accurate answers-Anyone who sells or aids in the selling of
insurance. Legally represents the company.
Agent's Report - accurate answers-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 - accurate answers-Unequal exchange of value. One party may obtain
a far greater value than the other under the contract.
Annual Renewable Term - accurate answers-A Term Life Insurance contract
which gives the policyowner the option to renew the policy each year without
showing proof of insurability. Premiums increase at each renewal.
Annuitant - accurate answers-The person that buys an annuity; may or may
not be an annuity's policyowner.
Annuity - accurate answers-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 outliving their savings.
Appointment - accurate answers-Authorization of an agent/producer by an
insurer to represent the company.
Blackout Period - accurate answers-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 - accurate answers-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 - accurate answers-Policyowner receives a lump-
sum payment of the current cash value of the policy upon surrender of the
policy. The policy cannot be reinstated.
Questions With Accurate Answers.
Absolute Assignment - accurate answers-A permanent and irrevocable
transfer of rights and/or benefits by the policyowner.
Collateral Assignment - accurate answers-A temporary and/or revocable
transfer of benefits by the policyowner.
Accelerated Death Benefit - accurate answers-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 - accurate answers-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 - accurate answers-The Dividend Option where the
policyowner leaves the dividends with the insurer to invest and earn interest.
Adhesion - accurate answers-Since the insurer created all the documents of
the contract, any ambiguities in the contract will be settled in favor of the
insured.
Adverse Selection - accurate answers-The tendency for less favorable risks to
seek or continue insurance to a greater extent than more favorable risks.
Agency Agreement or Agency Contract - accurate answers-A legal document
containing the terms of the agreement between the agent and the insurance
company.
Agent Authorities - accurate answers-Expressed: Power or authority
specifically granted in writing 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 expressly 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 - accurate answers-Anyone who sells or aids in the selling of
insurance. Legally represents the company.
Agent's Report - accurate answers-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 - accurate answers-Unequal exchange of value. One party may obtain
a far greater value than the other under the contract.
Annual Renewable Term - accurate answers-A Term Life Insurance contract
which gives the policyowner the option to renew the policy each year without
showing proof of insurability. Premiums increase at each renewal.
Annuitant - accurate answers-The person that buys an annuity; may or may
not be an annuity's policyowner.
Annuity - accurate answers-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 outliving their savings.
Appointment - accurate answers-Authorization of an agent/producer by an
insurer to represent the company.
Blackout Period - accurate answers-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 - accurate answers-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 - accurate answers-Policyowner receives a lump-
sum payment of the current cash value of the policy upon surrender of the
policy. The policy cannot be reinstated.
