PA LIFE ACCIDENT HEALTH FINAL PAPER 2025/2026
QUESTIONS WITH SOLUTIONS RATED A+
✔✔A warranty is defined as - ✔✔a sworn statement of truth, guaranteed to be true.
✔✔A breach of warranty - ✔✔may void a contract.
✔✔Concealment is defined as - ✔✔the failure to disclose a material fact.
✔✔When an insurer voluntarily gives up the right to obtain information that they are
entitled to, - ✔✔they have made a waiver.
✔✔Insurable interest - ✔✔must exist at the time of application, but not necessarily at
the time of a claim.
✔✔Insurable interest may be based on - ✔✔economics or family relationships.
✔✔An insurable interest exists if - ✔✔someone would benefit if another person
continues to live.
✔✔Buying a life insurance policy - ✔✔creates an immediate estate.
✔✔When life insurance is used to pay estate taxes - ✔✔it is known as estate
conservation.
✔✔A life settlement contract is between - ✔✔the life insurance policyowner and a third
party.
✔✔The human life value approach was created to - ✔✔establish what a family would
lose in income upon the death of the sole or chief income provider.
✔✔The needs approach to life insurance does not - ✔✔consider future earnings.
✔✔Stockholders in small, privately held closed corporations often enter into -
✔✔buy/sell agreements with the corporation that are funded by life policies.
✔✔A policy that provides for business continuation in the event that a business partner
dies is based upon a - ✔✔cross-purchase buy/sell agreement.
✔✔A corporation may buy a policy on a shareholder to provide for stock redemption in
the event of the - ✔✔shareholder's death.
, ✔✔A stock redemption plan is an - ✔✔agreement whereby a corporation agrees to buy
back the stock of a deceased shareholder.
✔✔Examples of third-party policyownership include - ✔✔key person and partnership
insurance, as well as a policy written on the life of a spouse or minor child.
✔✔Under an executive bonus, - ✔✔the premium paid to the employee as a bonus is
deductible by the business and the amount paid to or for the employee is reportable as
taxable income to the employee.
✔✔When life insurance is purchased as an executive bonus for a corporate employee, -
✔✔the policy belongs to the employee.
✔✔Life insurance mortality tables are based upon - ✔✔people and time.
✔✔Life insurance premiums are based on - ✔✔mortality (death) plus company
expenses minus interest earned on company investments.
✔✔Agents (producers) are also known as - ✔✔field underwriters.
✔✔If a producer gives an applicant a conditional receipt and the underwriter rejects the
application, - ✔✔there is no coverage.
✔✔Conditional or binding receipts are used in - ✔✔life and health insurance.
✔✔Binders are used in - ✔✔property and casualty insurance.
✔✔A conditional receipt is not given to an applicant unless - ✔✔the initial premium has
been paid.
✔✔Applicants may backdate a life insurance application - ✔✔for up to a specified
number of months (usually 6 months) in order to obtain a lower premium.
✔✔An incomplete application is - ✔✔usually returned.
✔✔However, should the underwriter approve it, - ✔✔coverage begins and the company
has waived its ability to contest a claim.
✔✔The earliest that coverage could start would be - ✔✔the day of application,
assuming the applicant paid the first premium, had no conditions to fulfill, and had not
lied on the application.
✔✔Coverage can NEVER begin unless - ✔✔the premium has been paid.
QUESTIONS WITH SOLUTIONS RATED A+
✔✔A warranty is defined as - ✔✔a sworn statement of truth, guaranteed to be true.
✔✔A breach of warranty - ✔✔may void a contract.
✔✔Concealment is defined as - ✔✔the failure to disclose a material fact.
✔✔When an insurer voluntarily gives up the right to obtain information that they are
entitled to, - ✔✔they have made a waiver.
✔✔Insurable interest - ✔✔must exist at the time of application, but not necessarily at
the time of a claim.
✔✔Insurable interest may be based on - ✔✔economics or family relationships.
✔✔An insurable interest exists if - ✔✔someone would benefit if another person
continues to live.
✔✔Buying a life insurance policy - ✔✔creates an immediate estate.
✔✔When life insurance is used to pay estate taxes - ✔✔it is known as estate
conservation.
✔✔A life settlement contract is between - ✔✔the life insurance policyowner and a third
party.
✔✔The human life value approach was created to - ✔✔establish what a family would
lose in income upon the death of the sole or chief income provider.
✔✔The needs approach to life insurance does not - ✔✔consider future earnings.
✔✔Stockholders in small, privately held closed corporations often enter into -
✔✔buy/sell agreements with the corporation that are funded by life policies.
✔✔A policy that provides for business continuation in the event that a business partner
dies is based upon a - ✔✔cross-purchase buy/sell agreement.
✔✔A corporation may buy a policy on a shareholder to provide for stock redemption in
the event of the - ✔✔shareholder's death.
, ✔✔A stock redemption plan is an - ✔✔agreement whereby a corporation agrees to buy
back the stock of a deceased shareholder.
✔✔Examples of third-party policyownership include - ✔✔key person and partnership
insurance, as well as a policy written on the life of a spouse or minor child.
✔✔Under an executive bonus, - ✔✔the premium paid to the employee as a bonus is
deductible by the business and the amount paid to or for the employee is reportable as
taxable income to the employee.
✔✔When life insurance is purchased as an executive bonus for a corporate employee, -
✔✔the policy belongs to the employee.
✔✔Life insurance mortality tables are based upon - ✔✔people and time.
✔✔Life insurance premiums are based on - ✔✔mortality (death) plus company
expenses minus interest earned on company investments.
✔✔Agents (producers) are also known as - ✔✔field underwriters.
✔✔If a producer gives an applicant a conditional receipt and the underwriter rejects the
application, - ✔✔there is no coverage.
✔✔Conditional or binding receipts are used in - ✔✔life and health insurance.
✔✔Binders are used in - ✔✔property and casualty insurance.
✔✔A conditional receipt is not given to an applicant unless - ✔✔the initial premium has
been paid.
✔✔Applicants may backdate a life insurance application - ✔✔for up to a specified
number of months (usually 6 months) in order to obtain a lower premium.
✔✔An incomplete application is - ✔✔usually returned.
✔✔However, should the underwriter approve it, - ✔✔coverage begins and the company
has waived its ability to contest a claim.
✔✔The earliest that coverage could start would be - ✔✔the day of application,
assuming the applicant paid the first premium, had no conditions to fulfill, and had not
lied on the application.
✔✔Coverage can NEVER begin unless - ✔✔the premium has been paid.
