Exam FX Life Insurance UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Accelerated Benefits - CORRECT ANSWER - Riders attached to life insurance policies
that allow death benefits to be used to cover nursing or convalescent home expenses.
Accidental Death Benefits - CORRECT ANSWER - A policy rider that states that the
cause of death will be analyzed to determine if it complies with the policy description of
accidental death.
Accidental Death Insurance - CORRECT ANSWER - An insurance policy that provides
payment if the insured's death is the result of an accident.
Accumulation Period - CORRECT ANSWER - The time before an annuitant's retirement
during which the annuitant is making payments or investments in an annuity.
Actual Cash Value (ACV) - CORRECT ANSWER - The required amount to pay damages
for property loss. This amount is calculated based on the property's current replacement value
minus depreciation.
Adhesion - CORRECT ANSWER - A contract offered on a "take-it or leave-it" basis by an
insurer, in which the insured's only option is to either accept or reject the contract. Any
ambiguities in the contract will be settled in favor of the insured.
Adjustable Life - CORRECT ANSWER - Life insurance that permits changes in the face
amount, premium amount, period of protection, and the duration of the premium payment period.
Adjuster - CORRECT ANSWER - A representative of an insurance company who
investigates and acts on the behalf of the company to obtain agreements for the amount of the
insurance claim.
,Administrator - CORRECT ANSWER - An individual appointed by a court as a fiduciary
to settle the financial affairs and estate of a deceased person.
Admitted (Authorized) Insurer - CORRECT ANSWER - An insurance company
authorized and licensed to transact business in a particular state.
Adverse Selection - CORRECT ANSWER - The tendency of risks with higher probability
of loss to purchase and maintain insurance more often than the risks who present lower
probability.
Agency - CORRECT ANSWER - An insurance sales office or company.
Agent - CORRECT ANSWER - An individual who is licensed to sell, negotiate, or effect
insurance contracts on behalf of an insurer.
Agent Appointment - CORRECT ANSWER - The authorization of an agent to act for or
represent an insurer.
Agent's Authority - CORRECT ANSWER - Special powers granted to an agent by his or
her agency contract.
Aleatory - CORRECT ANSWER - A contract in which participating parties exchange
unequal amounts. Insurance contracts are aleatory in that the amount the insured will pay in
premiums is unequal to the amount the insurer will pay in the event of a loss.
Alien Insurer - CORRECT ANSWER - An insurance company that is incorporated outside
the United States.
, Annual Statement - CORRECT ANSWER - A detailed financial report that an insurance
company must submit every year to the insurance department of state(s) in which it conducts
business.
Annuity - CORRECT ANSWER - A contract that provides income for a specified period
of years, or for life.
Apparent Authority - CORRECT ANSWER - The appearance or the assumption of
authority based on the actions, words, or deeds of the principal or because of circumstances the
principal created.
Applicant - CORRECT ANSWER - A person making application for, or offering
him/herself or another to be insured under an insurance contract.
Application - CORRECT ANSWER - A document that provides information for
underwriting purposes. After the policy is issued, any unanswered questions are considered
waived by the insurer.
Assignment - CORRECT ANSWER - The transfer of ownership rights of a life insurance
policy from one person to another.
Attained Age - CORRECT ANSWER - The age of the insured at a determined date.
Attending Physician's Statement (APS) - CORRECT ANSWER - A statement usually
obtained from the applicant's doctor.
Authorized (Admitted) Insurer - CORRECT ANSWER - An insurance company
authorized and licensed to transact business in a particular state.
Avoidance - CORRECT ANSWER - A method of dealing with risk by deliberately
keeping away from it (e.g. if a person wanted to avoid the risk of being killed in an airplane
crash, he/she might choose never to fly in a plane).
ACTUAL Exam Questions and CORRECT
Answers
Accelerated Benefits - CORRECT ANSWER - Riders attached to life insurance policies
that allow death benefits to be used to cover nursing or convalescent home expenses.
Accidental Death Benefits - CORRECT ANSWER - A policy rider that states that the
cause of death will be analyzed to determine if it complies with the policy description of
accidental death.
Accidental Death Insurance - CORRECT ANSWER - An insurance policy that provides
payment if the insured's death is the result of an accident.
Accumulation Period - CORRECT ANSWER - The time before an annuitant's retirement
during which the annuitant is making payments or investments in an annuity.
Actual Cash Value (ACV) - CORRECT ANSWER - The required amount to pay damages
for property loss. This amount is calculated based on the property's current replacement value
minus depreciation.
Adhesion - CORRECT ANSWER - A contract offered on a "take-it or leave-it" basis by an
insurer, in which the insured's only option is to either accept or reject the contract. Any
ambiguities in the contract will be settled in favor of the insured.
Adjustable Life - CORRECT ANSWER - Life insurance that permits changes in the face
amount, premium amount, period of protection, and the duration of the premium payment period.
Adjuster - CORRECT ANSWER - A representative of an insurance company who
investigates and acts on the behalf of the company to obtain agreements for the amount of the
insurance claim.
,Administrator - CORRECT ANSWER - An individual appointed by a court as a fiduciary
to settle the financial affairs and estate of a deceased person.
Admitted (Authorized) Insurer - CORRECT ANSWER - An insurance company
authorized and licensed to transact business in a particular state.
Adverse Selection - CORRECT ANSWER - The tendency of risks with higher probability
of loss to purchase and maintain insurance more often than the risks who present lower
probability.
Agency - CORRECT ANSWER - An insurance sales office or company.
Agent - CORRECT ANSWER - An individual who is licensed to sell, negotiate, or effect
insurance contracts on behalf of an insurer.
Agent Appointment - CORRECT ANSWER - The authorization of an agent to act for or
represent an insurer.
Agent's Authority - CORRECT ANSWER - Special powers granted to an agent by his or
her agency contract.
Aleatory - CORRECT ANSWER - A contract in which participating parties exchange
unequal amounts. Insurance contracts are aleatory in that the amount the insured will pay in
premiums is unequal to the amount the insurer will pay in the event of a loss.
Alien Insurer - CORRECT ANSWER - An insurance company that is incorporated outside
the United States.
, Annual Statement - CORRECT ANSWER - A detailed financial report that an insurance
company must submit every year to the insurance department of state(s) in which it conducts
business.
Annuity - CORRECT ANSWER - A contract that provides income for a specified period
of years, or for life.
Apparent Authority - CORRECT ANSWER - The appearance or the assumption of
authority based on the actions, words, or deeds of the principal or because of circumstances the
principal created.
Applicant - CORRECT ANSWER - A person making application for, or offering
him/herself or another to be insured under an insurance contract.
Application - CORRECT ANSWER - A document that provides information for
underwriting purposes. After the policy is issued, any unanswered questions are considered
waived by the insurer.
Assignment - CORRECT ANSWER - The transfer of ownership rights of a life insurance
policy from one person to another.
Attained Age - CORRECT ANSWER - The age of the insured at a determined date.
Attending Physician's Statement (APS) - CORRECT ANSWER - A statement usually
obtained from the applicant's doctor.
Authorized (Admitted) Insurer - CORRECT ANSWER - An insurance company
authorized and licensed to transact business in a particular state.
Avoidance - CORRECT ANSWER - A method of dealing with risk by deliberately
keeping away from it (e.g. if a person wanted to avoid the risk of being killed in an airplane
crash, he/she might choose never to fly in a plane).
