PRIMERICA Life Insurance Exam Test Questions with
Answers Graded A
An insured purchased an insurance policy 5 d. an agent explains a policy to a potential
years ago. Last year, she received a dividend applicant - ANSWER -A. an applicant
check from the insurance company that was not submits an application to the insurer
taxable. This year, she did not receive a check
from the insurer. From what type of insurer did in insurance, the offer is usually made by the
the insured purchase the policy? applicant in the form of an application.
acceptance takes place when an insurer's
a. mutual underwriter approves the application and issues
b. reciprocal a policy
c. nonprofit service organization
d. stock - ANSWER -A. mutual
funds not paid out after paying claims and other the causes of loss insured against in an
operating costs are returned to the policy owners insurance policy are known as
in the form of a dividend. if all funds are paid out,
no dividends are paid a. perils
b. losses
c. risks
d. hazards - ANSWER -A. perils
Following a career change, an insured is no
longer required to perform many physical perils are the causes of loss insured against in an
activities, so he has implemented a program insurance policy
where he walks and jogs for 45 minutes each
morning. The insured has also eliminated most
fatty foods from his diet. Which method of
dealing with risk does this scenario describe? what documentation grants express authority to
an agent?
a. retention
b. reduction a. agents contract with the principal
c. transfer b. agents insurance license
d. avoidance - ANSWER -B. reduction c. fiduciary contract
d. state provisions - ANSWER -A. agents
the insured's change in lifestyle and habits would contract with the principal
likely reduce the chances of health problems
the principal grants authority to an agent through
the agent's contract
In insurance, an offer is usually made when
a. an applicant submits an application to the which of the following best describes an
insurer insurance company that has been formed under
b. the insurer approves the application and the laws of this state?
receives the initial premium
c. the agent hands the policy to the policyholder a. domestic
, PRIMERICA Life Insurance Exam Test Questions with
Answers Graded A
b. sovereign agent's contract is referred to as
c. alien
d. foreign - ANSWER -A. domestic a. absolute authority
b. express authority
a company is domestic when doing business c. apparent authority
within the state in which it is incorporated d. implied authority - ANSWER -B. express
authority
express powers are written into the contract
which of the following factors is NOT considered between the insurer and the agent
by an underwriter when determining the premium
rates for an individual seeking insurance?
a. medical history insurance policies are not drawn up though
b. sex negotiations, and an insured has little to say
c. age about its provisions. what contract characteristic
d. race - ANSWER -D. race does this describe?
age, medical history, and sex provide sound a. unilateral
statistical date for determining the probability of b. conditional
loss. Race, religion, sexual orientation, etc. are c. personal
the factors that cannot be used because there is d. adhesion - ANSWER -D. adhesion
not sound statistical data to show that they effect
the probability of loss; therefore, they are a contract of adhesion is prepared by only the
considered to be discriminatory insurer; the insured's only option is to accept or
reject the policy as its written
in insurance transactions, fiduciary responsibility
means which of the following insurers are owned by
stockholders who have the usual rights of
a. handling insurer funds in a trust capacity ownership, including the right of voting?
b. maintaining good credit record
c. being liable with respect to payment of claims a. reciprocal
d. commingling premiums with agents personal b. fraternal
funds - ANSWER -A. handling insurer c. stock
funds in a trust capacity d. mutual - ANSWER -C. stock
an agents fiduciary responsibility includes only stock insurance companies are owned and
handling insurer funds in a trust capacity controlled by stockholders
the authority granted to an agent through the which of the following best describes the concept
, PRIMERICA Life Insurance Exam Test Questions with
Answers Graded A
that the insured pays a small amount of premium
for a large amount of risk on the part of the when an insurer and insured enter into a
insurance company? contract, both parties must be legal of age and
mentally competent. It is legal for a person
a. subrogation convicted of a felony to buy an insurance
b. warranty contract. An intoxicated person, however, may
c. aleatory not be mentally competent, a 12 year old student
d. adhesion - ANSWER -C. aleatory is considered to be underage in most states and
a person under mind-impairing medication most
an insurance contract is an aleatory contract in likely would not be mentally competent
that it requires a relatively small amount of
premium for a large risk
an insurer neglects to pay a legitimate claim that
is covered under the terms of the policy. Which of
When an insured makes truthful statements on the following insurance principles has the insurer
the application for insurance and pays the violated?
required premium, it is known as which of the
following? a. representation
b. adhesion
a. legal purpose c. consideration
b. contract of adhesion d. good health - ANSWER -C. consideration
c. acceptance
d. consideration - ANSWER -D. the binding force in any contract is consideration.
consideration consideration on the part of the insureds the
payment of premiums and the health
consideration is something of value that each representations made in the application.
party gives to the other. The consideration on the Consideration on the part of the insurer is the
part of the insured is the payment of premium promise to pay in the even of loss
and the representations made in the application
which of the following is a primary source of
which of the following would qualify as a information used for insurance underwriting?
competent party in an insurance contract?
a. application
a. the applicant is intoxicated at the time of b. applicant interviews
application c. medical records.
b. the applicant is 12 year old student d. private investigations - ANSWER -A.
c. the applicant is under the influence of a mind- application
impairing medication at the time of application
d. the applicant has a prior felony conviction - the application contains most of the information
ANSWER -D. the applicant has a prior used for underwriting purposes. this is why its
felony conviction completeness and accurarcy are so critical
, PRIMERICA Life Insurance Exam Test Questions with
Answers Graded A
exclusions
c. collect any premium due
d. explain the rating procedures if the policy is
which of the following is the best reason to rated differently than applied for -
purchase life insurance rather than annuities? ANSWER -A. disclose commissions earned
fro the sale of the policy
a. to liquidate a sum of money over a period of
year a producer must explain policy provisions,
b. to create regular income payments exclusions, and riders at the time of the delivery,
c. to liquidate a sum money over a lifetime as well as the rating procedures especially if the
d. to create an estate - ANSWER -D. to policy is rated differently than applied for. The
create an estate producer must also collect any due premium and
have the insured sign the statement go continued
with insurance, the death creates an immediate good health
estate should the insured die
if an applicant for a life insurance policy and
a producer is helping a married couple determine person to be insured by the policy are two
the financial needs of their children in the event different people, the underwriter would be
of one or both should die prematurely. This is a concerned about
personal use of life insurance known as
a. which individual will pay the premium
a. survivorship insurance b. whether an insurable interest exists between
b. juvenile protection provision the individuals
c. survivorship protection c. the gender of applicant
d. life planning - ANSWER -C. survivorship d. the type of policy requested - ANSWER -
protection B. whether an insurable interest exists between
the individuals
life insurance can provide the funds necessary
for the survivors of the insured to be able to an insurable interest must exist at the time of the
maintain their lifestyle in the event of the policy is issued. Some relationships are
insured's death. This is known as survivor automatically presumed to qualify as an insurable
protection interest. ex: spouses, parents, children, and
certain business relationships
a producer agent must do all of the following
when delivering a new policy to the insured When J. applied for a life insurance policy, the
EXCEPT agent informed him that a medical exam would
be required. The exam may be completed by
a. disclose commissions earned from the sale of
the policy a. a physician of the applicant's choice and at his
b. explain the policy provisions, riders, and expense
Answers Graded A
An insured purchased an insurance policy 5 d. an agent explains a policy to a potential
years ago. Last year, she received a dividend applicant - ANSWER -A. an applicant
check from the insurance company that was not submits an application to the insurer
taxable. This year, she did not receive a check
from the insurer. From what type of insurer did in insurance, the offer is usually made by the
the insured purchase the policy? applicant in the form of an application.
acceptance takes place when an insurer's
a. mutual underwriter approves the application and issues
b. reciprocal a policy
c. nonprofit service organization
d. stock - ANSWER -A. mutual
funds not paid out after paying claims and other the causes of loss insured against in an
operating costs are returned to the policy owners insurance policy are known as
in the form of a dividend. if all funds are paid out,
no dividends are paid a. perils
b. losses
c. risks
d. hazards - ANSWER -A. perils
Following a career change, an insured is no
longer required to perform many physical perils are the causes of loss insured against in an
activities, so he has implemented a program insurance policy
where he walks and jogs for 45 minutes each
morning. The insured has also eliminated most
fatty foods from his diet. Which method of
dealing with risk does this scenario describe? what documentation grants express authority to
an agent?
a. retention
b. reduction a. agents contract with the principal
c. transfer b. agents insurance license
d. avoidance - ANSWER -B. reduction c. fiduciary contract
d. state provisions - ANSWER -A. agents
the insured's change in lifestyle and habits would contract with the principal
likely reduce the chances of health problems
the principal grants authority to an agent through
the agent's contract
In insurance, an offer is usually made when
a. an applicant submits an application to the which of the following best describes an
insurer insurance company that has been formed under
b. the insurer approves the application and the laws of this state?
receives the initial premium
c. the agent hands the policy to the policyholder a. domestic
, PRIMERICA Life Insurance Exam Test Questions with
Answers Graded A
b. sovereign agent's contract is referred to as
c. alien
d. foreign - ANSWER -A. domestic a. absolute authority
b. express authority
a company is domestic when doing business c. apparent authority
within the state in which it is incorporated d. implied authority - ANSWER -B. express
authority
express powers are written into the contract
which of the following factors is NOT considered between the insurer and the agent
by an underwriter when determining the premium
rates for an individual seeking insurance?
a. medical history insurance policies are not drawn up though
b. sex negotiations, and an insured has little to say
c. age about its provisions. what contract characteristic
d. race - ANSWER -D. race does this describe?
age, medical history, and sex provide sound a. unilateral
statistical date for determining the probability of b. conditional
loss. Race, religion, sexual orientation, etc. are c. personal
the factors that cannot be used because there is d. adhesion - ANSWER -D. adhesion
not sound statistical data to show that they effect
the probability of loss; therefore, they are a contract of adhesion is prepared by only the
considered to be discriminatory insurer; the insured's only option is to accept or
reject the policy as its written
in insurance transactions, fiduciary responsibility
means which of the following insurers are owned by
stockholders who have the usual rights of
a. handling insurer funds in a trust capacity ownership, including the right of voting?
b. maintaining good credit record
c. being liable with respect to payment of claims a. reciprocal
d. commingling premiums with agents personal b. fraternal
funds - ANSWER -A. handling insurer c. stock
funds in a trust capacity d. mutual - ANSWER -C. stock
an agents fiduciary responsibility includes only stock insurance companies are owned and
handling insurer funds in a trust capacity controlled by stockholders
the authority granted to an agent through the which of the following best describes the concept
, PRIMERICA Life Insurance Exam Test Questions with
Answers Graded A
that the insured pays a small amount of premium
for a large amount of risk on the part of the when an insurer and insured enter into a
insurance company? contract, both parties must be legal of age and
mentally competent. It is legal for a person
a. subrogation convicted of a felony to buy an insurance
b. warranty contract. An intoxicated person, however, may
c. aleatory not be mentally competent, a 12 year old student
d. adhesion - ANSWER -C. aleatory is considered to be underage in most states and
a person under mind-impairing medication most
an insurance contract is an aleatory contract in likely would not be mentally competent
that it requires a relatively small amount of
premium for a large risk
an insurer neglects to pay a legitimate claim that
is covered under the terms of the policy. Which of
When an insured makes truthful statements on the following insurance principles has the insurer
the application for insurance and pays the violated?
required premium, it is known as which of the
following? a. representation
b. adhesion
a. legal purpose c. consideration
b. contract of adhesion d. good health - ANSWER -C. consideration
c. acceptance
d. consideration - ANSWER -D. the binding force in any contract is consideration.
consideration consideration on the part of the insureds the
payment of premiums and the health
consideration is something of value that each representations made in the application.
party gives to the other. The consideration on the Consideration on the part of the insurer is the
part of the insured is the payment of premium promise to pay in the even of loss
and the representations made in the application
which of the following is a primary source of
which of the following would qualify as a information used for insurance underwriting?
competent party in an insurance contract?
a. application
a. the applicant is intoxicated at the time of b. applicant interviews
application c. medical records.
b. the applicant is 12 year old student d. private investigations - ANSWER -A.
c. the applicant is under the influence of a mind- application
impairing medication at the time of application
d. the applicant has a prior felony conviction - the application contains most of the information
ANSWER -D. the applicant has a prior used for underwriting purposes. this is why its
felony conviction completeness and accurarcy are so critical
, PRIMERICA Life Insurance Exam Test Questions with
Answers Graded A
exclusions
c. collect any premium due
d. explain the rating procedures if the policy is
which of the following is the best reason to rated differently than applied for -
purchase life insurance rather than annuities? ANSWER -A. disclose commissions earned
fro the sale of the policy
a. to liquidate a sum of money over a period of
year a producer must explain policy provisions,
b. to create regular income payments exclusions, and riders at the time of the delivery,
c. to liquidate a sum money over a lifetime as well as the rating procedures especially if the
d. to create an estate - ANSWER -D. to policy is rated differently than applied for. The
create an estate producer must also collect any due premium and
have the insured sign the statement go continued
with insurance, the death creates an immediate good health
estate should the insured die
if an applicant for a life insurance policy and
a producer is helping a married couple determine person to be insured by the policy are two
the financial needs of their children in the event different people, the underwriter would be
of one or both should die prematurely. This is a concerned about
personal use of life insurance known as
a. which individual will pay the premium
a. survivorship insurance b. whether an insurable interest exists between
b. juvenile protection provision the individuals
c. survivorship protection c. the gender of applicant
d. life planning - ANSWER -C. survivorship d. the type of policy requested - ANSWER -
protection B. whether an insurable interest exists between
the individuals
life insurance can provide the funds necessary
for the survivors of the insured to be able to an insurable interest must exist at the time of the
maintain their lifestyle in the event of the policy is issued. Some relationships are
insured's death. This is known as survivor automatically presumed to qualify as an insurable
protection interest. ex: spouses, parents, children, and
certain business relationships
a producer agent must do all of the following
when delivering a new policy to the insured When J. applied for a life insurance policy, the
EXCEPT agent informed him that a medical exam would
be required. The exam may be completed by
a. disclose commissions earned from the sale of
the policy a. a physician of the applicant's choice and at his
b. explain the policy provisions, riders, and expense
