IOWA INSURANCE – LIFE EXAM 2025
QUESTIONS AND ANSWERS
Purpose of life insurance - ANS pay a death benefit to beneficiaries when the insured dies
life insurance for personal use - ANS death benefit serves to replace the insured's future loss
income and pay expenses that occur upon death, living benefits
Group insurance vs. individual - ANS -covers many non-related people
-less expensive per person
group insurance eligibility - ANS -group cannot be formed for the express purpose of
purchasing it
-employers
-labor unions
-trade and professional association groups
individual insurance - ANS covers one individual
ordinary life insurance - ANS face amounts grater than $25,000, premiums are payable
monthly, quarterly, semi annually, annually; includes every type of life insurance and annuity
product, flexible options
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,industrial life insurance - ANS "burial insurance", small face amounts 1000 or 2500 to 10,000;
premiums paid frequently, no medical exam, agent meets personally with policy owner to
collect premium
permanent life insurance - ANS provides life ins for the insured's entire life; coverage is
provided until insured dies or reaches 120 years old
True or false: Level premium of permanent life insurance - once the policy is issued premiums
remain level for the full duration of policy coverage - ANS true
Permanent life insurance accumulation element within the policy is __________ ____________
- ANS cash value
Term life insurance - ANS coverage is temporary, time limit can be as short as one year, as
long as 20+ years or until the insured reaches a specific age (ex. 65). No cash value, costs less
than permanent life, premiums increase with age
Participating vs nonparticipating life insurance - ANS par - issued by mutual ins co's,
policyowner is eligible for policy dividends declared by the insurance co; dividends are paid
from insurers divisible surplus
non par - issued by stock ins co, no policy dividends
fixed life insurance - ANS insurer guarantees fixed death benefit and min rate of return on
policy's cash value, premiums are invested in co's general account
variable life insurance - ANS premiums are invested in investment sub accounts managed by
the insurer - guarantees min death benefit (face amount of policy); cash values and death
benefit raise and fall based on sub accounts investment
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, Regulation of Variable products - what do the Securities Exchange commission and financial
Industry Regulatory authority do? - ANS SEC - responsible for regulating the securities that
make up an insurer's separate account
FIRA - regulates producers who sell variable life products and companies that sell investment
products
Actuary base life insurance premiums based on 3 things - ANS mortality, interest, expenses
Interest factor - ANS added to premium calculations to recognize investment earnings, used
as credit - higher rate = lower premium
Expense factor - ANS worked into premium calculation to reflect costs that insurer expects to
incur (rent, commissions, benefits)
Premium Tax - ANS levied on insurance companies when they receive premiums
Net Single premium - ANS uses factors of mortality and interest - theoretical amount
(excludes expense factor) that would be needed to fund the face amount for the duration of
the policy with single premium payment
Net level premium - ANS applying a factor to the net single premium, spreads out premium
for duration of premium paying period
Gross premium - ANS charged for the policy by adding the expense load to the net single
premium/net level premium
Level premium payment plan - ANS premium is fixed, remains over policy's term
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QUESTIONS AND ANSWERS
Purpose of life insurance - ANS pay a death benefit to beneficiaries when the insured dies
life insurance for personal use - ANS death benefit serves to replace the insured's future loss
income and pay expenses that occur upon death, living benefits
Group insurance vs. individual - ANS -covers many non-related people
-less expensive per person
group insurance eligibility - ANS -group cannot be formed for the express purpose of
purchasing it
-employers
-labor unions
-trade and professional association groups
individual insurance - ANS covers one individual
ordinary life insurance - ANS face amounts grater than $25,000, premiums are payable
monthly, quarterly, semi annually, annually; includes every type of life insurance and annuity
product, flexible options
1 Copyright ©BRIGHSTARS ALL RIGHTS RESERVED 2025
,industrial life insurance - ANS "burial insurance", small face amounts 1000 or 2500 to 10,000;
premiums paid frequently, no medical exam, agent meets personally with policy owner to
collect premium
permanent life insurance - ANS provides life ins for the insured's entire life; coverage is
provided until insured dies or reaches 120 years old
True or false: Level premium of permanent life insurance - once the policy is issued premiums
remain level for the full duration of policy coverage - ANS true
Permanent life insurance accumulation element within the policy is __________ ____________
- ANS cash value
Term life insurance - ANS coverage is temporary, time limit can be as short as one year, as
long as 20+ years or until the insured reaches a specific age (ex. 65). No cash value, costs less
than permanent life, premiums increase with age
Participating vs nonparticipating life insurance - ANS par - issued by mutual ins co's,
policyowner is eligible for policy dividends declared by the insurance co; dividends are paid
from insurers divisible surplus
non par - issued by stock ins co, no policy dividends
fixed life insurance - ANS insurer guarantees fixed death benefit and min rate of return on
policy's cash value, premiums are invested in co's general account
variable life insurance - ANS premiums are invested in investment sub accounts managed by
the insurer - guarantees min death benefit (face amount of policy); cash values and death
benefit raise and fall based on sub accounts investment
2 Copyright ©BRIGHSTARS ALL RIGHTS RESERVED 2025
, Regulation of Variable products - what do the Securities Exchange commission and financial
Industry Regulatory authority do? - ANS SEC - responsible for regulating the securities that
make up an insurer's separate account
FIRA - regulates producers who sell variable life products and companies that sell investment
products
Actuary base life insurance premiums based on 3 things - ANS mortality, interest, expenses
Interest factor - ANS added to premium calculations to recognize investment earnings, used
as credit - higher rate = lower premium
Expense factor - ANS worked into premium calculation to reflect costs that insurer expects to
incur (rent, commissions, benefits)
Premium Tax - ANS levied on insurance companies when they receive premiums
Net Single premium - ANS uses factors of mortality and interest - theoretical amount
(excludes expense factor) that would be needed to fund the face amount for the duration of
the policy with single premium payment
Net level premium - ANS applying a factor to the net single premium, spreads out premium
for duration of premium paying period
Gross premium - ANS charged for the policy by adding the expense load to the net single
premium/net level premium
Level premium payment plan - ANS premium is fixed, remains over policy's term
3 Copyright ©BRIGHSTARS ALL RIGHTS RESERVED 2025
