KENTUCKY LIFE INSURANCE 2 :EXAM
with verified answers
All of the following are duties and responsibilities of producers at the time of application
EXCEPT
a)Change any incorrect statement on the application by personally initialing next to the
corrected statement.
b)Explain the nature and type of any receipt the producer is giving to the applicant.
c)Probe beyond the stated questions if the producer feels the applicant is
misrepresenting or concealing information
.d)Check to make sure that there are no unanswered questions on the application. Any
changes to information on an application must be initialed by the applicant -
ANSWERSA. Change any incorrect statement on the application by personally initialing
next to the corrected statement.
Which of the following is NOT a characteristic of pure risk?
a)The loss exposure must be large.
b)The loss must be catastrophic.
c)The loss must be due to chance.
d)The loss must be measurable in dollars. - ANSWERSb)The loss must be catastrophic.
In order to be characterized as pure risk, the loss must be due to chance, definite,
measurable, and predictable, but not catastrophic.
The Waiver of Cost of Insurance rider is found in what type of insurance?
a)Joint and Survivor
b)Juvenile Life
c)Universal Life
d)Whole Life - ANSWERSc)Universal Life
The Waiver of Cost of Insurance rider is found in Universal Life policies. If the insured
becomes disabled, the rider allows the cost of insurance to be waived, with the
exception of premium costs required to accumulate cash value.
The two types of assignments are
a)Absolute and collateral.
b)Absolute and partial.
c)Complete and partial.
d)Complete and proportionate. - ANSWERSa)Absolute and collateral.
Absolute assigns the entire policy. Collateral assigns a part or all of the benefits.
Which of the following will NOT be an appropriate use of a deferred annuity? -
ANSWERSd)Creating an estate
, Deferred annuities grow tax deferred, and are best suitable for accumulating retirement
income or funds for children's college education. Unlike life insurance, annuities do not
create an estate, but liquidate it.
When a closely held corporation enters into an agreement with its stockholders to
insure each of them individually for the purpose of buying their stock, should any of
them die, it is called
a)Stock redemption plan.
b)Business continuation plan.
c)Entity buy-sell agreement.
d)Cross-purchase agreement. - ANSWERSStock redemption plan.
A stock redemption allows a closely held corporation to, upon the death of a
stockholder, purchase their stock from the deceased's estate.
Which of the following clauses specifies the conditions under which a policyowner can
change coverage?
a)Coverage amendment
b)Execution
c)Privilege of change
d)Applicant control - ANSWERSc)Privilege of change
The owner has privileges.
Which type of insurance is based on mutual agreements among subscribers?
a)Reinsurance
b)Reciprocal insurance
c)Mutual insurance
d)Limited liability
Reciprocals are insurance companies made up of subscribers, who are collectively
known as a Reciprocal Insurance Company or Exchange. These types of companies
are administered by an appointed Attorney in Fact. - ANSWERSb)Reciprocal insurance
Both companies reciprocate the agreements.
What insurance concept is associated with the names Weiss and Fitch?
a)Guides describing company financial integrity
b)Policy dividends
c)Types of mutual companies
d)Index used by stock companies - ANSWERSa)Guides describing company financial
integrity
Because an insurance company's strength and stability are two very crucial factors in
its sustainability, independent rating services have formed to publish regular updates on
the financial integrity of different insurance companies. Weiss and Fitch are two of these
services, although there are more.
with verified answers
All of the following are duties and responsibilities of producers at the time of application
EXCEPT
a)Change any incorrect statement on the application by personally initialing next to the
corrected statement.
b)Explain the nature and type of any receipt the producer is giving to the applicant.
c)Probe beyond the stated questions if the producer feels the applicant is
misrepresenting or concealing information
.d)Check to make sure that there are no unanswered questions on the application. Any
changes to information on an application must be initialed by the applicant -
ANSWERSA. Change any incorrect statement on the application by personally initialing
next to the corrected statement.
Which of the following is NOT a characteristic of pure risk?
a)The loss exposure must be large.
b)The loss must be catastrophic.
c)The loss must be due to chance.
d)The loss must be measurable in dollars. - ANSWERSb)The loss must be catastrophic.
In order to be characterized as pure risk, the loss must be due to chance, definite,
measurable, and predictable, but not catastrophic.
The Waiver of Cost of Insurance rider is found in what type of insurance?
a)Joint and Survivor
b)Juvenile Life
c)Universal Life
d)Whole Life - ANSWERSc)Universal Life
The Waiver of Cost of Insurance rider is found in Universal Life policies. If the insured
becomes disabled, the rider allows the cost of insurance to be waived, with the
exception of premium costs required to accumulate cash value.
The two types of assignments are
a)Absolute and collateral.
b)Absolute and partial.
c)Complete and partial.
d)Complete and proportionate. - ANSWERSa)Absolute and collateral.
Absolute assigns the entire policy. Collateral assigns a part or all of the benefits.
Which of the following will NOT be an appropriate use of a deferred annuity? -
ANSWERSd)Creating an estate
, Deferred annuities grow tax deferred, and are best suitable for accumulating retirement
income or funds for children's college education. Unlike life insurance, annuities do not
create an estate, but liquidate it.
When a closely held corporation enters into an agreement with its stockholders to
insure each of them individually for the purpose of buying their stock, should any of
them die, it is called
a)Stock redemption plan.
b)Business continuation plan.
c)Entity buy-sell agreement.
d)Cross-purchase agreement. - ANSWERSStock redemption plan.
A stock redemption allows a closely held corporation to, upon the death of a
stockholder, purchase their stock from the deceased's estate.
Which of the following clauses specifies the conditions under which a policyowner can
change coverage?
a)Coverage amendment
b)Execution
c)Privilege of change
d)Applicant control - ANSWERSc)Privilege of change
The owner has privileges.
Which type of insurance is based on mutual agreements among subscribers?
a)Reinsurance
b)Reciprocal insurance
c)Mutual insurance
d)Limited liability
Reciprocals are insurance companies made up of subscribers, who are collectively
known as a Reciprocal Insurance Company or Exchange. These types of companies
are administered by an appointed Attorney in Fact. - ANSWERSb)Reciprocal insurance
Both companies reciprocate the agreements.
What insurance concept is associated with the names Weiss and Fitch?
a)Guides describing company financial integrity
b)Policy dividends
c)Types of mutual companies
d)Index used by stock companies - ANSWERSa)Guides describing company financial
integrity
Because an insurance company's strength and stability are two very crucial factors in
its sustainability, independent rating services have formed to publish regular updates on
the financial integrity of different insurance companies. Weiss and Fitch are two of these
services, although there are more.
