PRIMERICA LIFE INSURANCE EXAM
QUESTIONS AND ANSWERS WELL
EXPLAINED
Which of the following methods of calculating the amount of life insurance needed takes
into account the insured's wages, years until retirement, and inflation?
a. needs approach
b. blackout approach
c. lump-sum approach
d. human life value approach - Answer- D. human life value approach
Human life value approach is determined by the loss of the income that would result
with the death of the insured, after making adjustments for expenses, inflation, etc.
Which of the following is NOT required for a producer to tell a prospect?
a. how the insurer would use any outside information regarding the applicant
b. an explanation of products that the insurer is selling
c. what requirements the producer needed to meet to obtain the insurance license
d. from what outside sources the insurer would seek information, regarding the insured -
Answer- C. what requirements the producer needed to meet to obtain the insurance
license
Agents are required to inform prospects of the products they are selling, as well as their
information collecting practices
Which of the following statements concerning buy-sell agreements is true?
a. premium paid are deductible as a business expense
b. benefits received are considered income taxable
c. buy-sell agreements pay in the event of a medical emergency
d. buy-sell agreements are normally funded with a life insurance expectancy - Answer-
D. buy-sell agreements are normally funded with life insurance expectancy
A buy-sell agreements is simply a contract that establishes what willl be done with a
business in the event that an owner dies. Buy-sell agreements are normally funded with
a life insurance policy
,Who may complete a paramedical report?
a. an underwriter
b. a nursing assistant
c. a registered nurse
d. a spouse - Answer- C. a registered nurse
Paramedical reports are completed by paramedics or registered nurses. Full medical
expectations are reserved for those wanting higher coverage or for those who have
more complex medical history
The term "illustrations" in a life insurance policy refers to
a. a presentation of non guaranteed elements of a policy
b. a depiction of policy benefits and guarantees
c. pictures accompanying a policy
d. charts and graphs - Answer- A. a presentation of non guaranteed elements of a
policy
The term "illustrations" means presentation of depiction that includes non guaranteed
elements of a policy of individual of group life insurance over a period of years
Which is generally true regarding insureds who have been classified as preferred risks?
a. they can borrow higher amounts off of their policies
b. they can decide when to pay their monthly premiums
c. they keep a higher percentage of any interest earned on their policies
d. their premiums are lower - Answer- D. their premiums are lower
The preferred risk classification indicates that an insured is in excellent physical
condition and employs healthy lifestyles and habits. These individuals qualify to lower
premiums than those in other categories
An insured purchased an insurance policy 5 years ago. Last year, she received a
dividend check from the insurance company that was not taxable. This year, she did not
receive a check from the insurer. From what type of insurer did the insured purchase
the policy?
a. mutual
b. reciprocal
c. nonprofit service organization
d. stock - Answer- A. mutual
Funds not paid out after paying claims and other operating costs are returned to the
policy owners in the form of a dividend. if all funds are paid out, no dividends are paid
,Following a career change, an insured is no longer required to perform many physical
activities, so he has implemented a program 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?
a. retention
b. reduction
c. transfer
d. avoidance - Answer- B. reduction
The insured's change in lifestyle and habits would likely reduce the chances of health
problems
In insurance, an offer is usually made when
a. an applicant submits an application to the insurer
b. the insurer approves the application and receives the initial premium
c. the agent hands the policy to the policyholder
d. an agent explains a policy to a potential applicant - Answer- A. an applicant submits
an application to the insurer
In insurance, the offer is usually made by the applicant in the form of an application.
acceptance takes place when an insurer's underwriter approves the application and
issues a policy
The causes of loss insured against in an insurance policy are known as
a. perils
b. losses
c. risks
d. hazards - Answer- A. perils
Perils are the causes of loss insured against in an insurance policy
What documentation grants express authority to an agent?
a. agents contract with the principal
b. agents insurance license
c. fiduciary contract
d. state provisions - Answer- A. agents contract with the principal
The principal grants authority to an agent through the agent's contract
Which of the following best describes an insurance company that has been formed
under the laws of this state?
, a. domestic
b. sovereign
c. alien
d. foreign - Answer- A. domestic
a company is domestic when doing business within the state in which it is incorporated
which of the following factors is NOT considered by an underwriter when determining
the premium rates for an individual seeking insurance?
a. medical history
b. sex
c. age
d. race - Answer- D. race
age, medical history, and sex provide sound statistical date for determining the
probability of loss. Race, religion, sexual orientation, etc. are the factors that cannot be
used because there is not sound statistical data to show that they effect the probability
of loss; therefore, they are considered to be discriminatory
in insurance transactions, fiduciary responsibility means
a. handling insurer funds in a trust capacity
b. maintaining good credit record
c. being liable with respect to payment of claims
d. commingling premiums with agents personal funds - Answer- A. handling insurer
funds in a trust capacity
an agents fiduciary responsibility includes handling insurer funds in a trust capacity
the authority granted to an agent through the agent's contract is referred to as
a. absolute authority
b. express authority
c. apparent authority
d. implied authority - Answer- B. express authority
express powers are written into the contract between the insurer and the agent
insurance policies are not drawn up though negotiations, and an insured has little to say
about its provisions. what contract characteristic does this describe?
a. unilateral
b. conditional
c. personal
QUESTIONS AND ANSWERS WELL
EXPLAINED
Which of the following methods of calculating the amount of life insurance needed takes
into account the insured's wages, years until retirement, and inflation?
a. needs approach
b. blackout approach
c. lump-sum approach
d. human life value approach - Answer- D. human life value approach
Human life value approach is determined by the loss of the income that would result
with the death of the insured, after making adjustments for expenses, inflation, etc.
Which of the following is NOT required for a producer to tell a prospect?
a. how the insurer would use any outside information regarding the applicant
b. an explanation of products that the insurer is selling
c. what requirements the producer needed to meet to obtain the insurance license
d. from what outside sources the insurer would seek information, regarding the insured -
Answer- C. what requirements the producer needed to meet to obtain the insurance
license
Agents are required to inform prospects of the products they are selling, as well as their
information collecting practices
Which of the following statements concerning buy-sell agreements is true?
a. premium paid are deductible as a business expense
b. benefits received are considered income taxable
c. buy-sell agreements pay in the event of a medical emergency
d. buy-sell agreements are normally funded with a life insurance expectancy - Answer-
D. buy-sell agreements are normally funded with life insurance expectancy
A buy-sell agreements is simply a contract that establishes what willl be done with a
business in the event that an owner dies. Buy-sell agreements are normally funded with
a life insurance policy
,Who may complete a paramedical report?
a. an underwriter
b. a nursing assistant
c. a registered nurse
d. a spouse - Answer- C. a registered nurse
Paramedical reports are completed by paramedics or registered nurses. Full medical
expectations are reserved for those wanting higher coverage or for those who have
more complex medical history
The term "illustrations" in a life insurance policy refers to
a. a presentation of non guaranteed elements of a policy
b. a depiction of policy benefits and guarantees
c. pictures accompanying a policy
d. charts and graphs - Answer- A. a presentation of non guaranteed elements of a
policy
The term "illustrations" means presentation of depiction that includes non guaranteed
elements of a policy of individual of group life insurance over a period of years
Which is generally true regarding insureds who have been classified as preferred risks?
a. they can borrow higher amounts off of their policies
b. they can decide when to pay their monthly premiums
c. they keep a higher percentage of any interest earned on their policies
d. their premiums are lower - Answer- D. their premiums are lower
The preferred risk classification indicates that an insured is in excellent physical
condition and employs healthy lifestyles and habits. These individuals qualify to lower
premiums than those in other categories
An insured purchased an insurance policy 5 years ago. Last year, she received a
dividend check from the insurance company that was not taxable. This year, she did not
receive a check from the insurer. From what type of insurer did the insured purchase
the policy?
a. mutual
b. reciprocal
c. nonprofit service organization
d. stock - Answer- A. mutual
Funds not paid out after paying claims and other operating costs are returned to the
policy owners in the form of a dividend. if all funds are paid out, no dividends are paid
,Following a career change, an insured is no longer required to perform many physical
activities, so he has implemented a program 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?
a. retention
b. reduction
c. transfer
d. avoidance - Answer- B. reduction
The insured's change in lifestyle and habits would likely reduce the chances of health
problems
In insurance, an offer is usually made when
a. an applicant submits an application to the insurer
b. the insurer approves the application and receives the initial premium
c. the agent hands the policy to the policyholder
d. an agent explains a policy to a potential applicant - Answer- A. an applicant submits
an application to the insurer
In insurance, the offer is usually made by the applicant in the form of an application.
acceptance takes place when an insurer's underwriter approves the application and
issues a policy
The causes of loss insured against in an insurance policy are known as
a. perils
b. losses
c. risks
d. hazards - Answer- A. perils
Perils are the causes of loss insured against in an insurance policy
What documentation grants express authority to an agent?
a. agents contract with the principal
b. agents insurance license
c. fiduciary contract
d. state provisions - Answer- A. agents contract with the principal
The principal grants authority to an agent through the agent's contract
Which of the following best describes an insurance company that has been formed
under the laws of this state?
, a. domestic
b. sovereign
c. alien
d. foreign - Answer- A. domestic
a company is domestic when doing business within the state in which it is incorporated
which of the following factors is NOT considered by an underwriter when determining
the premium rates for an individual seeking insurance?
a. medical history
b. sex
c. age
d. race - Answer- D. race
age, medical history, and sex provide sound statistical date for determining the
probability of loss. Race, religion, sexual orientation, etc. are the factors that cannot be
used because there is not sound statistical data to show that they effect the probability
of loss; therefore, they are considered to be discriminatory
in insurance transactions, fiduciary responsibility means
a. handling insurer funds in a trust capacity
b. maintaining good credit record
c. being liable with respect to payment of claims
d. commingling premiums with agents personal funds - Answer- A. handling insurer
funds in a trust capacity
an agents fiduciary responsibility includes handling insurer funds in a trust capacity
the authority granted to an agent through the agent's contract is referred to as
a. absolute authority
b. express authority
c. apparent authority
d. implied authority - Answer- B. express authority
express powers are written into the contract between the insurer and the agent
insurance policies are not drawn up though negotiations, and an insured has little to say
about its provisions. what contract characteristic does this describe?
a. unilateral
b. conditional
c. personal
