Texas Life and Health Insurance-Group 1 Questions with Correct Answers

Insurance Correct Answer Contractual coverage binding the insurer (insurance company) to indemnify (compensate for loss) the insured (people or businesses) against a specified loss in return for money (premiums). Law of Large Numbers Correct Answer What insurance is based on. The bigger the observed sample, the more accurate the predicted results. Life insurance pools growth and distribution of money to satisfy two goals: Correct Answer 1. Pay benefits to survivors of someone who dies while covered. 2. Providing distribution of benefits by lump sum or with guaranteed lifetime payments Indemnification Correct Answer Concept of restoring individuals to the same financial position they were at before a loss occurred. Agent/Producer Correct Answer Individual who is state-licensed to solicit and sell insurance for one or more insurance companies. He/She must be authorized by an insurer (principal) to act on its behalf. Insured Correct Answer Individual who is insured or has insurance taken out on or for them for a specific interest. Named Insured Correct Answer Person(s) listed as insured in the Declarations page. First Named Insured Correct Answer first person listed who gets renewal/policy change notices Other Insured Correct Answer 1. Any member of the insured household who is a relative or is under 21 2. A child or parent living with the insured is included, regardless of age 3. Other members of the insured household who are under 21 years of age Additional Insured Correct Answer an individual or entity who, other than the named insured, qualifies as an insured person under the policy. Policyowner Correct Answer Person who: 1. Applies for a policy 2. Takes responsibility for premium payment 3. Has the right to cash values, dividends, and policy proceeds 4. Has the ability to change beneficiaries and other policy particulars