Life Insurance Exam Prep Questions and Answers Rated A+

Life Insurance Exam Prep Questions and Answers Rated A+ Primary purpose for a rating service company such as A.M best? To determine financial strength of an insurance company Primary reason for buying life insurance? Provide death benefits What is described as an insurers ability to make unpredictable payouts to its policy owners? Liquidity What is described as a plan in which an employer pays insurance benefits from a fund derived from the employers current revenue? Self-Funded Plan Which policy will not pay dividends? Nonparticipating policy What is issued by a mutual insurer and provides a return of divisible surplus? Participating Life Insurance Policy What is a type of insurer that is owned by its policy owners? Mutual A life insurance company has transferred some of its risk to another insurer, the insurer assuming the risk is called the what? The reinsurer A nonparticipating company is sometimes called what? Stock Insurer What is described as spreading risk by sharing the possibility of loss over a large number of people? Risk Pooling Described as a potential loss. Risk Described as something that can cause a financial loss. Peril Described as unintentional decrease in the value of an asset due to a peril. Loss Similar objects of insurance that are exposed to the same group of perils. Homogeneous Exposure Units What presents the chance for both loss and gain? Ex. Gambling Speculative Risk What is the only insurable risk and presents a potential for loss only with no possibility of gain, such as injury, illness, and death? Pure Risk Which type of hazard is poor health, overweight, blind, etc? Physical Which type of hazard is dishonesty, drugs, alcohol abuse, etc.? Moral Which type of hazard is careless and reckless? Morale What are events or conditions that increase the chances of an insured's life? Hazards People who have higher loss exposure have the tendency to purchase insurance more often, which is described as what? Adverse Selection What is a legally binding agreement between two or more parties, where a promise of benefits is exchanged for a consideration? Insurance Contract What is intentional withholding of material facts that would affect an insurance policy validity? Concealment What is an applicants statements concerning occupation, hobbies, and personal health history? Representations What type of authority gives an agent authority in writing?