Alabama life insurance test questions with correct answers 2024

The best definition of risk? - ANSWERS Chance of loss. Producer appointed by one company on an exclusive basis is a. - ANSWERS Captive agent Predicting the likelihood of sickness or accident occurring among groups of people according to age, occupation or some other factor. - ANSWERS Morbidity tables Specialized property or liability coverage provided by a nonadmitted insurer is called: - ANSWERS Excess and surplus lines The larger the number of risks combined into one group, the less uncertainty there will be as to the amount of loss that will be incurred. - ANSWERS The law of large numbers The specific cause of a loss: - ANSWERS Peril Represents several insurance companies and owns their book of buisness. - ANSWERS Independent agent Self insurance is what type or risk management technique? - ANSWERS Retention A risk that involves both chance of loss or gain: - ANSWERS Speculative risk A person or business may use this method to transfer risk. - ANSWERS Hold-harmless agreement and insurance What characteristic of an insurable risk uses the law of large numbers? - ANSWERS Predictable loss Mathematicians who study and compile statistical data for insurance companies are called: - ANSWERS Actuaries An individuals careless actions or attitudes may be a Hazzard if a loss occurs as a result of them describes whatever type of hazard? - ANSWERS Morale Insurance company that would typically issue non-par policies? - ANSWERS Stock company An insurance company owned by its policyholders would be what type of company? - ANSWERS Mutual company A society that provides a meeting facility and administrative service to its members to underwrite and accept risks is called: - ANSWERS Lloyd's associatiom Reinsurance is negotiated separately for each insurance contract that is insured is called: - ANSWERS Facultative reinsurance. To waive an insureds premium, most companies require an individuals disability to be: - ANSWERS total and permanent If one of the named beneficiaries has died, and the deceased beneficiary's heirs receive a portion of the proceeds of the policy, this is called a: - ANSWERS *per stripes beneficiary designation . Which of the following is the most accurate description of the accumulation at interest life insurance dividend option? - ANSWERS *Dividends accumulate with interest paid on them at a rate specified in the contract. In which of the following circumstances would the accidental death benefit not apply? - ANSWERS *Death caused by riot or insurrection What is the name of the plan that caps the amount of group life insurance coverage at $50,000 to provide life insurance benefits on a tax favored basis? - ANSWERS Group carve out plans An insurance marketing method that does not involve producers is: - ANSWERS Direct response marketing Separate accounts are used with which policy? - ANSWERS Variable whole life A variable whole life policy offers: - ANSWERS A guaranteed minimum death benifit An adjustable life policy allows all of the following: - ANSWERS *Change the period of protection *Increase or decrease the face amount *Raise or lower the premium amount Which policy can be changed from a non-accumulating cash value policy to a policy that does accumulate cash value? - ANSWERS A convertible term policy What type of policy pays nothing when the first insured dies, but later pays a death benefit when the second insured dies? - ANSWERS Survivorship life policy Insurers may limit the period of time that an insured can exercise the conversion privilege on a convertible term policy. This conversion period: - ANSWERS Varies among the different insurance companies All of the following are required elements of a legal contract: - ANSWERS *legal purpose *offer and acceptance *consideration With a continuous-pay Whole life policy: - ANSWERS The premium is required to be paid for the insureds entire life with policy endowment at age 100. With a Variable life policy: - ANSWERS Death benefits will vary according to the performance of the separate account; however, death benefits will not fall below a guaranteed minimum account. The "Annuity Period" is: - ANSWERS The period of time during which annuity payments are made to the annuitant from the insurer. If the cash value of a universal life policy reaches zero, the policy owner must make a premium payment or: - ANSWERS The policy will go into the grace period The head of the state department of insurance has been granted all of the following authority: - ANSWERS *approving rates and rate increases for regulated lines of insurance. *Subpoenaing witnesses and administering oaths in order to further any examination, investigation, or hearing on insurance matters. *imposing penalties for violations of the insurance code. Term insurance differs from permanent insurance in what way? - ANSWERS term insurance does not build cash value and only pays a death benefit. In underwriting group life insurance, the underwriter: - ANSWERS normally focuses on the group as a whole rather than on individual members. Henry purchases a 10 annuity certain. He dies soon after the payments start, but before the certain period of 10 years. Any funds remaining are: - ANSWERS Paid to the beneficiary for the remainder of the certain period When a group insurance plan in noncontributory: - ANSWERS All members become covered immediately after completing the probationary period. All of the following offer tax-deferred growth on cash accumulations:: - ANSWERS *A single-premium deferred annuity *A 401-k plan Tom and Martha are receiving annuity payments. If tom dies before Martha, she will continue to receive payments. Tom and Martha have a: - ANSWERS Joint life and survivorship annuity