ALABAMA LIFE & HEALTH INSURANCE EXAM QUESTIONS AND ANSWERS GUARANTEED SUCCESS.

ALABAMA LIFE & HEALTH INSURANCE EXAM QUESTIONS AND ANSWERS guaranteed success. Which dof dthe dfollowing dwould dbe dconsidered da dspeculative drisk? d- d d d dcorrect danswer d: dThe dpossibility dthe dpainting dyou dbought dmight dbe da dlong-lost dmasterpiece A dspeculative drisk dis done din dwhich dthere dis da dchance dfor deither dloss dor dgain. dExample: dGambling, dCasino's, dLottery, detc. dAll dof dthe dother dchoices ddescribe dpure drisk, dwhere dthere dis dno dchance dof dgain, donly da dchance dof dloss dexists. Which dis dthe dproper dterm dfor da dcompany downed dby dits dpolicy downers? d- d d d dcorrect danswer d: dA dmutual dinsurance dcompany A dproducer dwho dis dacting das dan dagent dis drepresenting: d- d d d dcorrect danswer d: dAlways dthe dinsurer All dof dthe dfollowing dare delements dof da dcontract, dexcept: d- d d d dcorrect danswer d: dAuthority All denforceable dcontracts dmust dinclude dthese dcharacteristics: doffer dand dacceptance d(agreement), dconsiderations, dcompetent dparties, dand dlegal dpurpose. dAuthority dis dnot dconsidered done dof dthe delements dof da dlegal dcontract. Each dof dthe dfollowing dwould dbe dan delement din dthe ddefinition dof dfraud, dexcept: d- d d d dcorrect danswer d: dAn dindividual dwarrants da dfact dstated don dthe dapplication A dwarranted dfact dis done dguaranteed dto dbe dtrue. dAlthough dno dstatement don dan dapplication dis dregarded das dwarranty, dno dfraud dis dinvolved dif da dstatement dis dguaranteed dto dbe dtrue. Examples dof dFraud d- d d d dcorrect danswer d: dIntentional dmaterial dmisrepresentation dwith dthe dintent dof dcausing dinjury dto danother dparty Withholding dof dknown dmaterial dfacts A dfalse dstatement don dthe dapplication dthat dis dmaterial dto dthe dacceptance dof dthe drisk A dcompany dthat dis dlicensed dto dsell dinsurance din da dparticular dstate dis: d- d d d dcorrect danswer d: dAn dauthorized dCompany In dorder dto dbe dvalid, da dcontract dmust dbe dbetween dindividuals dconsidered dlegally dable dto denter dinto dan dagreement. dThis dprinciple dis dknown das: d- d d d dcorrect danswer d: dCompetent dparties An dinsurance dcontract dis dan daleatory dcontract. dThis dmeans: d- d d d dcorrect danswer d: dEqual dvalue dis dnot dgiven dby dboth dparties dto dthe dcontract Aleatory: dcontract dof dunequal dvalues dexchanged The d____________ dmarket dis da dprivate dsource dof dcoverage dof dlast dresort dfor dindividuals dor dbusinesses dthat dhave dbeen drejected dby dvoluntary dmarket dinsurers. d- d d d dcorrect danswer d: dResidual To daddress dadverse dselection dwhat dcan dan dinsurer dlegally ddo? d- d d d dcorrect danswer d: dEstablish dand denforce dsound dunderwriting dpractices Underwriting dhelps dto dprotect dthe dinsurer dagainst dadverse dselection dand daccepting drisks dthat dare dmore dlikely dthan daverage dto dsuffer dlosses. A dcontract dthat dis ddrafted dby dan dinsurer dand dreceives dno dinput dor dalteration dfrom dthe dinsured, dis dconsidered da(n): d- d d d dcorrect danswer d: dContract dof dAdhesion _________ drefers dto dthe djurisdiction dwhere dan dinsurer dwas dformed dor dincorporated. d- d d d dcorrect danswer d: dDomicile: dDomicile drefers dto dthe djurisdiction deither dstate dor dcountry dwhere dan dinsurer dwas dformed dor dincorporated. _____________ dinsurance dallows dfor dinsurance dcoverage dto dbe dobtained dwhen dnot davailable dfrom dadmitted dcarriers. d- d d d dcorrect danswer d: dSurplus dLines Insurance dcan dbe dobtained dthrough dsurplus dlines dbrokers d(producers) dfrom dnon-admitted dinsurers. To dmake dinsurance dmore daffordable dand dprotect dthe dinsurance dcompany dfrom dpaying dout dtoo dmuch din dclaims, dinsurers dwill: d- d d d dcorrect danswer d: dReinsure dthe drisk d Reinsurance dis dwhat dmakes dinsurance daffordable. dReinsurance dcompanies dare dinsurance dcompanies dthat daccept dall dor da dportion dof dthe dfinancial drisk dof dloss dfrom dthe dinsurance dcompany. The dfield dunderwriter dis dthe d_________ dand dis dnot da ddeterminer dof dinsurability. d- d d d dcorrect danswer d: dProducer The dproducer dis din dthe dfield dsoliciting dapplications dfor dinsurance dand din deffect dis danother dpair dof deyes dand dears dfor dthe dinsurer din dhelping dto dissue dpolicies dto dinsurable dprospects. Third-party downership drefers dto: d- d d d dcorrect danswer d: dA dsituation dwhere dthe dpolicyowner dis dsomeone dother dthan dthe dinsured Which dstatement dbest ddescribes dthe dterm dreserve? d- d d d dcorrect danswer d: dThat damount dthat, dwhen dincreased dby dfuture dpremiums don doutstanding dpolicies, dand dinterest don dthose dpremiums dwill denable dthe dcompany dto dmeet dfuture ddeath dclaims The dapplicant, dif dother dthan dthe dproposed dinsured, dmust dhave: d- d d d dcorrect danswer d: dAn dinsurable dinterest din dthe dlife dof dthe dinsured Controlled dbusiness dmay dbe ddefined das dinsurance dsold: d- d d d dcorrect danswer d: dTo dthe dproducer, dthe dproducer's dfamily dand dfriends, dand dthe dproducer's dbusiness dassociates With dregard dto dlife dinsurance dpolicies, dloading drefers dto: d- d d d dcorrect danswer d: dAssignment dof dthe dappropriate dshare dof dthe dcompany's doperating dexpenses dto deach dpolicy Which dof dthe dfollowing dstatements dabout dthe daverage dnumber dof dpeople dwho ddie deach dyear dis dtrue? d- d d d dcorrect danswer d: dIt dis dcalled dthe dmortality drate Mortality dRate: dwhich dis dthe dstatistical dprobability dof ddeath din da dlarge dpopulation dof dinsureds. Which dof dthe dfollowing dis dNOT da dcharacteristic dof dlife dinsurance das dproperty? d- d d d dcorrect danswer d: dIt drequires da dfund dportfolio dmanager Characteristics: d It dcreates dan dimmediate destate It drequires dno dphysical dmaintenance It dmay dbe dpaid dfor din dinstallments The dmost deffective dway dto densure dthat dthe dapplicant dwill daccept dthe dpolicy dwhen dit dis dissued dis: d- d d d dcorrect danswer d: dTo dhave dthe dapplicant dpay dthe dinitial dpremium dat dthe dtime dof dapplication Allen dpurchases dan destate dbuilder d(jumping djuvenile) dpolicy dfor dhis d5-year dold dson, dDonald. dSuppose dthat dwhen dDonald dreaches dage d21 dhis dfather dpresents dhim dwith dthe dpolicy das da dgift. dWhich dof dthe dfollowing dstatements dis dNOT dcorrect? d- d d d dcorrect danswer d: dDonald dmust dchange dthe dbeneficiaries dimmediately CORRECT: The dpremium dwill dcontinue dto dbe dbased don dhis doriginal dage dof d5 Donald dhas denjoyed dprotection dagainst dthe dproblems dof dpremature ddeath The dface dvalue dof dDonald's dpolicy dhas dincreased dby d5 dtimes Term dinsurance ddiffers dfrom dpermanent dinsurance din dthat dterm: d- d d d dcorrect danswer d: dBuilds dno dcash dvalue, dpays da ddeath dbenefit donly An dindeterminate dpremium dpolicy doffers: d- d d d dcorrect danswer d: dA dlow dinitial dpremium dwith dsucceeding dpremiums dbased don dthe dcompany's dinvestment dreturn, dmortality dand dexpenses With dregard dto dthe dwaiver dof dpremium drider, dafter dthe ddisability da dpolicyowner dnormally: d- d d d dcorrect danswer d: dNeed dnot drepay dthe dpremiums dpaid dby dthe dcompany dduring ddisability In dmany djurisdictions, dpermanent dpolicies dare drequired dto dhave dsome dcash dvalue dby dthe dend dof: d- d d d dcorrect danswer d: dThe dThird dYear Loan dvalues dand dretirement dincome dare: d- d d d dcorrect danswer d: dCalled dthe dliving dbenefits dof dlife dinsurance With da dmodified dpremium dwhole dlife dcontract, dpremium dpayments: d- d d d dcorrect danswer d: dAre dlower din dthe dearly dyears dof dthe dcontract A dvariable dlife dpolicy: d- d d d dcorrect danswer d: dDeath dbenefit dvaries dto dreflect dthe dinvestment dresults dof dthe dunderlying dseparate daccount, dbut dnever dfalls dbelow da dguaranteed dminimum The dtype dof dpolicy dthat dcan dbe dchanged dfrom done dthat ddoes dnot daccumulate dcash dvalues dto done dthat ddoes dis da: d- d d d dcorrect danswer d: dConvertible dterm dpolicy A dlimited dpay dlife dpolicy: d- d d d dcorrect danswer d: dRequires dpremium dpayments dfor da dspecified dnumber dof dyears dor duntil da dspecified dage dis dreached Should dan dinsured dbecome dtotally dand dpermanently ddisabled dtwo dmonths dbefore dthe dcut-off ddate dfor dthe dwaiver dof dpremium drider: d- d d d dcorrect danswer d: dThe dinsured dremains deligible dfor dall dprovisions Warren dand dWilma dhave da djoint dlife dpolicy. dWarren ddies dand dthe dpolicy dpays dnothing. dLater don, dWilma ddies dand dthe dpolicy ddeath dbenefit dis dpaid dto dthe dbeneficiary. dThis dis dcalled da: d- d d d dcorrect danswer d: dSurvivorship dor dsecond-to-die dpolicy A dwhole dlife dpolicy: d- d d d dcorrect danswer d: dRequires dthe dinsured dto dpay dpremiums dfor dlife dand dendows dat dage d100 If dGreg's dpolicy don dhis down dlife dhas da dguaranteed dinsurability drider, dit dmeans dthat dhe dcan dpurchase dmore dinsurance: d- d d d dcorrect danswer d: dOn dhis down dlife dat dcertain dspecified dages dwithout dproof dof dinsurability Any dextra dpremium dcharged dfor dthe dwaiver dof dpremium drider: d- d d d dcorrect danswer d: dDoes dnot dapply dto dthe dpolicy's dcash dvalue If da dpolicyowner dhas da d$100,000 dpolicy dwith dan daccumulated dcash dvalue dof d$6,000, dthe dpolicyowner dcan dborrow dup dto: d- d d d dcorrect danswer d: dThe dentire daccumulated dcash dvalue dof d$6,000, dless dinterest dfor d1 dyear An dinsured dallows da dpermanent dpolicy dto dlapse. dUnless dotherwise dinstructed, dthe dinsurance dcompany: d- d d d dcorrect danswer d: dWill dautomatically dinstitute dthe dextended dterm doption Each dof dthe dfollowing dstatements dabout dpolicy dloans dis dcorrect, dexcept: d- d d d dcorrect danswer d: dPolicy dloans dmay dbe dmade don dany dtype dof dpolicy What dis da dpostmortem ddividend? d- d d d dcorrect danswer d: dA ddividend dearned, dbut dnot dyet dpaid, din dthe dyear dof dthe dinsured's ddeath dand dpaid dwith dthe ddeath dclaim The dfactors dthat ddetermine dthe damount dof deach dpayment dunder dthe dfixed dperiod dsettlement doption dare: d- d d d dcorrect danswer d: dLength dof dthe dfixed dperiod, dface damount dof dthe dpolicy dand dinterest Fred dpurchased da d$100,000 dpolicy dnaming dhis dwife, dWilma, das dprimary dbeneficiary, dand dhis donly dchild, dPebbles, dto dreceive dany dproceeds dif dWilma ddies dbefore dFred, dor dif dshe ddies dafter dFred, dbut dbefore dreceiving dall dthe dpolicy dproceeds. dFred delected dthe dinterest dsettlement doption dfor dWilma, dwith dthe dright dof dwithdrawal dafter d5 dyears. dNo dsettlement doption dwas dstipulated dfor dPebbles. dFred ddies don dMay d6th, d1991. dWhen dFred ddies, dhis dinsurance dcompany dwill dmake dsettlement dby dpaying: d- d d d dcorrect danswer d: dInterest din dperiodic dpayments dto dWilma Each dof dthe dfollowing dis da dsource dof dlife dinsurance dpolicy ddividends, dexcept: d- d d d dcorrect danswer d: dGuaranteed dcash dvalue daccumulations Why dshould da dpolicyowner dbe despecially dcareful dwhen ddeciding dto dincrease dthe damount dof dan doutstanding dpolicy dloan? d- d d d dcorrect danswer d: dIf dthe doutstanding dloan dbalance, dplus dinterest, dequals dor dexceeds dthe dcash dvalue dof dthe dpolicy, dthe dcompany dcould dcancel dthe dinsurance The dmain dpurpose dof dthe dspendthrift dclause dcontained din da dsettlement doption dis dto dprevent dthe dbeneficiary dfrom ddoing dall dof dthe dfollowing, dexcept: d- d d d dcorrect danswer d: dPurchasing da dnew dcar donce dthe dclaim dhas dbeen dsettled dand dproceeds dhave dbeen dpaid dout daccording dto dthe dbeneficiary ddesignations Collateral dfor da dpolicy dloan dis: d- d d d dcorrect danswer d: dThe dcash dvalue dof dthe dpolicy ditself If dan dinsured dhas dan doutstanding dloan dof d$5,000 don da dpolicy dwith da dface damount dof d$25,000, dat ddeath dthe dcompany dwill: d- d d d dcorrect danswer d: dPay dthe dbeneficiary d$20,000, dafter dsubtracting dthe damount dof dthe doutstanding dloan The dnonforfeiture doption dthat dprovides dthe dmost dlife dinsurance dprotection dis dthe: d- d d d dcorrect danswer d: dExtended dTerm dOption d The dextended dterm doption dprovides dthe dmost dlife dinsurance dprotection dof dthe davailable dnonforfeiture doptions. dPaid dup dadditions dare dconsidered ddividend doptions dand dare dnot dconsidered da dnonforfeiture doption. The dsettlement doption dthat dprovides dfor dthe dproceeds dplus dinterest dto dbe dpaid din dinstallments dfor da dspecified dperiod dof dtime dis dcalled dthe: d- d d d dcorrect danswer d: dFixed dPeriod dOption All dof dthe dfollowing dare dsituations din dwhich dthe dinsurer dis dobligated dto dpay dout da ddeath dbenefit dafter dthe dinsured dhas ddied, dexcept: d- d d d dcorrect danswer d: dThe dpremiums dhave dnot dbeen dpaid dand dhave dbeen doverdue dfor d3 dyears A dclient dpurchases dan dindividual ddisability dincome dpolicy dand dreceives dthe dpolicy dfrom dthe dinsurer d45 ddays dafter dapplication. dUpon dreceipt dof dthe dpolicy, dthe dclient dtypically dhas d______days dto dreview dand dreturn dthe dpolicy dto dreceive da dfull drefund dfor dany dreason. d- d d d dcorrect danswer d: d10 An dannuitant dhas da dtemporary dannuity dcertain, dand ddies dshortly dafter dthe dpayments dstart dbut dbefore dthe dcertain dperiod dof d10 dyears dhas delapsed. dAny dmoney dremaining dis: d- d d d dcorrect danswer d: dPaid dto dthe dbeneficiary dfor dthe drest dof dthe dcertain dperiod The dtype dof dannuity dthat dguarantees dto dpay dtotal dincome dat dleast dequal dto dthe dpurchase dprice dof dthe dcontract dis da: d- d d d dcorrect danswer d: dRefund dlife dannuity 'Annuity dPeriod' drefers dto dwhich dof dthe dfollowing? d- d d d dcorrect danswer d: dThe dtime dduring dwhich dpayments dare dmade dto dthe dannuitant The dannuity dperiod dbegins dwhen dthe dannuitant dstarts dto dreceive dpayments dfrom dthe daccumulated dfunds din dthe dannuity dpolicy. dThis dis dalso dreferred dto das d'the dAnnuitization dperiod'. An dannuity downer dcan dchange dall dof dthe dfollowing din dan dannuity, dexcept: d- d d d dcorrect danswer d: dMortality dTable Which dof dthe dfollowing dwill dreceive dthe dsmallest dmonthly dincome dbenefit dcheck dif dan dannuity dis dannuitized? d- d d d dcorrect danswer d: d50 dyear dold dfemale Which dof dthe dfollowing dAnnuities dis dgenerally dnot dbacked dby dthe dinsurer's dgeneral daccount dassets? d- d d d dcorrect danswer d: dVariable When dconverting da dgroup dlife dpolicy dto dan dindividual dpolicy, dthe ddeparting dgroup dmember's dnew dpolicy dmust dbe da: d- d d d dcorrect danswer d: dPermanent dor dwhole dlife dpolicy When dunderwriting dgroup dlife dinsurance: d- d d d dcorrect danswer d: dThe dunderwriter dgenerally dfocuses don dthe dgroup das da dwhole, drather dthan don dindividual dmembers Which dof dthe dfollowing dstatements dis dNOT dtrue dabout dthe dtax dtreatment dof dSocial dSecurity? d- d d d dcorrect danswer d: dEmployee dpaid dpayroll ddeductions dfor dSocial dSecurity dare dtax ddeductible dto dthe demployee Split-dollar dplan d- d d d dcorrect danswer d: dDivides dthe dcost dof dadditional dinsurance dfor dan demployee dbetween dthat demployee dand dthe dcompany