THEBRIGHT EXAM SOLUTIONS 8/20/2024 8:37 PM
Webce Life and Health Exam Questions
With Correct Answers
Representations and Warranties - answer✔✔Representations are statements the applicant makes
on an application that are deemed to be true to the applicant's best knowledge. Warranties are
statements the insurer makes in the contract.
Underwriting vs. Actuarial Departments - answer✔✔Two related insurance company functions.
Through the process of _________, applications are assessed for insurability and to assign
premium rates. The ________ department analyzes data to help estimate future losses and to
produce rate tables.
Managerial System vs. General Agency System - answer✔✔Two variations of the career agency
system in which producers represent a single company. One is headed by a company employee
called a general manager (GM), the other by an independent contractor called a general agent
(GA).
Fraternal Insurance Company - answer✔✔A non-profit form of insurance provider sponsored by
an organization of people who share a common ethnic, religious, or vocational affiliation.
Peril and Hazard - answer✔✔Two related general insurance terms:
Peril is the immediate cause of a loss (and the event that is insured against).
Hazard is any condition that increases the risk of incurring a loss.
Contract of adhesion - answer✔✔A type of contract in which one party (the offeror) drafts the
terms that must be accepted as-is by the offeree. Insurance policies are this type.
Mutual Insurance Company - answer✔✔A form of insurance company that is owned by
policyowners. May distribute policy dividends (non-taxable) through participating policies.
Independent Agency System - answer✔✔An insurance distribution system in which the manager
and producers are fully independent and not affiliated with any single insurer.
Buyer's Guide and Policy Summary - answer✔✔Two related disclosure documents that are
required by most states to be presented to life and health insurance applicants at some point
during the buying process.
, THEBRIGHT EXAM SOLUTIONS 8/20/2024 8:37 PM
Risk - answer✔✔A basic insurance term referring to the possibility of incurring a loss.
Law of Large Numbers - answer✔✔A mathematical principle that is the basis for predicting the
odds of a loss occurring in a certain population in any given year.
Social Security (OASDI) - answer✔✔A federal insurance program that provides disability,
death, and retirement benefits to covered workers and their qualifying beneficiaries.
Agents vs. Brokers - answer✔✔Two basic types of insurance producer: an ______ represents a
single insurer and a _____ sells policies from multiple insurers.
Reinsurance - answer✔✔The process through which insurance companies spread large risks
among other insurers.
Domestic, Foreign, and Alien Insurers - answer✔✔Insurers can be categorized by their state of
domicile. There are three categories, known as _____, _____, and _____.
Stock Insurance Company - answer✔✔A form of insurance company that is owned by
stockholders who may or may not also be policyowners. May distribute stock dividends
(taxable).
Admitted Insurer - answer✔✔An insurer that has a certificate of authority in a given state is said
to be an___________ insurer in that state.
Express, Implied, and Apparent Authority - answer✔✔Express authority—The right to sign an
application as an agent for the insurer.
Implied authority—Using a computer program to identify insurance needs and to recommend
solutions.
Apparent authority—Advising the applicant to not disclose on the application any important
health facts that might reduce his or her insurability.
Indemnity vs. Valued Contract - answer✔✔Two forms of insurance contract. An indemnity
contract bases policy benefits on reimbursement of actual losses. A valued contract bases
benefits on a stated amount without regard for the value of the loss.
Loss - answer✔✔An unplanned reduction in economic value resulting from the occurrence of a
covered peril.
Medicare - answer✔✔A federal insurance program that provides medical care benefits to
covered workers (retirees).
Underwriting - answer✔✔The process by which an insurance company assesses an application
to determine if it represents an insurable risk.
, THEBRIGHT EXAM SOLUTIONS 8/20/2024 8:37 PM
Risk Management - answer✔✔The natural process by which people contend with the perils
faced daily, of which there are five common techniques.
The five basic elements of a valid contract - answer✔✔Offer, acceptance, consideration,
competent parties, and legal purpose
Concealment - answer✔✔The willful nondisclosure of material facts on an application for the
purpose of obtaining insurance.
Insurable Risk (5 Criteria) - answer✔✔Loss must be definable and measurable.
The covered peril must be accidental or outside the insured's control.
The risk must be shared by a large group of similar risks.
The loss must not be catastrophic.
The risk must not be generally excluded from coverage.
Needs Approach - answer✔✔The needs approach to determining life insurance needs is based on
a detailed review of a person's specific situation. It examines personal and family income,
liabilities, and assets, as well as future financial goals, to calculate the right amount of life
insurance.
Bring-Back Rule - answer✔✔In estate planning, this rule requires life insurance policies
transferred from the insured within 3 years before death to be returned to the decedent's estate for
valuation purposes.
Life Insurance "Living Benefits" - answer✔✔Living benefits are made possible by the policy's
cash value, which is always available to the policyowner through policy loans, withdrawals, and
partial surrenders. The funds may be used for any purpose.
Key Person Life Insurance - answer✔✔If a key employee ends his or her employment, the
employer can continue the policy in force. However, many employers choose to:
sell the policy to the insured for an amount equal to its cash value
surrender the policy or
change insureds if allowed by the insurance company and applicable state law
Annuity - answer✔✔An insurance contract between a person and an insurer to distribute an
accumulated sum of money over a certain period, including the person's lifetime.
Annuities come in many forms, but they all have two common purposes:
, THEBRIGHT EXAM SOLUTIONS 8/20/2024 8:37 PM
to accumulate money on a tax-deferred basis
to distribute the accumulated money as income in a guaranteed amount for a guaranteed period
(including the annuitant's life)
Decreasing Term Life Insurance - answer✔✔This form of term life features a death benefit that
diminishes over time and premium that remains level for the term of the policy.
Fully Insured Status (Social Security) - answer✔✔To be considered fully insured, a worker must
have 40 quarters of coverage. A fully insured worker is eligible for disability, retirement, and
death benefits.
Cross-Purchase Buy-Sell Agreement - answer✔✔A type of buy-sell agreement in which each
owner purchases a life insurance policy on each of the other owners.
ERISA - answer✔✔The Employee Retirement Income Security Act of 1974 (ERISA) protects
the rights of employees covered under an employer-sponsored plan by stipulating minimum
participation, vesting, and funding requirements.
Irrevocable Beneficiary - answer✔✔This beneficiary designation cannot be changed by the
policyowner without that beneficiary's permission.
Guaranteed Insurability Rider - answer✔✔This life policy rider guarantees that additional
coverage can be added to a whole life policy even if the insured has become uninsurable.
Annuity Beneficiary - answer✔✔The person the annuity owner chooses to receive the annuity
contract's values if either the owner or the annuitant dies before annuitization.
Whole Life Insurance - answer✔✔Whole life insurance features a guaranteed cash value, a fixed
guaranteed death benefit, level premiums, and coverage that can remain in effect as long as the
insured lives (up to age 120). Its most basic form is called straight (or ordinary) whole life
insurance.
Buy-Sell Agreement - answer✔✔A legal agreement through which two or more owners of a
business arrange for the disposition of each owner's share of the business upon death.
Expense Charge (Load Factor) - answer✔✔The load factor reflects the costs the insurer expects
to incur on the policy. In determining its load factor, an insurer is generally guided by three
objectives:
to cover total operating costs
to provide a safety margin
to contribute to profits or surplus
Webce Life and Health Exam Questions
With Correct Answers
Representations and Warranties - answer✔✔Representations are statements the applicant makes
on an application that are deemed to be true to the applicant's best knowledge. Warranties are
statements the insurer makes in the contract.
Underwriting vs. Actuarial Departments - answer✔✔Two related insurance company functions.
Through the process of _________, applications are assessed for insurability and to assign
premium rates. The ________ department analyzes data to help estimate future losses and to
produce rate tables.
Managerial System vs. General Agency System - answer✔✔Two variations of the career agency
system in which producers represent a single company. One is headed by a company employee
called a general manager (GM), the other by an independent contractor called a general agent
(GA).
Fraternal Insurance Company - answer✔✔A non-profit form of insurance provider sponsored by
an organization of people who share a common ethnic, religious, or vocational affiliation.
Peril and Hazard - answer✔✔Two related general insurance terms:
Peril is the immediate cause of a loss (and the event that is insured against).
Hazard is any condition that increases the risk of incurring a loss.
Contract of adhesion - answer✔✔A type of contract in which one party (the offeror) drafts the
terms that must be accepted as-is by the offeree. Insurance policies are this type.
Mutual Insurance Company - answer✔✔A form of insurance company that is owned by
policyowners. May distribute policy dividends (non-taxable) through participating policies.
Independent Agency System - answer✔✔An insurance distribution system in which the manager
and producers are fully independent and not affiliated with any single insurer.
Buyer's Guide and Policy Summary - answer✔✔Two related disclosure documents that are
required by most states to be presented to life and health insurance applicants at some point
during the buying process.
, THEBRIGHT EXAM SOLUTIONS 8/20/2024 8:37 PM
Risk - answer✔✔A basic insurance term referring to the possibility of incurring a loss.
Law of Large Numbers - answer✔✔A mathematical principle that is the basis for predicting the
odds of a loss occurring in a certain population in any given year.
Social Security (OASDI) - answer✔✔A federal insurance program that provides disability,
death, and retirement benefits to covered workers and their qualifying beneficiaries.
Agents vs. Brokers - answer✔✔Two basic types of insurance producer: an ______ represents a
single insurer and a _____ sells policies from multiple insurers.
Reinsurance - answer✔✔The process through which insurance companies spread large risks
among other insurers.
Domestic, Foreign, and Alien Insurers - answer✔✔Insurers can be categorized by their state of
domicile. There are three categories, known as _____, _____, and _____.
Stock Insurance Company - answer✔✔A form of insurance company that is owned by
stockholders who may or may not also be policyowners. May distribute stock dividends
(taxable).
Admitted Insurer - answer✔✔An insurer that has a certificate of authority in a given state is said
to be an___________ insurer in that state.
Express, Implied, and Apparent Authority - answer✔✔Express authority—The right to sign an
application as an agent for the insurer.
Implied authority—Using a computer program to identify insurance needs and to recommend
solutions.
Apparent authority—Advising the applicant to not disclose on the application any important
health facts that might reduce his or her insurability.
Indemnity vs. Valued Contract - answer✔✔Two forms of insurance contract. An indemnity
contract bases policy benefits on reimbursement of actual losses. A valued contract bases
benefits on a stated amount without regard for the value of the loss.
Loss - answer✔✔An unplanned reduction in economic value resulting from the occurrence of a
covered peril.
Medicare - answer✔✔A federal insurance program that provides medical care benefits to
covered workers (retirees).
Underwriting - answer✔✔The process by which an insurance company assesses an application
to determine if it represents an insurable risk.
, THEBRIGHT EXAM SOLUTIONS 8/20/2024 8:37 PM
Risk Management - answer✔✔The natural process by which people contend with the perils
faced daily, of which there are five common techniques.
The five basic elements of a valid contract - answer✔✔Offer, acceptance, consideration,
competent parties, and legal purpose
Concealment - answer✔✔The willful nondisclosure of material facts on an application for the
purpose of obtaining insurance.
Insurable Risk (5 Criteria) - answer✔✔Loss must be definable and measurable.
The covered peril must be accidental or outside the insured's control.
The risk must be shared by a large group of similar risks.
The loss must not be catastrophic.
The risk must not be generally excluded from coverage.
Needs Approach - answer✔✔The needs approach to determining life insurance needs is based on
a detailed review of a person's specific situation. It examines personal and family income,
liabilities, and assets, as well as future financial goals, to calculate the right amount of life
insurance.
Bring-Back Rule - answer✔✔In estate planning, this rule requires life insurance policies
transferred from the insured within 3 years before death to be returned to the decedent's estate for
valuation purposes.
Life Insurance "Living Benefits" - answer✔✔Living benefits are made possible by the policy's
cash value, which is always available to the policyowner through policy loans, withdrawals, and
partial surrenders. The funds may be used for any purpose.
Key Person Life Insurance - answer✔✔If a key employee ends his or her employment, the
employer can continue the policy in force. However, many employers choose to:
sell the policy to the insured for an amount equal to its cash value
surrender the policy or
change insureds if allowed by the insurance company and applicable state law
Annuity - answer✔✔An insurance contract between a person and an insurer to distribute an
accumulated sum of money over a certain period, including the person's lifetime.
Annuities come in many forms, but they all have two common purposes:
, THEBRIGHT EXAM SOLUTIONS 8/20/2024 8:37 PM
to accumulate money on a tax-deferred basis
to distribute the accumulated money as income in a guaranteed amount for a guaranteed period
(including the annuitant's life)
Decreasing Term Life Insurance - answer✔✔This form of term life features a death benefit that
diminishes over time and premium that remains level for the term of the policy.
Fully Insured Status (Social Security) - answer✔✔To be considered fully insured, a worker must
have 40 quarters of coverage. A fully insured worker is eligible for disability, retirement, and
death benefits.
Cross-Purchase Buy-Sell Agreement - answer✔✔A type of buy-sell agreement in which each
owner purchases a life insurance policy on each of the other owners.
ERISA - answer✔✔The Employee Retirement Income Security Act of 1974 (ERISA) protects
the rights of employees covered under an employer-sponsored plan by stipulating minimum
participation, vesting, and funding requirements.
Irrevocable Beneficiary - answer✔✔This beneficiary designation cannot be changed by the
policyowner without that beneficiary's permission.
Guaranteed Insurability Rider - answer✔✔This life policy rider guarantees that additional
coverage can be added to a whole life policy even if the insured has become uninsurable.
Annuity Beneficiary - answer✔✔The person the annuity owner chooses to receive the annuity
contract's values if either the owner or the annuitant dies before annuitization.
Whole Life Insurance - answer✔✔Whole life insurance features a guaranteed cash value, a fixed
guaranteed death benefit, level premiums, and coverage that can remain in effect as long as the
insured lives (up to age 120). Its most basic form is called straight (or ordinary) whole life
insurance.
Buy-Sell Agreement - answer✔✔A legal agreement through which two or more owners of a
business arrange for the disposition of each owner's share of the business upon death.
Expense Charge (Load Factor) - answer✔✔The load factor reflects the costs the insurer expects
to incur on the policy. In determining its load factor, an insurer is generally guided by three
objectives:
to cover total operating costs
to provide a safety margin
to contribute to profits or surplus
