Washington Life-Health Insurance Exam
Questions with Latest Update
policy owner - Answer-usually, but not always the person covered by the policy
beneficiary - Answer-the person who is paid when a claim
is submitted
agent/producer - Answer-acts as a legal representative
of the insurance company
broker - Answer-representative of the Insured, not the insurance company
risk - Answer-The chance or uncertainty of loss
Pure risk - Answer-the chance of experiencing a loss (without the possibility of gain).
Only downside, no upside.
Speculative risk - Answer-s the chance of loss one accepts in the hope of realizing a
gain
Risk avoidance - Answer-staying away from risky activities altogether
Risk reduction - Answer-reduce the chance of something bad happening
Risk shifting - Answer-Get someone else to accept the risk
Buying insurance - Answer-transfer a portion of your risk to the Insurer
Risk Retention - Answer-the individual or business that opts not to buy insurance retains
the entire risk
Indemnification - Answer-an insurance concept that states that some portions of the
insurance industry prefer that we be made only whole after a loss rather than coming
out ahead (Only getting back what you are owed, not getting more than what you had to
start with)
Subrogation - Answer-the transfer to the Insurer of the Insured's rights to recover
damages from a responsible third party
Peril - Answer-the cause of loss
Law of Large numbers - Answer-the mathematical concept that makes it easier to
predict losses if we have a large number of Insureds
,Insurable losses are... - Answer-Economic, Predictable, Accidental, Measurable, Non-
Catastrophic
non-participating companies - Answer-Stock companies that exist for the sole purpose
of generating profits
for their stockholders
participating companies - Answer-A company owned by its policy holders where the
profits are distributed among policy holders
Social Security act - Answer-a guarantee that government
would never again allow workers (and their families) to become
destitute
OASDI (Social Security) - Answer-Old Age, Survivors, and Disability Insurance...Federal
Government law
FICA - Answer-Federal Insurance Contributions Act
or FICA, payroll taxes levied on employees, employers, and the self-employed.
Not covered by social security - Answer-payroll taxes levied on employees, employers,
and the self-employed.
FICA Fully Insured - Answer-(Worked for 10 years) payroll taxes levied on employees,
employers,
and the self-employed.
Retirement Benefits;
Disability Income Benefits; and
Survivor Benefits.
Currently Insured - Answer-Worked less than ten years. Only eligeable for Survivor
Benefits
Average Indexed Monthly
Earnings - Answer-Averages earnings over time period. Either way, the more a worker
has paid into Social Security, the more the worker (or dependents)
will get out of it. (What you get at age 65)
Primary Insurance Amount (PIA). - Answer-Full retirement benefit someone is entitled to
at age 65 (some cases, 66-67)
elimination period (Disability) - Answer-the person must be
disabled for 5 months before starting to receive Disability
Benefits
, underwriting - Answer-the selection and classification of risks.
actuary - Answer-A person who tracks the lifespan and chance of illness or accident
based on specific factors
Mortality table - Answer-predict the age at which
people in a given group are likely to die (Used by life insurers)
Morbidity table - Answer-predict how often
people in a given group are likely to get sick or have an
accident. (Used by health insurers)
field underwriters - Answer-Insurance agents
declined risks - Answer-Applicants who are too risky are declined
Adverse selection - Answer-the tendency for high
risk people to be more likely to apply for insurance than low risk
people.
Premium = - Answer-Risk + Expenses - Interest
Premium mode - Answer-how frequently an Insured will pay the premium
Accelerated Death Benefit Rider - Answer-requires the Insurer to pay out part of the
death benefit
(usually 50%) if the Insured has a diagnosis of a particular illness
likely to cause death within 12 months
Viatical Settlements - Answer-sell the policy to an investment company that will continue
to make the premium payments and collect the death benefit when the Insured dies.
The Insured will sell only if an investment company will pay more than the current cash
surrender value.
Group Policies share
these three characteristics - Answer-Reduced Cost;
Reduced Adverse Selection; and
Fixed Benefits.
Adverse selection - Answer-people who need
insurance the most are the ones most likely to buy it - and buy
more of it causing more loss claims
experience rating - Answer-looks at the claims
history for this particular group.
Questions with Latest Update
policy owner - Answer-usually, but not always the person covered by the policy
beneficiary - Answer-the person who is paid when a claim
is submitted
agent/producer - Answer-acts as a legal representative
of the insurance company
broker - Answer-representative of the Insured, not the insurance company
risk - Answer-The chance or uncertainty of loss
Pure risk - Answer-the chance of experiencing a loss (without the possibility of gain).
Only downside, no upside.
Speculative risk - Answer-s the chance of loss one accepts in the hope of realizing a
gain
Risk avoidance - Answer-staying away from risky activities altogether
Risk reduction - Answer-reduce the chance of something bad happening
Risk shifting - Answer-Get someone else to accept the risk
Buying insurance - Answer-transfer a portion of your risk to the Insurer
Risk Retention - Answer-the individual or business that opts not to buy insurance retains
the entire risk
Indemnification - Answer-an insurance concept that states that some portions of the
insurance industry prefer that we be made only whole after a loss rather than coming
out ahead (Only getting back what you are owed, not getting more than what you had to
start with)
Subrogation - Answer-the transfer to the Insurer of the Insured's rights to recover
damages from a responsible third party
Peril - Answer-the cause of loss
Law of Large numbers - Answer-the mathematical concept that makes it easier to
predict losses if we have a large number of Insureds
,Insurable losses are... - Answer-Economic, Predictable, Accidental, Measurable, Non-
Catastrophic
non-participating companies - Answer-Stock companies that exist for the sole purpose
of generating profits
for their stockholders
participating companies - Answer-A company owned by its policy holders where the
profits are distributed among policy holders
Social Security act - Answer-a guarantee that government
would never again allow workers (and their families) to become
destitute
OASDI (Social Security) - Answer-Old Age, Survivors, and Disability Insurance...Federal
Government law
FICA - Answer-Federal Insurance Contributions Act
or FICA, payroll taxes levied on employees, employers, and the self-employed.
Not covered by social security - Answer-payroll taxes levied on employees, employers,
and the self-employed.
FICA Fully Insured - Answer-(Worked for 10 years) payroll taxes levied on employees,
employers,
and the self-employed.
Retirement Benefits;
Disability Income Benefits; and
Survivor Benefits.
Currently Insured - Answer-Worked less than ten years. Only eligeable for Survivor
Benefits
Average Indexed Monthly
Earnings - Answer-Averages earnings over time period. Either way, the more a worker
has paid into Social Security, the more the worker (or dependents)
will get out of it. (What you get at age 65)
Primary Insurance Amount (PIA). - Answer-Full retirement benefit someone is entitled to
at age 65 (some cases, 66-67)
elimination period (Disability) - Answer-the person must be
disabled for 5 months before starting to receive Disability
Benefits
, underwriting - Answer-the selection and classification of risks.
actuary - Answer-A person who tracks the lifespan and chance of illness or accident
based on specific factors
Mortality table - Answer-predict the age at which
people in a given group are likely to die (Used by life insurers)
Morbidity table - Answer-predict how often
people in a given group are likely to get sick or have an
accident. (Used by health insurers)
field underwriters - Answer-Insurance agents
declined risks - Answer-Applicants who are too risky are declined
Adverse selection - Answer-the tendency for high
risk people to be more likely to apply for insurance than low risk
people.
Premium = - Answer-Risk + Expenses - Interest
Premium mode - Answer-how frequently an Insured will pay the premium
Accelerated Death Benefit Rider - Answer-requires the Insurer to pay out part of the
death benefit
(usually 50%) if the Insured has a diagnosis of a particular illness
likely to cause death within 12 months
Viatical Settlements - Answer-sell the policy to an investment company that will continue
to make the premium payments and collect the death benefit when the Insured dies.
The Insured will sell only if an investment company will pay more than the current cash
surrender value.
Group Policies share
these three characteristics - Answer-Reduced Cost;
Reduced Adverse Selection; and
Fixed Benefits.
Adverse selection - Answer-people who need
insurance the most are the ones most likely to buy it - and buy
more of it causing more loss claims
experience rating - Answer-looks at the claims
history for this particular group.
