INDIANA LIFE & HEALTH INSUARANCE EXAM ACTUAL
EXAM WITH ALL 163 QUESTIONS AND VERIFIED ANSWERS
GRADED A+ LATEST VERSION 2024.
Participating Insurance Policy - ANSWER-may pay dividends to the policyowner
Material Misrepresentation - ANSWER-misstatement to a question asked in the application process;
death benefit claim will likely be denied
Law of Large Numbers - ANSWER-the larger a group becomes, the easier it is to predict losses; used to
predict certain types of losses and set appropriate premiums
Substandard Risk - ANSWER-results in higher premium
Standard Risk - ANSWER-results in standard premium
Preferred Risk - ANSWER-results in lower premium
Expense Loading - ANSWER-combined with premiums to spread the operating costs of a business to all
insureds
Net Premium - ANSWER-premiums without expense loading
Concealment - ANSWER-occurs when a person withholds a material fact that is crucial to making a
decision; in insurance, this involves withholding information that would be crucial to underwriting
decisions
Warranty - ANSWER-a statement guaranteed to be true
,Representation - ANSWER-a statement true to the best of an applicant's knowledge
3 Basic Types of Term Life Insurance - ANSWER-level, increasing, and decreasing
Level Term - ANSWER-death benefit doesn't change throughout the life of the policy
Annually Renewable Term (ART) - ANSWER-premium increases annually according to attained age;
policy may be guaranteed to be renewable each without proof of insurability
Re-entry Option - ANSWER-the insured, upon the end of a term policy with guaranteed renewable
option, may qualify for a discounted premium rate with proof of insurability
Decreasing Term - ANSWER-death benefit decreases each year over duration of the policy term; typically
used when the amount of needed protection is time sensitive, or decreases over time
Increasing Term - ANSWER-death benefit increases each year over duration of the policy term (usually
by specific amount or percentage of original amount); often used by insurance companies to fund
certain riders that provide a refund of premiums of a gradual increase in total coverage, such as the cost
of living or return of premium riders
Convertible Term - ANSWER-provides the policy owner with the right to convert the policy to a
permanent insurance policy without evidence of insurability; premium will be based on the insured's
attained age at the time of conversion
Continuous Premium (Straight Life or Ordinary Life) - ANSWER-basic whole life policy; will typically have
the lowest annual premium
Limited Payment - ANSWER-premiums for coverage paid-up before age 100; higher premium and cash
value builds up faster; 20-pay life, life paid-up at 65 (LP-65);
, Single Premium Whole Life (SPWL) - ANSWER-provides level death benefit to the insured's age 100 for a
one-time, lump-sum payment; policy completely paid-up after one premium and generates immediate
cash
Modified Life - ANSWER-lower premium in first few policy years (3 to 5 years) and higher level premium
for remainder of insured's life
Graded-premium Whole Life - ANSWER-premiums start low, gradually increase each year (for about 5 to
10 years), and remain level thereafter
Interest Sensitive Whole Life (Current Assumption Life) - ANSWER-provides same benefits as traditional
whole life policies with added benefit of current interest rates which may allow for either greater cash
value accumulation or a shorter premium-paying period
Equity-Indexed Whole Life - ANSWER-cash value is dependent upon the performance of the equity index
(S&P 500) although there is a guaranteed minimum interest rate; policy's face amount increases
annually to keep pace with inflation
Adjustable LIfe - ANSWER-insured determines how much coverage is needed and the affordable amount
of premium; as insured's needs change, policy owner may make adjustments such as increase or
decrease the premium or the premium paying period, increase or decrease the face amount (requires
proof of insurability for increasing the death benefit or changing to a lower premium type policy), or
change the period of protection; policy owner also has option of converting from term to whole life or
vice versa
Universal Life (flexible premium adjustable life) - ANSWER-policy owner has the flexibility to increase the
amount of premium paid into the policy and to later decrease it again; interests sensitive policy with a
guaranteed contract interest rate (usually 3 to 6%) and opportunity to get the current interest rate; two
components: insurance (always annually renewable term insurance) and cash account; option A (level
death benefit) and option B (increasing death benefit)
Fixed Life Insurance and Annuities - ANSWER-contracts that offer guaranteed minimum of fixed benefits
that are stated in the contract
EXAM WITH ALL 163 QUESTIONS AND VERIFIED ANSWERS
GRADED A+ LATEST VERSION 2024.
Participating Insurance Policy - ANSWER-may pay dividends to the policyowner
Material Misrepresentation - ANSWER-misstatement to a question asked in the application process;
death benefit claim will likely be denied
Law of Large Numbers - ANSWER-the larger a group becomes, the easier it is to predict losses; used to
predict certain types of losses and set appropriate premiums
Substandard Risk - ANSWER-results in higher premium
Standard Risk - ANSWER-results in standard premium
Preferred Risk - ANSWER-results in lower premium
Expense Loading - ANSWER-combined with premiums to spread the operating costs of a business to all
insureds
Net Premium - ANSWER-premiums without expense loading
Concealment - ANSWER-occurs when a person withholds a material fact that is crucial to making a
decision; in insurance, this involves withholding information that would be crucial to underwriting
decisions
Warranty - ANSWER-a statement guaranteed to be true
,Representation - ANSWER-a statement true to the best of an applicant's knowledge
3 Basic Types of Term Life Insurance - ANSWER-level, increasing, and decreasing
Level Term - ANSWER-death benefit doesn't change throughout the life of the policy
Annually Renewable Term (ART) - ANSWER-premium increases annually according to attained age;
policy may be guaranteed to be renewable each without proof of insurability
Re-entry Option - ANSWER-the insured, upon the end of a term policy with guaranteed renewable
option, may qualify for a discounted premium rate with proof of insurability
Decreasing Term - ANSWER-death benefit decreases each year over duration of the policy term; typically
used when the amount of needed protection is time sensitive, or decreases over time
Increasing Term - ANSWER-death benefit increases each year over duration of the policy term (usually
by specific amount or percentage of original amount); often used by insurance companies to fund
certain riders that provide a refund of premiums of a gradual increase in total coverage, such as the cost
of living or return of premium riders
Convertible Term - ANSWER-provides the policy owner with the right to convert the policy to a
permanent insurance policy without evidence of insurability; premium will be based on the insured's
attained age at the time of conversion
Continuous Premium (Straight Life or Ordinary Life) - ANSWER-basic whole life policy; will typically have
the lowest annual premium
Limited Payment - ANSWER-premiums for coverage paid-up before age 100; higher premium and cash
value builds up faster; 20-pay life, life paid-up at 65 (LP-65);
, Single Premium Whole Life (SPWL) - ANSWER-provides level death benefit to the insured's age 100 for a
one-time, lump-sum payment; policy completely paid-up after one premium and generates immediate
cash
Modified Life - ANSWER-lower premium in first few policy years (3 to 5 years) and higher level premium
for remainder of insured's life
Graded-premium Whole Life - ANSWER-premiums start low, gradually increase each year (for about 5 to
10 years), and remain level thereafter
Interest Sensitive Whole Life (Current Assumption Life) - ANSWER-provides same benefits as traditional
whole life policies with added benefit of current interest rates which may allow for either greater cash
value accumulation or a shorter premium-paying period
Equity-Indexed Whole Life - ANSWER-cash value is dependent upon the performance of the equity index
(S&P 500) although there is a guaranteed minimum interest rate; policy's face amount increases
annually to keep pace with inflation
Adjustable LIfe - ANSWER-insured determines how much coverage is needed and the affordable amount
of premium; as insured's needs change, policy owner may make adjustments such as increase or
decrease the premium or the premium paying period, increase or decrease the face amount (requires
proof of insurability for increasing the death benefit or changing to a lower premium type policy), or
change the period of protection; policy owner also has option of converting from term to whole life or
vice versa
Universal Life (flexible premium adjustable life) - ANSWER-policy owner has the flexibility to increase the
amount of premium paid into the policy and to later decrease it again; interests sensitive policy with a
guaranteed contract interest rate (usually 3 to 6%) and opportunity to get the current interest rate; two
components: insurance (always annually renewable term insurance) and cash account; option A (level
death benefit) and option B (increasing death benefit)
Fixed Life Insurance and Annuities - ANSWER-contracts that offer guaranteed minimum of fixed benefits
that are stated in the contract
