Alabama Life Insurance Exam Questions
With Complete Solutions Rated A+
Which clause allows the insured to change an existing policy to any other policy of any
type as long as the new policy has a higher premium, without any proof of insurability? -
CORRECT ANSWER-Privilege of change clause
The extended term nonforfeiture option provides: - CORRECT ANSWER-Paid-up term
coverage equal to that of the original policy
With a collateral assignment of a life policy to a creditor: - CORRECT ANSWER-You
assign a partial amount of the policy values to the creditor
An accounting measure used to determine a contract owner's interest in the separate
account of a variable annuity before payments begin is called: - CORRECT ANSWER-
An accumulation unit
Group Insurance Market: A certificate of insurance is issued to whom? - CORRECT
ANSWER-Each individual covered by the group life insurance
The principal difference between an entity purchase and a cross purchase buy-sell
agreement is: - CORRECT ANSWER-The identity of the policy owner (the main
difference is who owns the policy)
How long is the probationary period for group life insurance? - CORRECT ANSWER-
The probationary period is usually 90 days.
What is the primary purpose of a section 303 redemption? - CORRECT ANSWER-To
provide liquidity to pay estate taxes and administration and funeral costs
, What is it called when an insurance company sells part of their risk to another insurance
company? - CORRECT ANSWER-Reinsurance (also, risk-sharing)
The policy conditions represent the obligation of whom? - CORRECT ANSWER-Both
the insured and the insurer
Does social insurance provide equal benefits to all citizens that contribute? - CORRECT
ANSWER-No. As income is re-distributed through the governmental system, insureds
who put less into the system such as the poor, elderly, and those with dependents get
proportionately greater benefits.
In determining whether disability is permanent, most companies call for a waiting period
of how long? - CORRECT ANSWER-3 to 6 months
What can the cash value of a permanent life insurance policy be used for? - CORRECT
ANSWER-Cash values can be used as nonforfeiture option, policy loans, full or partial
surrender's, but not for accidental death benefits.
What are the essential elements of a contract? - CORRECT ANSWER-Remember the
acronym: CLOC: consideration, offer and acceptance, competent parties, and legal
purpose
What market is a private source of coverage of last resort for individuals or businesses
that have been rejected by voluntary market insurers? - CORRECT ANSWER-The
residual marketplace
Describe the term reserve - CORRECT ANSWER-That amount that, when increased by
future premiums on outstanding policies, and interest on this premiums will enable the
company to meet future death claims
With Complete Solutions Rated A+
Which clause allows the insured to change an existing policy to any other policy of any
type as long as the new policy has a higher premium, without any proof of insurability? -
CORRECT ANSWER-Privilege of change clause
The extended term nonforfeiture option provides: - CORRECT ANSWER-Paid-up term
coverage equal to that of the original policy
With a collateral assignment of a life policy to a creditor: - CORRECT ANSWER-You
assign a partial amount of the policy values to the creditor
An accounting measure used to determine a contract owner's interest in the separate
account of a variable annuity before payments begin is called: - CORRECT ANSWER-
An accumulation unit
Group Insurance Market: A certificate of insurance is issued to whom? - CORRECT
ANSWER-Each individual covered by the group life insurance
The principal difference between an entity purchase and a cross purchase buy-sell
agreement is: - CORRECT ANSWER-The identity of the policy owner (the main
difference is who owns the policy)
How long is the probationary period for group life insurance? - CORRECT ANSWER-
The probationary period is usually 90 days.
What is the primary purpose of a section 303 redemption? - CORRECT ANSWER-To
provide liquidity to pay estate taxes and administration and funeral costs
, What is it called when an insurance company sells part of their risk to another insurance
company? - CORRECT ANSWER-Reinsurance (also, risk-sharing)
The policy conditions represent the obligation of whom? - CORRECT ANSWER-Both
the insured and the insurer
Does social insurance provide equal benefits to all citizens that contribute? - CORRECT
ANSWER-No. As income is re-distributed through the governmental system, insureds
who put less into the system such as the poor, elderly, and those with dependents get
proportionately greater benefits.
In determining whether disability is permanent, most companies call for a waiting period
of how long? - CORRECT ANSWER-3 to 6 months
What can the cash value of a permanent life insurance policy be used for? - CORRECT
ANSWER-Cash values can be used as nonforfeiture option, policy loans, full or partial
surrender's, but not for accidental death benefits.
What are the essential elements of a contract? - CORRECT ANSWER-Remember the
acronym: CLOC: consideration, offer and acceptance, competent parties, and legal
purpose
What market is a private source of coverage of last resort for individuals or businesses
that have been rejected by voluntary market insurers? - CORRECT ANSWER-The
residual marketplace
Describe the term reserve - CORRECT ANSWER-That amount that, when increased by
future premiums on outstanding policies, and interest on this premiums will enable the
company to meet future death claims
