Life Insurance Exam – Wisconsin – Questions
With Detailed Solutions
Mortality - -The rate people will die
- Morbidity - -The rate people will get sick
- Peril - -The cause of loss and the event insured against.
Ex: premature death, dependency during old age, accident, and sickness
- Adverse Selection - -The tendency for poorer than average risks to seek out
insurance
- Annuity - -Annuities protect against the risk of living longer than expected. Annuities
provide a guaranteed life income to protect against the risk of depleting retirement
funds
- Lloyds Associations - -Described as a market where individuals and groups gather to
exchange insurance, much like stock exchanges provide a place to buy, sell and trade
stocks
- Risk Retention Groups - -Llimited liability companies or member-owned corporations
that collectively assume and spread their members' liability risks through self-insurance.
All members of a risk retention group must be employed in similar types of businesses
so that they have similar liability exposures
- Express Authority - -The explicit authority granted to the agent by the principal as
written in the agency contract
- Implied Authority - -Not specifically expressed by the principal to the agent in the
agency contract, but is implicit in the agent's duties
- Apparent Authority - -Is a situation in which the insurer gives the customer a
reasonable belief that an agent has the power and authority to bind the principal, even
in cases where the agent does not have such authority
- Fair Credit Reporting Act (FCRA) - -The Act requires consumer-reporting agencies to
implement policies and procedures to preserve the confidentiality, accuracy, relevance,
and appropriate utilization of consumer's private credit information
- What cannot be in a consumer report unless for a life insurance policy of $150,000 or
more: - --Bankruptcies dating back more than 10 years
, -Civil suits and judgments dating back more than seven years or cases in which the
statute of limitations has expired, whichever period is longer
-Tax liens dating back more than seven years
-Adverse information dating back more than seven years
-Reports of a consumer's arrests, indictments or convictions
- Guaranty Associations - -Provide a safety net for all member life, health and annuity
insurers in a particular state
- Defamation - -Any false, maliciously critical, or derogatory communication - written
or oral - that injures another's reputation, fame, or character
- Rebating - -If a buyer of an insurance policy is given anything of significant value as
an inducement to purchase or renew a policy- saying you'll give them something in
addition like a membership to a club
- Twisting - -The unethical act of persuading a policyowner to drop a policy solely for
the purpose of selling another policy without regard to possible disadvantages to the
policyowner- Often, it involves encouraging an insured to lapse on their current policy
and to take out another.
- Churning - -The practice of using misrepresentation to induce a policyholder to
replace a policy issued by the insurer the producer represents, rather than the policy of
a competitor
- Coercion - -Generally manipulates through the prospect of something desirable
- Consideration - -Premium payment + application
- Subrogation - -The right of the insurer to assume the rights of the insured and sue
the responsible third party for damages inflicted upon the insured.
- Indemnity Insurance - -Insurance that compensates the beneficiaries of the policies
for their actual economic losses, up to the limiting amount of the insurance policy
- Four elements that need to be in every contract: - -Offer and acceptance,
consideration, competent parties, legal purpose
- Four main parts of a life and health insurance contract - -The policy face, insuring
clause, conditions, exclusions
- Insurable interest must be present at what time - -Time of the application
With Detailed Solutions
Mortality - -The rate people will die
- Morbidity - -The rate people will get sick
- Peril - -The cause of loss and the event insured against.
Ex: premature death, dependency during old age, accident, and sickness
- Adverse Selection - -The tendency for poorer than average risks to seek out
insurance
- Annuity - -Annuities protect against the risk of living longer than expected. Annuities
provide a guaranteed life income to protect against the risk of depleting retirement
funds
- Lloyds Associations - -Described as a market where individuals and groups gather to
exchange insurance, much like stock exchanges provide a place to buy, sell and trade
stocks
- Risk Retention Groups - -Llimited liability companies or member-owned corporations
that collectively assume and spread their members' liability risks through self-insurance.
All members of a risk retention group must be employed in similar types of businesses
so that they have similar liability exposures
- Express Authority - -The explicit authority granted to the agent by the principal as
written in the agency contract
- Implied Authority - -Not specifically expressed by the principal to the agent in the
agency contract, but is implicit in the agent's duties
- Apparent Authority - -Is a situation in which the insurer gives the customer a
reasonable belief that an agent has the power and authority to bind the principal, even
in cases where the agent does not have such authority
- Fair Credit Reporting Act (FCRA) - -The Act requires consumer-reporting agencies to
implement policies and procedures to preserve the confidentiality, accuracy, relevance,
and appropriate utilization of consumer's private credit information
- What cannot be in a consumer report unless for a life insurance policy of $150,000 or
more: - --Bankruptcies dating back more than 10 years
, -Civil suits and judgments dating back more than seven years or cases in which the
statute of limitations has expired, whichever period is longer
-Tax liens dating back more than seven years
-Adverse information dating back more than seven years
-Reports of a consumer's arrests, indictments or convictions
- Guaranty Associations - -Provide a safety net for all member life, health and annuity
insurers in a particular state
- Defamation - -Any false, maliciously critical, or derogatory communication - written
or oral - that injures another's reputation, fame, or character
- Rebating - -If a buyer of an insurance policy is given anything of significant value as
an inducement to purchase or renew a policy- saying you'll give them something in
addition like a membership to a club
- Twisting - -The unethical act of persuading a policyowner to drop a policy solely for
the purpose of selling another policy without regard to possible disadvantages to the
policyowner- Often, it involves encouraging an insured to lapse on their current policy
and to take out another.
- Churning - -The practice of using misrepresentation to induce a policyholder to
replace a policy issued by the insurer the producer represents, rather than the policy of
a competitor
- Coercion - -Generally manipulates through the prospect of something desirable
- Consideration - -Premium payment + application
- Subrogation - -The right of the insurer to assume the rights of the insured and sue
the responsible third party for damages inflicted upon the insured.
- Indemnity Insurance - -Insurance that compensates the beneficiaries of the policies
for their actual economic losses, up to the limiting amount of the insurance policy
- Four elements that need to be in every contract: - -Offer and acceptance,
consideration, competent parties, legal purpose
- Four main parts of a life and health insurance contract - -The policy face, insuring
clause, conditions, exclusions
- Insurable interest must be present at what time - -Time of the application
