LIFE INSURANCE PRACTICE- EXAM GUIDE 2025
|MOST COMMON QUESTIONS WITH CORRECTLY
VERIFIED ANSWERS|ALREADY A+
GRADED|GUARANTEED PASS
Adverse Selection - People with higher loss exposure have the tendancy to purchase
insurance more often tham those at average risk
peril - The cause of a loss
hazard - Which of the following is considered to be an event or condition that increases
the probability of an insured's loss?
Transference - Insurance represents the process of risk _____
All of the following are examples of pure risk except - Losing money at a casino
How do insurers predict the increase of individual risks? - law of large numbers
What is known as the immediate specific event causing loss and giving rise to risk? - Peril
Insurance companies determine risk exposure by which of the following? - Law of large
numbers and risk pooling
An individual who removes the risk of losing money in the stock market by never purchasing
stocks is said to be engaging in - Risk avoidance
An example of risk sharing would be - Doctors pooling their money to cover malpractice
exposures
Insurable interest does not occur in which of the following relationships? - Business
owner and business client
All of the following are elements of an insurance policy except - claim forms
Which contract element is insurable interest a component of? - legal purpose
When the principal gives the agent authority in writing, it's referred to as - Express
authority
,In an insurance contract, the insurer is the only party legally obligated to perform. Because of
this, an insurance contract is considered - unilateral
Ambiguities in an insurance policy are always resolved in favor of the - insured
What are an applicant's statements concerning occupation, hobbies, and personal health
history regarded as? - representation
The power given to an individual producer that is not specifically addressed in his/her contract
is considered what type of authority? - implied
The term which describes the fact that both parties of a contract may NOT receive the same
value is referred to as - Aleatory
According to life insurance contract law, insurable interest exists - At the time of
application
In order for a contract to be valid, it must - contain an offer and acceptance
What makes an insurance policy a unilateral contract - Only the insurer is legally bound
In an insurance contract, the element that shows each party is giving something of value is
called - consideration
Legal purpose is a term used in contract law meaning - there must be legal reasons for
entering into the contract
Under a contract of adhesion - the terms must be accepted or rejected in full
What is the automatic continuance of insurance coverage referred to as? - renewal
A permanent life insurance policy where the policyowner pays premiums for a specified number
of years is called a(n) - limited pay policy
How are survivorship life insurance policies helpful in estate planning? - Provide funds to
help pay taxes
Which of the following are the premium payments for a universal life policy not used for? -
Separate account investments
Shawn, Mike, and Dave are brothers who have a $100,000 "first to die" joint life policy covering
all three of their lives. If Mike dies first, the policy proceeds
will no longer provide insurance protection
, will go to Mike's estate
will be divided by probate
will not be paid until the last brother dies - will no longer provide insurance protection
An interest-sensitive life insurance policyowner may be able to withdraw the policy's cash value
interest free. The provision that allows this is called - partial surrender
The premium for a modified whole life policy is - Lower than the typical whole life policy
during the first few years then higher than typical for the remainder
Julie has a $100,000 30-year mortgage on her new home. What type of life insurance could she
purchase that is designed to pay off the loan balance if she dies within the 30-year period? -
Decreasing term insurance
A Modified Endowment Contract (MEC) is best described as - A life insurance contract
which accumulates cash values higher than the IRS will allow
Which of these would be the best example of a limited pay life insurance policy? - Whole
life policy with premiums paid up after 20 years
A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate
that is higher than the guaranteed rate is called - Universal Life
A renewable term life insurance policy can be renewed - at a predetermined date or age,
regardless of the insured's health
What is a corridor in relation to a Universal Life insurance policy? - The gap between the
total death benefit and the policy's cash value
Jonas is a whole life insurance policyowner and would like to add coverage for his two children.
Which of the following products would allow him to accomplish this? - Child term rider
The type of policy which pays on the death of the last person is called - survivorship life
Variable life insurance and universal life insurance are very similar. Which of these features are
held exclusively by variable universal life insurance - Policyowner has the right to select
the investment which will provide the greatest return
A limited payment whole life policy provides - lifetime protection
What types of life insurance are normally used for key employee indemnification? - term,
whole, and universal life insurance
|MOST COMMON QUESTIONS WITH CORRECTLY
VERIFIED ANSWERS|ALREADY A+
GRADED|GUARANTEED PASS
Adverse Selection - People with higher loss exposure have the tendancy to purchase
insurance more often tham those at average risk
peril - The cause of a loss
hazard - Which of the following is considered to be an event or condition that increases
the probability of an insured's loss?
Transference - Insurance represents the process of risk _____
All of the following are examples of pure risk except - Losing money at a casino
How do insurers predict the increase of individual risks? - law of large numbers
What is known as the immediate specific event causing loss and giving rise to risk? - Peril
Insurance companies determine risk exposure by which of the following? - Law of large
numbers and risk pooling
An individual who removes the risk of losing money in the stock market by never purchasing
stocks is said to be engaging in - Risk avoidance
An example of risk sharing would be - Doctors pooling their money to cover malpractice
exposures
Insurable interest does not occur in which of the following relationships? - Business
owner and business client
All of the following are elements of an insurance policy except - claim forms
Which contract element is insurable interest a component of? - legal purpose
When the principal gives the agent authority in writing, it's referred to as - Express
authority
,In an insurance contract, the insurer is the only party legally obligated to perform. Because of
this, an insurance contract is considered - unilateral
Ambiguities in an insurance policy are always resolved in favor of the - insured
What are an applicant's statements concerning occupation, hobbies, and personal health
history regarded as? - representation
The power given to an individual producer that is not specifically addressed in his/her contract
is considered what type of authority? - implied
The term which describes the fact that both parties of a contract may NOT receive the same
value is referred to as - Aleatory
According to life insurance contract law, insurable interest exists - At the time of
application
In order for a contract to be valid, it must - contain an offer and acceptance
What makes an insurance policy a unilateral contract - Only the insurer is legally bound
In an insurance contract, the element that shows each party is giving something of value is
called - consideration
Legal purpose is a term used in contract law meaning - there must be legal reasons for
entering into the contract
Under a contract of adhesion - the terms must be accepted or rejected in full
What is the automatic continuance of insurance coverage referred to as? - renewal
A permanent life insurance policy where the policyowner pays premiums for a specified number
of years is called a(n) - limited pay policy
How are survivorship life insurance policies helpful in estate planning? - Provide funds to
help pay taxes
Which of the following are the premium payments for a universal life policy not used for? -
Separate account investments
Shawn, Mike, and Dave are brothers who have a $100,000 "first to die" joint life policy covering
all three of their lives. If Mike dies first, the policy proceeds
will no longer provide insurance protection
, will go to Mike's estate
will be divided by probate
will not be paid until the last brother dies - will no longer provide insurance protection
An interest-sensitive life insurance policyowner may be able to withdraw the policy's cash value
interest free. The provision that allows this is called - partial surrender
The premium for a modified whole life policy is - Lower than the typical whole life policy
during the first few years then higher than typical for the remainder
Julie has a $100,000 30-year mortgage on her new home. What type of life insurance could she
purchase that is designed to pay off the loan balance if she dies within the 30-year period? -
Decreasing term insurance
A Modified Endowment Contract (MEC) is best described as - A life insurance contract
which accumulates cash values higher than the IRS will allow
Which of these would be the best example of a limited pay life insurance policy? - Whole
life policy with premiums paid up after 20 years
A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate
that is higher than the guaranteed rate is called - Universal Life
A renewable term life insurance policy can be renewed - at a predetermined date or age,
regardless of the insured's health
What is a corridor in relation to a Universal Life insurance policy? - The gap between the
total death benefit and the policy's cash value
Jonas is a whole life insurance policyowner and would like to add coverage for his two children.
Which of the following products would allow him to accomplish this? - Child term rider
The type of policy which pays on the death of the last person is called - survivorship life
Variable life insurance and universal life insurance are very similar. Which of these features are
held exclusively by variable universal life insurance - Policyowner has the right to select
the investment which will provide the greatest return
A limited payment whole life policy provides - lifetime protection
What types of life insurance are normally used for key employee indemnification? - term,
whole, and universal life insurance
