LIFE INSURANCE PRACTICE- EXAM GUIDE 2025
|MOST COMMON QUESTIONS WITH CORRECTLY
VERIFIED ANSWERS|ALREADY A+
GRADED|GUARANTEED PASS
An insurance policy - Is a social device, legal contract, or policy for the transfer of
financial risks
Transfer of risks - Through insurance individuals transfer to insurance companies financial
risks they cannot individually afford. Insurance companies can accept for insured risks insureds
cannot individually afford by charging a small premium to a large group of people. The premium
is small compared to the size of the financial risk transferred.
Pooling of risks - Is when a large group of people contribute money to a fund out of
which their losses can be paid. The larger the group, the better it works financially
The premium - Is the money paid by the policyowner to the insurance company in
exchange for the policy. The premium must be sufficient to pay sales commissions and other
marketing costs, pay administrative costs, and provide a loss reserve from which claims are paid
A lapse - Is when a policy is terminated due to non-payment of premiums
The policyowner - Is the person or organization that applies for the policy and pays the
premiums. The policyowner is also sometimes called the policyholder
The insured - Is the person at whose death the insurance company pays benefits to the
beneficiary
The beneficiary - Is the person or organization to whom benefits are payable at the
insured's death
A rider - Is a form that can be added to an insurance policy. It is usually added for an
extra premium charge to add coverage. It can, however, sometimes be added to limit coverage
Actuarial Tables - Are statistical tables that are used when calculating premium rates and
mortality loss reserves. They tell insurance companies how many claims are likely to be made
each year enabling the insurance companies to estimate what their losses will be
, Mortality actuarial tables - Are actuarial tables that tell insurance companies how many
people of each age and sex (gender) are likely to die
Mortality loss reserve - Is the money set aside by the insurance company to pay life
insurance claims
The law of large numbers - Indicates that the larger the group, the more accurate the
mortality actuarial tables will become and the losses will become more predictable and
manageable
Premature death - - Is dying before the normal age according to the mortality actuarial
tables
- It is also defined as dying with unsatisfied responsibilities
Test topic - Through life insurance policies, which are issued by life insurance companies,
insureds transfer to insurance companies the financial risks of premature death in a defined
amount
Four permature death risks - -Loss of income
-Unsatisfied major obligations
-incomplete financial goals
Loss of income - The face amount of life insurance is determined as a multiple of income
(such as 5,6,7,8 times income) depending on the age of the insured's children, the insured's
family circumstances, other benefits such as employment provided group insurance benefits,
and social security benefits
Unsatisfied Major obligations - -Cars
-Student Loans
-Mortgage
-Final expenses
Incomplete Financial Goals - -Childrens Education
-Family Financial Security
-Husband and wifes financial independence in old age
Final expenses - -Funeral expenses
|MOST COMMON QUESTIONS WITH CORRECTLY
VERIFIED ANSWERS|ALREADY A+
GRADED|GUARANTEED PASS
An insurance policy - Is a social device, legal contract, or policy for the transfer of
financial risks
Transfer of risks - Through insurance individuals transfer to insurance companies financial
risks they cannot individually afford. Insurance companies can accept for insured risks insureds
cannot individually afford by charging a small premium to a large group of people. The premium
is small compared to the size of the financial risk transferred.
Pooling of risks - Is when a large group of people contribute money to a fund out of
which their losses can be paid. The larger the group, the better it works financially
The premium - Is the money paid by the policyowner to the insurance company in
exchange for the policy. The premium must be sufficient to pay sales commissions and other
marketing costs, pay administrative costs, and provide a loss reserve from which claims are paid
A lapse - Is when a policy is terminated due to non-payment of premiums
The policyowner - Is the person or organization that applies for the policy and pays the
premiums. The policyowner is also sometimes called the policyholder
The insured - Is the person at whose death the insurance company pays benefits to the
beneficiary
The beneficiary - Is the person or organization to whom benefits are payable at the
insured's death
A rider - Is a form that can be added to an insurance policy. It is usually added for an
extra premium charge to add coverage. It can, however, sometimes be added to limit coverage
Actuarial Tables - Are statistical tables that are used when calculating premium rates and
mortality loss reserves. They tell insurance companies how many claims are likely to be made
each year enabling the insurance companies to estimate what their losses will be
, Mortality actuarial tables - Are actuarial tables that tell insurance companies how many
people of each age and sex (gender) are likely to die
Mortality loss reserve - Is the money set aside by the insurance company to pay life
insurance claims
The law of large numbers - Indicates that the larger the group, the more accurate the
mortality actuarial tables will become and the losses will become more predictable and
manageable
Premature death - - Is dying before the normal age according to the mortality actuarial
tables
- It is also defined as dying with unsatisfied responsibilities
Test topic - Through life insurance policies, which are issued by life insurance companies,
insureds transfer to insurance companies the financial risks of premature death in a defined
amount
Four permature death risks - -Loss of income
-Unsatisfied major obligations
-incomplete financial goals
Loss of income - The face amount of life insurance is determined as a multiple of income
(such as 5,6,7,8 times income) depending on the age of the insured's children, the insured's
family circumstances, other benefits such as employment provided group insurance benefits,
and social security benefits
Unsatisfied Major obligations - -Cars
-Student Loans
-Mortgage
-Final expenses
Incomplete Financial Goals - -Childrens Education
-Family Financial Security
-Husband and wifes financial independence in old age
Final expenses - -Funeral expenses
