Kansas Life Insurance Exam
Contract Characteristics - ANSWER-- Adhesion: one party prepares the contract; the
other party must accept it as is
- Aleatory: exchange of unequal amounts
- Conditional: certain conditions must be met
- Unilateral: only one of the parties to the contract is legally bound to do anything
Field Underwriting (By Agent) - ANSWER-- Application: completed and signed
- Agent's report agent's observations about the applicant that can assist in underwriting
- Premiums with application and conditional receipts
Company Underwriting - ANSWER-- Multiple sources of information: application,
consumer reports, MIB
- Risk classification 3 types of risks: standard, substandard, preferred
Federal Regulations - ANSWER-- Fair Credit Reporting Act: protects consumers against
circulation of inaccurate or obsolete information
- USA PATRIOT Act/Antimoney Laundering and Suspicious Activity Reports Rules
Insurance - ANSWER-- Transfers the risk of loss from an individual to an insurer
- Based on the principle of indemnity
- Based on the spreading of risk (risk pooling ) and the law of large
Insurable Interest - ANSWER-- Must exist at the time of application
- Insuring one's own life, family member, or a business partner
Elements of a Legal Contract - ANSWER-- Agreement: offer and acceptance
- Consideration: premiums and representations on the part of the insured; payment of
claims on the part of
the insurer
- Competent parties: of legal age, sound mental capacity, and not under the influence of
drugs or alcohol
- Legal purpose: not against public policy
Determination - ANSWER-- Mode: the more frequently premium is paid, the higher the
premium
Policy Issue and Delivery - ANSWER-- Effective date of coverage: if the premium is not
paid with the application, the agent must obtain the premium and a statement of
continued good health at
the time of policy delivery
, Level Premium Term - ANSWER-- Level Death Benefit and Level Premium
Annually Renewable Term - ANSWER-- Renews each year without proof of insurability
and Premiums increase due to attained age
Decreasing Term - ANSWER-- Coverage gradually decreases at predetermined times;
best used when the need for protection declines from year to year
Renewable Term Policy - ANSWER-Renew the policy without evidence of insurability
Convertible Term Policy - ANSWER-Right to convert a term policy to a permanent
policy without evidence of insurability
Whole Life Characteristics - ANSWER-- Permanent Protection
- Guaranteed Elements ( Face Amount, Premium, and Cash Value)
- Level Premium
- Cash Value and Other Living Benefits
Ordinary Whole Life (Continuous Premium) - ANSWER-- Basic Policy
- Level Death Benefit
- Insured Pays Premium for Life or Until Age 100
Whole Life Limited Payment - ANSWER-- Premiums Paid until a certain time; coverage
in effect to age 100
Whole Life Single Premium - ANSWER-- Premiums Paid in One Lump Sum; Coverage
Continues to Age 100
Flexible (Whole Life) Insurance Policies (Universal) - ANSWER-- An insurance
component in the form of annually renewable term
- 2 Death Benefit Options: (A) Level Death Benefit
(B) Increasing Death Benefit
- Can make partial surrender/cash withdrawal
Variable Life - ANSWER-- Fixed Premium, minimum Death Benefit
- Cash Value and the Actual Amount of Death Benefit Are Not Guaranteed
- Assets in Separate Accounts
- Agents must be dually licensed in insurance and in securities
Joint Life (Combination Plan) - ANSWER-- Premium is based on the joint average age
of the insured
- Death Benefit upon the first death only
Survivorship Life (Combination Plan) - ANSWER-- Premium is based on the Joint
Average Age of the Insured
Contract Characteristics - ANSWER-- Adhesion: one party prepares the contract; the
other party must accept it as is
- Aleatory: exchange of unequal amounts
- Conditional: certain conditions must be met
- Unilateral: only one of the parties to the contract is legally bound to do anything
Field Underwriting (By Agent) - ANSWER-- Application: completed and signed
- Agent's report agent's observations about the applicant that can assist in underwriting
- Premiums with application and conditional receipts
Company Underwriting - ANSWER-- Multiple sources of information: application,
consumer reports, MIB
- Risk classification 3 types of risks: standard, substandard, preferred
Federal Regulations - ANSWER-- Fair Credit Reporting Act: protects consumers against
circulation of inaccurate or obsolete information
- USA PATRIOT Act/Antimoney Laundering and Suspicious Activity Reports Rules
Insurance - ANSWER-- Transfers the risk of loss from an individual to an insurer
- Based on the principle of indemnity
- Based on the spreading of risk (risk pooling ) and the law of large
Insurable Interest - ANSWER-- Must exist at the time of application
- Insuring one's own life, family member, or a business partner
Elements of a Legal Contract - ANSWER-- Agreement: offer and acceptance
- Consideration: premiums and representations on the part of the insured; payment of
claims on the part of
the insurer
- Competent parties: of legal age, sound mental capacity, and not under the influence of
drugs or alcohol
- Legal purpose: not against public policy
Determination - ANSWER-- Mode: the more frequently premium is paid, the higher the
premium
Policy Issue and Delivery - ANSWER-- Effective date of coverage: if the premium is not
paid with the application, the agent must obtain the premium and a statement of
continued good health at
the time of policy delivery
, Level Premium Term - ANSWER-- Level Death Benefit and Level Premium
Annually Renewable Term - ANSWER-- Renews each year without proof of insurability
and Premiums increase due to attained age
Decreasing Term - ANSWER-- Coverage gradually decreases at predetermined times;
best used when the need for protection declines from year to year
Renewable Term Policy - ANSWER-Renew the policy without evidence of insurability
Convertible Term Policy - ANSWER-Right to convert a term policy to a permanent
policy without evidence of insurability
Whole Life Characteristics - ANSWER-- Permanent Protection
- Guaranteed Elements ( Face Amount, Premium, and Cash Value)
- Level Premium
- Cash Value and Other Living Benefits
Ordinary Whole Life (Continuous Premium) - ANSWER-- Basic Policy
- Level Death Benefit
- Insured Pays Premium for Life or Until Age 100
Whole Life Limited Payment - ANSWER-- Premiums Paid until a certain time; coverage
in effect to age 100
Whole Life Single Premium - ANSWER-- Premiums Paid in One Lump Sum; Coverage
Continues to Age 100
Flexible (Whole Life) Insurance Policies (Universal) - ANSWER-- An insurance
component in the form of annually renewable term
- 2 Death Benefit Options: (A) Level Death Benefit
(B) Increasing Death Benefit
- Can make partial surrender/cash withdrawal
Variable Life - ANSWER-- Fixed Premium, minimum Death Benefit
- Cash Value and the Actual Amount of Death Benefit Are Not Guaranteed
- Assets in Separate Accounts
- Agents must be dually licensed in insurance and in securities
Joint Life (Combination Plan) - ANSWER-- Premium is based on the joint average age
of the insured
- Death Benefit upon the first death only
Survivorship Life (Combination Plan) - ANSWER-- Premium is based on the Joint
Average Age of the Insured
