WISCONSIN LIFE INSURANCE EXAM PREP
QUESTIONS & ANSWERS
Tom has a home health care benefit and is confined to his home. Which of these is
NOT typically covered? - Answers :Full-Time Nursing Care
What is created after policy proceeds are obtained in a lump sum and then immediately
invested? - Answers :Estate
A plan in which an employer pays insurance benefits from a fund derived from the
employer's current revenues is called - Answers :a self-funded plan
A non participating policy will - Answers :not pay dividends
What kind of life insurance policy issued by a mutual insurer provides a return of
divisible surplus? - Answers :participating life insurance policy
Fraternal Benefit Society has each of the following characteristics EXCEPT - Answers
:exist for profit
A(n) _______________ company is owned by its shareholders - Answers :stock
Ken is a producer who has obtained Consumer Information Reports under false
pretenses. Under the Fair Credit Reporting Act, what is the maximum penalty that may
be imposed on Ken? - Answers :$5,000
What is the primary purpose of a rating service company such as A.M Best? - Answers
:determine financial strength of an insurance company
What is considered to be the primary reason for buying life insurance? - Answers
:provide death benefits
A nonparticipating company is sometimes called a(n) - Answers :stock insurer
Which of the following is NOT considered advertising? - Answers :A rating from a rating
service company such as A.M. Best
Insurance represents the process of risk - Answers :transference
Insurance companies determine risk exposure by which of the following? - Answers :law
of large numbers and risk pooling
The cause of a loss is referred to as a(n) - Answers :peril
,People with higher loss exposure have the tendency to purchase insurance more often
than those at average risk. This is called - Answers :adverse selection
Which of the following is considered to be an event or condition that increases the
probability of an insured's loss? - Answers :hazard
An example of risk sharing would be - Answers :Doctors pooling their money to cover
malpractice exposures
How do insurers predict the increase of individual risks? - Answers :law of large
numbers
All of the following are examples of pure risk EXCEPT - Answers :losing money at a
casino
What is known as the immediate specific event causing loss and giving rise to risk? -
Answers :peril
An individual who removes the risk of losing money in the stock market by never
purchasing stocks is said to be engaging in - Answers :risk avoidance
Which of the following is an example of the insured's consideration? - Answers :a paid
premium
What makes an insurance policy a unilateral contract? - Answers :only the insurer is
legally bound
Which of the following is present when an applicant stands to lose value if the insured
dies? - Answers :insurable interest
In order for a contract to be valid, it must - Answers :contain an offer and acceptance
Which type of clause describes the following statement: "We have issued the policy in
consideration of the representations in your applications and payment of the first-term
premium". - Answers :consideration clause
All of the following are elements of an insurance policy EXCEPT - Answers :claim forms
What is implied authority defined as? - Answers :authority that is not specifically given to
an agent in the agency contract, but that an agent can reasonably assume to carry out
his/her duties
According to the principle of Utmost Good Faith, the insured will answer questions on
the application to the best of their knowledge and pay the required premium, while the
insurer will deal fairly with the insured and it's - Answers :promises made
,When are group disability benefits considered to be tax-free to the insured? - Answers
:When the recipient pays the premiums
Which of the following describes a person who is NOT acceptable by an insurer at
standard rates because of health history, occupation, or hobbies? - Answers
:Substandard Risk
The ________________ decides on the suitability of a disability (accident & health)
policy for an applicant. - Answers :intermediary
An intermediary must hold which of the following licenses to sell variable life insurance
policies? - Answers :Life, variable, and securities license
An insurer's claim settlement practices are regulated by the - Answers :State insurance
departments
A type of insurer that is owned by its policyowners is called - Answers :mutual
An insurer's ability to make unpredictable payouts to policyowners is called - Answers
:liquidity
Karen is a producer who has obtained personal information about a client without
having a legitimate reason to do so. Under the McCarren-Ferguson Act, what is the
minimum penalty for this? - Answers :$10,000 or up to one year in jail
A life insurance company has transferred some of its risk to another insurer. The insurer
assuming the risk is called the - Answers :reinsurer
The Do Not Call Registry offers exemptions for calls placed from all of the following
EXCEPT - Answers :insurance sales calls
Why are dividends from a mutual insurer not subject to taxation? - Answers :Because
dividends are considered to be a return of premium
ABC Insurance Company transfers part of their risk to XYZ Insurance Company. This
situation is called - Answers :reinsurance
The Fair Credit and Reporting Act's main purpose is to - Answers :protect consumers
with guidelines regarding credit reporting and distribuition
The authority granted to a licensed producer is provided via the - Answers :Law of
Agency
Under a contract of adhesion, - Answers :the terms must be accepted or rejected in full
, According to life insurance contract law, insurable interest exists - Answers :at the time
of application
In an insurance contract, the element that shows each party is giving something of
value is called - Answers :consideration
What are an applicant's statements concerning occupation, hobbies, and personal
health history regarded as? - Answers :representation
When the principal gives the agent authority in writing, it's referred to as - Answers
:express authority
The power given to an individual producer that is not specifically addressed in his/her
contract is considered what type of authority? - Answers :implied authority
Bob and Tom start a business. Since each partner contributes an important element to
the success of the business, they decide to take life insurance policies out on each
other, and name each other as beneficiaries. Eventually, they retire and dissolve the
business. Bob dies 12 months later. The policies continue in force with no change. Both
partners are still married at the time of Bob's death. In this situation, who will receive
Bob's policy proceeds? - Answers :Tom
Intentional withholding of material facts that would affect an insurance policy's validity is
called a(n) - Answers :concealment
Which contract element is insurable interest a component of? - Answers :legal purpose
Which of the following BEST describes a conditional insurance contract? - Answers :a
contract that requires certain conditions or acts by the insured individual
Ambiguities in an insurance policy are always resolved in favor of the - Answers
:insured
Who is responsible for assembling the policy forms for insureds? - Answers :insurance
carriers
Legal purpose is a term used in contract law meaning - Answers :there must be legal
reasons for entering into the contract
The deeds and actions of a producer indicate what kind of authority - Answers :apparent
authority
A professional liability for which producers can be sued for mistakes of putting a policy
into effect is called - Answers :errors and omissions
______ is NOT an element of a valid contract. - Answers :countersignature
QUESTIONS & ANSWERS
Tom has a home health care benefit and is confined to his home. Which of these is
NOT typically covered? - Answers :Full-Time Nursing Care
What is created after policy proceeds are obtained in a lump sum and then immediately
invested? - Answers :Estate
A plan in which an employer pays insurance benefits from a fund derived from the
employer's current revenues is called - Answers :a self-funded plan
A non participating policy will - Answers :not pay dividends
What kind of life insurance policy issued by a mutual insurer provides a return of
divisible surplus? - Answers :participating life insurance policy
Fraternal Benefit Society has each of the following characteristics EXCEPT - Answers
:exist for profit
A(n) _______________ company is owned by its shareholders - Answers :stock
Ken is a producer who has obtained Consumer Information Reports under false
pretenses. Under the Fair Credit Reporting Act, what is the maximum penalty that may
be imposed on Ken? - Answers :$5,000
What is the primary purpose of a rating service company such as A.M Best? - Answers
:determine financial strength of an insurance company
What is considered to be the primary reason for buying life insurance? - Answers
:provide death benefits
A nonparticipating company is sometimes called a(n) - Answers :stock insurer
Which of the following is NOT considered advertising? - Answers :A rating from a rating
service company such as A.M. Best
Insurance represents the process of risk - Answers :transference
Insurance companies determine risk exposure by which of the following? - Answers :law
of large numbers and risk pooling
The cause of a loss is referred to as a(n) - Answers :peril
,People with higher loss exposure have the tendency to purchase insurance more often
than those at average risk. This is called - Answers :adverse selection
Which of the following is considered to be an event or condition that increases the
probability of an insured's loss? - Answers :hazard
An example of risk sharing would be - Answers :Doctors pooling their money to cover
malpractice exposures
How do insurers predict the increase of individual risks? - Answers :law of large
numbers
All of the following are examples of pure risk EXCEPT - Answers :losing money at a
casino
What is known as the immediate specific event causing loss and giving rise to risk? -
Answers :peril
An individual who removes the risk of losing money in the stock market by never
purchasing stocks is said to be engaging in - Answers :risk avoidance
Which of the following is an example of the insured's consideration? - Answers :a paid
premium
What makes an insurance policy a unilateral contract? - Answers :only the insurer is
legally bound
Which of the following is present when an applicant stands to lose value if the insured
dies? - Answers :insurable interest
In order for a contract to be valid, it must - Answers :contain an offer and acceptance
Which type of clause describes the following statement: "We have issued the policy in
consideration of the representations in your applications and payment of the first-term
premium". - Answers :consideration clause
All of the following are elements of an insurance policy EXCEPT - Answers :claim forms
What is implied authority defined as? - Answers :authority that is not specifically given to
an agent in the agency contract, but that an agent can reasonably assume to carry out
his/her duties
According to the principle of Utmost Good Faith, the insured will answer questions on
the application to the best of their knowledge and pay the required premium, while the
insurer will deal fairly with the insured and it's - Answers :promises made
,When are group disability benefits considered to be tax-free to the insured? - Answers
:When the recipient pays the premiums
Which of the following describes a person who is NOT acceptable by an insurer at
standard rates because of health history, occupation, or hobbies? - Answers
:Substandard Risk
The ________________ decides on the suitability of a disability (accident & health)
policy for an applicant. - Answers :intermediary
An intermediary must hold which of the following licenses to sell variable life insurance
policies? - Answers :Life, variable, and securities license
An insurer's claim settlement practices are regulated by the - Answers :State insurance
departments
A type of insurer that is owned by its policyowners is called - Answers :mutual
An insurer's ability to make unpredictable payouts to policyowners is called - Answers
:liquidity
Karen is a producer who has obtained personal information about a client without
having a legitimate reason to do so. Under the McCarren-Ferguson Act, what is the
minimum penalty for this? - Answers :$10,000 or up to one year in jail
A life insurance company has transferred some of its risk to another insurer. The insurer
assuming the risk is called the - Answers :reinsurer
The Do Not Call Registry offers exemptions for calls placed from all of the following
EXCEPT - Answers :insurance sales calls
Why are dividends from a mutual insurer not subject to taxation? - Answers :Because
dividends are considered to be a return of premium
ABC Insurance Company transfers part of their risk to XYZ Insurance Company. This
situation is called - Answers :reinsurance
The Fair Credit and Reporting Act's main purpose is to - Answers :protect consumers
with guidelines regarding credit reporting and distribuition
The authority granted to a licensed producer is provided via the - Answers :Law of
Agency
Under a contract of adhesion, - Answers :the terms must be accepted or rejected in full
, According to life insurance contract law, insurable interest exists - Answers :at the time
of application
In an insurance contract, the element that shows each party is giving something of
value is called - Answers :consideration
What are an applicant's statements concerning occupation, hobbies, and personal
health history regarded as? - Answers :representation
When the principal gives the agent authority in writing, it's referred to as - Answers
:express authority
The power given to an individual producer that is not specifically addressed in his/her
contract is considered what type of authority? - Answers :implied authority
Bob and Tom start a business. Since each partner contributes an important element to
the success of the business, they decide to take life insurance policies out on each
other, and name each other as beneficiaries. Eventually, they retire and dissolve the
business. Bob dies 12 months later. The policies continue in force with no change. Both
partners are still married at the time of Bob's death. In this situation, who will receive
Bob's policy proceeds? - Answers :Tom
Intentional withholding of material facts that would affect an insurance policy's validity is
called a(n) - Answers :concealment
Which contract element is insurable interest a component of? - Answers :legal purpose
Which of the following BEST describes a conditional insurance contract? - Answers :a
contract that requires certain conditions or acts by the insured individual
Ambiguities in an insurance policy are always resolved in favor of the - Answers
:insured
Who is responsible for assembling the policy forms for insureds? - Answers :insurance
carriers
Legal purpose is a term used in contract law meaning - Answers :there must be legal
reasons for entering into the contract
The deeds and actions of a producer indicate what kind of authority - Answers :apparent
authority
A professional liability for which producers can be sued for mistakes of putting a policy
into effect is called - Answers :errors and omissions
______ is NOT an element of a valid contract. - Answers :countersignature
