LOMA 281: Meeting Customer Needs with
Insurance Annuities
a life insurance policy purchased by one person or entity for another. a. the applicant b. the
beneficiary c. covered d. the policyholder e. policy regarding third parties - ANS-E To be
considered insurable, a risk—or potential loss—must possess certain characteristics. For
instance, for a loss to be covered by insurance, a. not just happen by chance b. have a
devastating effect on the insurer c. have importance d. have an unpredictable rate of loss -
ANS-C. actuaries (ANS) are specialists in insurance, annuity, and financial instrument
mathematics and modeling, as well as in financial risk management. A new term life insurance
product is being developed by Retreat Insurance Company actuaries. They anticipate that five
out of every one thousand insureds will pass away prior to the product's first year's end. The
projected cost of benefits for this product would be (lower / higher) if the actuaries had predicted
that seven out of every one thousand insureds would pass away prior to the end of the first year.
Additionally, they anticipate that 120 out of every 1,000 insureds will not pay the second year's
premium, causing their coverage to end. The expected lapse or surrender rate for this product's
second year is 12%. a. decrease or lapse b. to lower or give up c. higher or lower d. higher or
give up - ANS-C ANS-cost benefits, investment earnings, and operating expense and profit are
actuarial pricing factors. Aleatory contract is a type of ANS-A contract in which one party gives
something of value to another in return for a conditional promise. Insurance companies are all
businesses. Corporations (are / are not) distinct from their owners and (do / do not) last after
their owners pass away are two characteristics of corporations. a. are and do b. are or are not c.
neither are nor do d. are not ANS-A or do not exist. Amanda can anticipate that the coverage's
premium rate will be the same as the rate Sequoia charges other women her age and in the
same risk class. a. higher than b. similar to c. lower than ANS-B Graham Young and Andrew
Kaczicki were business partners. Andrew named himself as beneficiary when he applied for a
policy of Graham's life insurance. Andrew was issued a policy after the insurance company
determined that their business relationship met the insurable interest requirement. They ended
both the partnership and the business three years later. Graham passed away two years later,
while the policy was still in effect. Andrew continued to be the named beneficiary. Do you
believe Andrew was able to obtain the life insurance benefit in this circumstance? a. No,
because Andrew no longer possessed a legitimate interest in Graham's life. b. Yes, as there
must only be an insurable interest at policy issue ANS-B. An annuity is a financial product under
which an insurer promises to pay a named person or entity a set of regular payments in return
for a premium or premiums. antiselection - ANS: The tendency of people who think they are
more likely to lose money than the average person to get insurance coverage more often than
other people. Let's pretend you're applying for life insurance. The insurance agent states the
following during his presentation. Are all of them true? (Select all relevant options.) a. In order
to lessen the financial risk they face, people purchase insurance; however, not all risks can be
, insured. b. speculative risks and pure risks are both covered by insurance. c. The majority of life
insurance policies are valued contracts that specify the amount of the benefit payable upon the
insured person's death at the time of policy issuance. d. the majority of life insurance policies
are sold at premiums that are below average - ANS-A and C bargaining contract - ANS-A
contract in which both parties decide the contract's terms on an equal basis. Barry applied for
and received a life insurance policy that covered Ina, his wife. If Ina passes away while the
policy is in effect, Barry designated Gail, his daughter, as the beneficiary. In light of the
situation's basic insurance terminology, it is probably accurate to state that a. Barry applied for a
third-party insurance policy. b. Barry is the one who will benefit from this policy. c. This policy's
insured is Gail. d. This policy's owner is Ina, and her name is ANS-A. A typical life insurance
contract is an illustration of a (unilateral / bilateral) contract because only the insurer makes a
legally enforceable promise. A life insurance contract is an example of a (commutative or
aleatory) contract because the policyowner gives up something of value, the premium, in
exchange for the insurer's conditional promise to pay benefits if the insured dies while the policy
is in effect. a. unidirectional or commutative b. unidirectional or an aleatory c. bidirectional or
commutative d. bilateral - ANS-B; an aleatory Bilateral contract: An ANS-A contract in which
both parties make promises that can be enforced in court when they sign it. ANS-A group of
policies issued to insureds who share the same age, sex, and risk classification. Block of
policies Brad Lischka buys a Cathy Lischka life insurance policy to cover her death. Nicholas,
their son, is named as the beneficiary of the policy's benefit if Cathy passes away. Match the
individuals to their roles. Brad bought the policy so that he would be the ______________. a.
the policyholder b. the recipient c. owner of the policy; insured - ANS-A Brad Lischka buys a
Cathy Lischka life insurance policy to cover her death. Nicholas, their son, is named as the
beneficiary of the policy's benefit if Cathy passes away. Match the individuals to their roles.
Cathy would serve as the ______________.
a. the policyholder b. the recipient c. covered by ANS-C Insured
Brad Lischka buys a Cathy Lischka life insurance policy to cover her death. Nicholas, their son,
is named as the beneficiary of the policy's benefit if Cathy passes away. Match the individuals to
their roles. The benefit from the policy would go to Nicholas, their son, in the event that Cathy
passes away. a. the policyholder b. the recipient c. covered by ANS-B Beneficiary
Does Able Life have the option of terminating Simone's life insurance policy? a. Yes
b. ANS-B says no. A $100,000 life insurance policy insures Charlie Crittenden as the
policyowner. Charlie fell ill and passed away while the policy was in effect. His wife received a
death benefit from the insurance company. What served as the foundation for the insurance
company's death benefit? a. the $100,000 face value of the policy b. the actual cost of Charlie's
final medical care and funeral, ANS-A. the $100,000 face value of the policy ANS-A
commutative contract is one in which the parties specify the values they will exchange in
advance. Additionally, the parties typically exchange goods or services they believe to be of
roughly equal value. ANS: Interest on both the principal and the interest that has already been
accrued. Compounding is the process of calculating the interest rate on both the principal and
the interest that has already been accrued. ANS-A conditional promise is a promise to carry out
a specific action if a particular, uncertain event occurs; if the event does not take place, the
promise will not be carried out. In the event that he becomes ill or injured and is unable to work,
Conrad sought protection for his family by purchasing disability income insurance. a. minimizing
Insurance Annuities
a life insurance policy purchased by one person or entity for another. a. the applicant b. the
beneficiary c. covered d. the policyholder e. policy regarding third parties - ANS-E To be
considered insurable, a risk—or potential loss—must possess certain characteristics. For
instance, for a loss to be covered by insurance, a. not just happen by chance b. have a
devastating effect on the insurer c. have importance d. have an unpredictable rate of loss -
ANS-C. actuaries (ANS) are specialists in insurance, annuity, and financial instrument
mathematics and modeling, as well as in financial risk management. A new term life insurance
product is being developed by Retreat Insurance Company actuaries. They anticipate that five
out of every one thousand insureds will pass away prior to the product's first year's end. The
projected cost of benefits for this product would be (lower / higher) if the actuaries had predicted
that seven out of every one thousand insureds would pass away prior to the end of the first year.
Additionally, they anticipate that 120 out of every 1,000 insureds will not pay the second year's
premium, causing their coverage to end. The expected lapse or surrender rate for this product's
second year is 12%. a. decrease or lapse b. to lower or give up c. higher or lower d. higher or
give up - ANS-C ANS-cost benefits, investment earnings, and operating expense and profit are
actuarial pricing factors. Aleatory contract is a type of ANS-A contract in which one party gives
something of value to another in return for a conditional promise. Insurance companies are all
businesses. Corporations (are / are not) distinct from their owners and (do / do not) last after
their owners pass away are two characteristics of corporations. a. are and do b. are or are not c.
neither are nor do d. are not ANS-A or do not exist. Amanda can anticipate that the coverage's
premium rate will be the same as the rate Sequoia charges other women her age and in the
same risk class. a. higher than b. similar to c. lower than ANS-B Graham Young and Andrew
Kaczicki were business partners. Andrew named himself as beneficiary when he applied for a
policy of Graham's life insurance. Andrew was issued a policy after the insurance company
determined that their business relationship met the insurable interest requirement. They ended
both the partnership and the business three years later. Graham passed away two years later,
while the policy was still in effect. Andrew continued to be the named beneficiary. Do you
believe Andrew was able to obtain the life insurance benefit in this circumstance? a. No,
because Andrew no longer possessed a legitimate interest in Graham's life. b. Yes, as there
must only be an insurable interest at policy issue ANS-B. An annuity is a financial product under
which an insurer promises to pay a named person or entity a set of regular payments in return
for a premium or premiums. antiselection - ANS: The tendency of people who think they are
more likely to lose money than the average person to get insurance coverage more often than
other people. Let's pretend you're applying for life insurance. The insurance agent states the
following during his presentation. Are all of them true? (Select all relevant options.) a. In order
to lessen the financial risk they face, people purchase insurance; however, not all risks can be
, insured. b. speculative risks and pure risks are both covered by insurance. c. The majority of life
insurance policies are valued contracts that specify the amount of the benefit payable upon the
insured person's death at the time of policy issuance. d. the majority of life insurance policies
are sold at premiums that are below average - ANS-A and C bargaining contract - ANS-A
contract in which both parties decide the contract's terms on an equal basis. Barry applied for
and received a life insurance policy that covered Ina, his wife. If Ina passes away while the
policy is in effect, Barry designated Gail, his daughter, as the beneficiary. In light of the
situation's basic insurance terminology, it is probably accurate to state that a. Barry applied for a
third-party insurance policy. b. Barry is the one who will benefit from this policy. c. This policy's
insured is Gail. d. This policy's owner is Ina, and her name is ANS-A. A typical life insurance
contract is an illustration of a (unilateral / bilateral) contract because only the insurer makes a
legally enforceable promise. A life insurance contract is an example of a (commutative or
aleatory) contract because the policyowner gives up something of value, the premium, in
exchange for the insurer's conditional promise to pay benefits if the insured dies while the policy
is in effect. a. unidirectional or commutative b. unidirectional or an aleatory c. bidirectional or
commutative d. bilateral - ANS-B; an aleatory Bilateral contract: An ANS-A contract in which
both parties make promises that can be enforced in court when they sign it. ANS-A group of
policies issued to insureds who share the same age, sex, and risk classification. Block of
policies Brad Lischka buys a Cathy Lischka life insurance policy to cover her death. Nicholas,
their son, is named as the beneficiary of the policy's benefit if Cathy passes away. Match the
individuals to their roles. Brad bought the policy so that he would be the ______________. a.
the policyholder b. the recipient c. owner of the policy; insured - ANS-A Brad Lischka buys a
Cathy Lischka life insurance policy to cover her death. Nicholas, their son, is named as the
beneficiary of the policy's benefit if Cathy passes away. Match the individuals to their roles.
Cathy would serve as the ______________.
a. the policyholder b. the recipient c. covered by ANS-C Insured
Brad Lischka buys a Cathy Lischka life insurance policy to cover her death. Nicholas, their son,
is named as the beneficiary of the policy's benefit if Cathy passes away. Match the individuals to
their roles. The benefit from the policy would go to Nicholas, their son, in the event that Cathy
passes away. a. the policyholder b. the recipient c. covered by ANS-B Beneficiary
Does Able Life have the option of terminating Simone's life insurance policy? a. Yes
b. ANS-B says no. A $100,000 life insurance policy insures Charlie Crittenden as the
policyowner. Charlie fell ill and passed away while the policy was in effect. His wife received a
death benefit from the insurance company. What served as the foundation for the insurance
company's death benefit? a. the $100,000 face value of the policy b. the actual cost of Charlie's
final medical care and funeral, ANS-A. the $100,000 face value of the policy ANS-A
commutative contract is one in which the parties specify the values they will exchange in
advance. Additionally, the parties typically exchange goods or services they believe to be of
roughly equal value. ANS: Interest on both the principal and the interest that has already been
accrued. Compounding is the process of calculating the interest rate on both the principal and
the interest that has already been accrued. ANS-A conditional promise is a promise to carry out
a specific action if a particular, uncertain event occurs; if the event does not take place, the
promise will not be carried out. In the event that he becomes ill or injured and is unable to work,
Conrad sought protection for his family by purchasing disability income insurance. a. minimizing
