Fundamentals of Life Insurance and Annuities Questions
With Accurate Answers.
What is the definition of risk in insurance? - accurate answers-Risk is the
uncertainty of loss.
What is a pool in the context of insurance? - accurate answers-A pool is the
monies paid into a policy; the larger the pool, the less uncertainty.
What is a premium in insurance? - accurate answers-A premium is an act for a
promise, also referred to as consideration.
Who must sign an insurance policy? - accurate answers-The insured, the
owner, and the agent are the only ones who have to sign the policy.
What is the fiduciary responsibility of an agent to the insurance company? -
accurate answers-The fiduciary responsibility is to ensure that the people
allowed into the pool are healthy and will not drain it.
What does indemnify mean in insurance? - accurate answers-To indemnify
means to make whole in the event of a death with an insurance payout.
What is the face value of an insurance policy? - accurate answers-The face
value is the amount paid to the beneficiary at the insured's death, found on the
first page of the policy contract.
What are the characteristics of term life insurance? - accurate answers-Term
life insurance is temporary, least expensive, has low premiums, and no cash
value.
What happens to group insurance when an employee leaves the company? -
accurate answers-All group insurance is term insurance, and the employee no
longer pays the premium once they leave.
How long does an employee have to convert a company group policy to a
whole life policy? - accurate answers-An employee has 31 days to convert a
company group policy to a whole life policy.
, What is the maximum amount of group life term insurance an employer can
provide without tax implications? - accurate answers-The maximum amount
is $50,000.
Do beneficiaries pay tax on death benefits? - accurate answers-No,
beneficiaries NEVER pay tax on death benefits.
What is the renewal right for a term insured person? - accurate answers-The
term insured person has the right to renew the policy at the end of the term
without having to prove insurability.
What is the conversion right for a term insured person? - accurate answers-
The term insured person has 31 days to convert their term coverage to whole
life insurance.
What is a level term insurance policy? - accurate answers-Level term
insurance has a face amount and premium that stays the same for the policy
period.
What is decreasing term life insurance? - accurate answers-Decreasing term
life insurance decreases for the life of the policy down to zero at the end of the
contract and is not renewable.
What is a return of premiums rider? - accurate answers-A return of premiums
rider pays the face value and the amount of premiums paid at the time of
death.
What is whole life insurance? - accurate answers-Whole life insurance is
permanent, continuous pay, and the premiums and coverage remain the same
for the life of the policy.
What happens to the cash value in a whole life policy? - accurate answers-The
cash value goes to the owner, while the face value goes to the beneficiary.
How long does it take for dividends to be paid on whole life insurance? -
accurate answers-It takes 1 year for dividends to be paid and 2 years for cash
value to start accumulating.
With Accurate Answers.
What is the definition of risk in insurance? - accurate answers-Risk is the
uncertainty of loss.
What is a pool in the context of insurance? - accurate answers-A pool is the
monies paid into a policy; the larger the pool, the less uncertainty.
What is a premium in insurance? - accurate answers-A premium is an act for a
promise, also referred to as consideration.
Who must sign an insurance policy? - accurate answers-The insured, the
owner, and the agent are the only ones who have to sign the policy.
What is the fiduciary responsibility of an agent to the insurance company? -
accurate answers-The fiduciary responsibility is to ensure that the people
allowed into the pool are healthy and will not drain it.
What does indemnify mean in insurance? - accurate answers-To indemnify
means to make whole in the event of a death with an insurance payout.
What is the face value of an insurance policy? - accurate answers-The face
value is the amount paid to the beneficiary at the insured's death, found on the
first page of the policy contract.
What are the characteristics of term life insurance? - accurate answers-Term
life insurance is temporary, least expensive, has low premiums, and no cash
value.
What happens to group insurance when an employee leaves the company? -
accurate answers-All group insurance is term insurance, and the employee no
longer pays the premium once they leave.
How long does an employee have to convert a company group policy to a
whole life policy? - accurate answers-An employee has 31 days to convert a
company group policy to a whole life policy.
, What is the maximum amount of group life term insurance an employer can
provide without tax implications? - accurate answers-The maximum amount
is $50,000.
Do beneficiaries pay tax on death benefits? - accurate answers-No,
beneficiaries NEVER pay tax on death benefits.
What is the renewal right for a term insured person? - accurate answers-The
term insured person has the right to renew the policy at the end of the term
without having to prove insurability.
What is the conversion right for a term insured person? - accurate answers-
The term insured person has 31 days to convert their term coverage to whole
life insurance.
What is a level term insurance policy? - accurate answers-Level term
insurance has a face amount and premium that stays the same for the policy
period.
What is decreasing term life insurance? - accurate answers-Decreasing term
life insurance decreases for the life of the policy down to zero at the end of the
contract and is not renewable.
What is a return of premiums rider? - accurate answers-A return of premiums
rider pays the face value and the amount of premiums paid at the time of
death.
What is whole life insurance? - accurate answers-Whole life insurance is
permanent, continuous pay, and the premiums and coverage remain the same
for the life of the policy.
What happens to the cash value in a whole life policy? - accurate answers-The
cash value goes to the owner, while the face value goes to the beneficiary.
How long does it take for dividends to be paid on whole life insurance? -
accurate answers-It takes 1 year for dividends to be paid and 2 years for cash
value to start accumulating.
