Iowa Insurance Exam – Life;questions and answers.
purpose of life insurance ~CORRECT ANSWER~✓✓pay a death benefit to
beneficiaries when the insured dies
life insurance for personal use ~CORRECT ANSWER~✓✓death benefit serves to
replace the insured's future loss income and pay expenses that occur upon death,
living benefits
Group insurance vs. individual ~CORRECT ANSWER~✓✓-covers many non-
related people
-less expensive per person
group insurance eligibility ~CORRECT ANSWER~✓✓-group cannot be formed
for the express purpose of purchasing it
-employers
-labor unions
-trade and professional association groups
individual insurance ~CORRECT ANSWER~✓✓covers one individual
ordinary life insurance ~CORRECT ANSWER~✓✓face amounts grater than
$25,000, premiums are payable monthly, quarterly, semi annually, annually;
includes every type of life insurance and annuity product, flexible options
,industrial life insurance ~CORRECT ANSWER~✓✓"burial insurance", small face
amounts 1000 or 2500 to 10,000; premiums paid frequently, no medical exam,
agent meets personally with policy owner to collect premium
permanent life insurance ~CORRECT ANSWER~✓✓provides life ins for the
insured's entire life; coverage is provided until insured dies or reaches 120 years
old
True or false: Level premium of permanent life insurance - once the policy is
issued premiums remain level for the full duration of policy coverage
~CORRECT ANSWER~✓✓true
Permanent life insurance accumulation element within the policy is __________
____________ ~CORRECT ANSWER~✓✓cash value
Term life insurance ~CORRECT ANSWER~✓✓coverage is temporary, time limit
can be as short as one year, as long as 20+ years or until the insured reaches a
specific age (ex. 65). No cash value, costs less than permanent life, premiums
increase with age
Participating vs nonparticipating life insurance ~CORRECT ANSWER~✓✓par -
issued by mutual ins co's, policyowner is eligible for policy dividends declared
by the insurance co; dividends are paid from insurers divisible surplus
non par - issued by stock ins co, no policy dividends
, fixed life insurance ~CORRECT ANSWER~✓✓insurer guarantees fixed death
benefit and min rate of return on policy's cash value, premiums are invested in
co's general account
variable life insurance ~CORRECT ANSWER~✓✓premiums are invested in
investment sub accounts managed by the insurer - guarantees min death benefit
(face amount of policy); cash values and death benefit raise and fall based on sub
accounts investment
Regulation of Variable products - what do the Securities Exchange commission
and financial Industry Regulatory authority do? ~CORRECT ANSWER~✓✓SEC
- responsible for regulating the securities that make up an insurer's separate
account
FIRA - regulates producers who sell variable life products and companies that
sell investment products
Actuary base life insurance premiums based on 3 things ~CORRECT
ANSWER~✓✓mortality, interest, expenses
Interest factor ~CORRECT ANSWER~✓✓added to premium calculations to
recognize investment earnings, used as credit - higher rate = lower premium
Expense factor ~CORRECT ANSWER~✓✓worked into premium calculation to
reflect costs that insurer expects to incur (rent, commissions, benefits)
Premium Tax ~CORRECT ANSWER~✓✓levied on insurance companies when
they receive premiums
purpose of life insurance ~CORRECT ANSWER~✓✓pay a death benefit to
beneficiaries when the insured dies
life insurance for personal use ~CORRECT ANSWER~✓✓death benefit serves to
replace the insured's future loss income and pay expenses that occur upon death,
living benefits
Group insurance vs. individual ~CORRECT ANSWER~✓✓-covers many non-
related people
-less expensive per person
group insurance eligibility ~CORRECT ANSWER~✓✓-group cannot be formed
for the express purpose of purchasing it
-employers
-labor unions
-trade and professional association groups
individual insurance ~CORRECT ANSWER~✓✓covers one individual
ordinary life insurance ~CORRECT ANSWER~✓✓face amounts grater than
$25,000, premiums are payable monthly, quarterly, semi annually, annually;
includes every type of life insurance and annuity product, flexible options
,industrial life insurance ~CORRECT ANSWER~✓✓"burial insurance", small face
amounts 1000 or 2500 to 10,000; premiums paid frequently, no medical exam,
agent meets personally with policy owner to collect premium
permanent life insurance ~CORRECT ANSWER~✓✓provides life ins for the
insured's entire life; coverage is provided until insured dies or reaches 120 years
old
True or false: Level premium of permanent life insurance - once the policy is
issued premiums remain level for the full duration of policy coverage
~CORRECT ANSWER~✓✓true
Permanent life insurance accumulation element within the policy is __________
____________ ~CORRECT ANSWER~✓✓cash value
Term life insurance ~CORRECT ANSWER~✓✓coverage is temporary, time limit
can be as short as one year, as long as 20+ years or until the insured reaches a
specific age (ex. 65). No cash value, costs less than permanent life, premiums
increase with age
Participating vs nonparticipating life insurance ~CORRECT ANSWER~✓✓par -
issued by mutual ins co's, policyowner is eligible for policy dividends declared
by the insurance co; dividends are paid from insurers divisible surplus
non par - issued by stock ins co, no policy dividends
, fixed life insurance ~CORRECT ANSWER~✓✓insurer guarantees fixed death
benefit and min rate of return on policy's cash value, premiums are invested in
co's general account
variable life insurance ~CORRECT ANSWER~✓✓premiums are invested in
investment sub accounts managed by the insurer - guarantees min death benefit
(face amount of policy); cash values and death benefit raise and fall based on sub
accounts investment
Regulation of Variable products - what do the Securities Exchange commission
and financial Industry Regulatory authority do? ~CORRECT ANSWER~✓✓SEC
- responsible for regulating the securities that make up an insurer's separate
account
FIRA - regulates producers who sell variable life products and companies that
sell investment products
Actuary base life insurance premiums based on 3 things ~CORRECT
ANSWER~✓✓mortality, interest, expenses
Interest factor ~CORRECT ANSWER~✓✓added to premium calculations to
recognize investment earnings, used as credit - higher rate = lower premium
Expense factor ~CORRECT ANSWER~✓✓worked into premium calculation to
reflect costs that insurer expects to incur (rent, commissions, benefits)
Premium Tax ~CORRECT ANSWER~✓✓levied on insurance companies when
they receive premiums
