Iowa Life and Health Insurance Test
Questions and Answers
Risk Pooling - ANSWER-A group sharing the possibility of a loss. Risk transferred from
individual to group.
Valued Contract - ANSWER-Pays a stated amount in the event of a loss
Indemnity Contract - ANSWER-pays an amount equal to the loss
Waiver - ANSWER-the voluntary relinquishment of a known legal right
Estoppel - ANSWER-A legal impediment to denying a fact or restoring a right that has
been previously waived.
Which of the following is the authority an insurer gives to it's agents by means of a
contract?
A. Implied
B. Expressed
C. General - ANSWER-B
An insurance company only has how many years to challenge the validity of a life
insurance contract? - ANSWER-2 years
Term Life Insurance - ANSWER-Insurance that provides financial protection from losses
resulting from a death during a definite period, or term.
Whole Life Insurance - ANSWER-Insurance that is kept in force for a person's entire life
and pays a benefit upon the person's death, whenever that may be.
At age 100 what happens to a whole life policy if the policy holder is still living? -
ANSWER-The policy is paid out as a living benefit and the policy terminates as this is
when the cash value of the policy equals the death benefit amount.
Term Life Insurance - ANSWER-Insurance that provides financial protection from losses
resulting from a death during a definite period, or term.
Whole Life Insurance - ANSWER-Insurance that is kept in force for a person's entire life
and pays a benefit upon the person's death, up until age 100.
, Endowment Policy - ANSWER-An insurance product that pays out a lump sum after a
specified term or if the insured person dies before the end of the term. Endowment
policies are often used as a way of saving over the long term.
Ron an insured under a $100,000 life insurance policy dies during the grace period,
what happens considering he has not yet paid the premium? - ANSWER-Benefits are
paid out to beneficiary, minus the premium amount.
T/F when a whole life insurance policy is in place the owner can borrow from the cash
value. - ANSWER-True-it is not expected to be paid back, but amount taken will be
deducted from earnings at death.
Beneficiary - ANSWER-a person who receives something good from someone else
such as an inheritance
Common Disaster Provision - ANSWER-Sometimes added to a policy and designed to
provide an alternative beneficiary in the event that the insured as well as the original
beneficiary die in the same accident. If there is not an alternate beneficiary, money will
be paid to estate of policy holder.
Can a minor be listed as a beneficiary? - ANSWER-Yes-in some cases the proceeds
may be paid to a guardian, be placed in a trust, or be paid out when the child reaches
adult age.
What 3 general factors that help determine the premium of a life insurance policy? -
ANSWER-Mortality, Interest, and Expense
What are the other specific factors that can influence mortality and are also considered
in a life insurance premium? - ANSWER-Age, Sex, Health, Occupation, Habits
Is a life insurance policy taxable? - ANSWER-A policyowner is allowed to receive tax
free an amount equal to what he or she paid into the policy over the years in form of a
premium, but anything additional is taxable.
Lump Sum Option - ANSWER-All policy proceeds paid out in a single cash settlement.
Law of Large Numbers - ANSWER-The principle that the larger the number of individual
risks in a group, the more certainty there is as to the amount of loss incurred in any
period. This is based on the science of probability and the experience of mortality and
morbidity statistics.
Speculative Risk - ANSWER-Involves the chance of both loss or gain.
Pure Risk - ANSWER-Involves only the chance of loss, no possibility of a gain or profit.
Peril - ANSWER-Immediate specific event that causes a loss.
Questions and Answers
Risk Pooling - ANSWER-A group sharing the possibility of a loss. Risk transferred from
individual to group.
Valued Contract - ANSWER-Pays a stated amount in the event of a loss
Indemnity Contract - ANSWER-pays an amount equal to the loss
Waiver - ANSWER-the voluntary relinquishment of a known legal right
Estoppel - ANSWER-A legal impediment to denying a fact or restoring a right that has
been previously waived.
Which of the following is the authority an insurer gives to it's agents by means of a
contract?
A. Implied
B. Expressed
C. General - ANSWER-B
An insurance company only has how many years to challenge the validity of a life
insurance contract? - ANSWER-2 years
Term Life Insurance - ANSWER-Insurance that provides financial protection from losses
resulting from a death during a definite period, or term.
Whole Life Insurance - ANSWER-Insurance that is kept in force for a person's entire life
and pays a benefit upon the person's death, whenever that may be.
At age 100 what happens to a whole life policy if the policy holder is still living? -
ANSWER-The policy is paid out as a living benefit and the policy terminates as this is
when the cash value of the policy equals the death benefit amount.
Term Life Insurance - ANSWER-Insurance that provides financial protection from losses
resulting from a death during a definite period, or term.
Whole Life Insurance - ANSWER-Insurance that is kept in force for a person's entire life
and pays a benefit upon the person's death, up until age 100.
, Endowment Policy - ANSWER-An insurance product that pays out a lump sum after a
specified term or if the insured person dies before the end of the term. Endowment
policies are often used as a way of saving over the long term.
Ron an insured under a $100,000 life insurance policy dies during the grace period,
what happens considering he has not yet paid the premium? - ANSWER-Benefits are
paid out to beneficiary, minus the premium amount.
T/F when a whole life insurance policy is in place the owner can borrow from the cash
value. - ANSWER-True-it is not expected to be paid back, but amount taken will be
deducted from earnings at death.
Beneficiary - ANSWER-a person who receives something good from someone else
such as an inheritance
Common Disaster Provision - ANSWER-Sometimes added to a policy and designed to
provide an alternative beneficiary in the event that the insured as well as the original
beneficiary die in the same accident. If there is not an alternate beneficiary, money will
be paid to estate of policy holder.
Can a minor be listed as a beneficiary? - ANSWER-Yes-in some cases the proceeds
may be paid to a guardian, be placed in a trust, or be paid out when the child reaches
adult age.
What 3 general factors that help determine the premium of a life insurance policy? -
ANSWER-Mortality, Interest, and Expense
What are the other specific factors that can influence mortality and are also considered
in a life insurance premium? - ANSWER-Age, Sex, Health, Occupation, Habits
Is a life insurance policy taxable? - ANSWER-A policyowner is allowed to receive tax
free an amount equal to what he or she paid into the policy over the years in form of a
premium, but anything additional is taxable.
Lump Sum Option - ANSWER-All policy proceeds paid out in a single cash settlement.
Law of Large Numbers - ANSWER-The principle that the larger the number of individual
risks in a group, the more certainty there is as to the amount of loss incurred in any
period. This is based on the science of probability and the experience of mortality and
morbidity statistics.
Speculative Risk - ANSWER-Involves the chance of both loss or gain.
Pure Risk - ANSWER-Involves only the chance of loss, no possibility of a gain or profit.
Peril - ANSWER-Immediate specific event that causes a loss.
