Life Insurance Exam-Illinois / Actual Exam Questions
with Certified Solutions / Newest Practice questions
for this set
What is insurance? - (ANSWER)The transfer of the risk of loss from the individual
or business entity to an insurance company
What is included under the term insurance transaction? - (ANSWER)Solicitation,
negotiating prior to execution of a contract, execution of a contract, and the
transaction of any matters that arise as a result of the contract, as well as the
actual process of insuring.
What is the difference between an authorized/admitted and
unauthorized/nonadmitted insurer? - (ANSWER)An admitted or authorized
insurer is qualified and received a Certificate of Authority from the Department of
Insurance to transact insurance in the state. A nonadmitted or nonauthorized
insurer is an insurance company that has not applied for, or has been denied a
Certificate of Authority and may not transact insurance.
What are the four elements of an insurance contract? - (ANSWER)AGREEMENT-
offer/acceptance, consideration, competent parties, legal purpose
What does representation mean and how does it differ from a warranty? -
(ANSWER)Representations are statements believed to be true to the best of one's
knowledge. A warranty is an absolutely true statement upon which the validity of
the insurance policy depends.
,What information is gathered in Parts 1 & 2 of the application? - (ANSWER)Part 1
of the application includes the general questions about the applicant, including
name, age, address, birth date, gender, income, marital status, and occupation.
Part 2 includes medical information about prospective insured.
What is the purpose of the agent's report? - (ANSWER)The agent's (producer's)
report is used by the agent to discuss his or her personal observations concerning
the proposed insured.
Who is required to sign an application for life insurance? - (ANSWER)Both the
agent and the proposed insured (usually the applicant) must sign the application
When does the insurance policy go in effect? - (ANSWER)The policy will go into
effect when the first premium is paid and the policy has been delivered
What is underwriting? - (ANSWER)Underwriting is the risk selection and
classification process
In a life insurance policy, when must insurable interest exist? -
(ANSWER)Insurable interest must exist between the policyowner and the insured
at the time of application (or time of policy issue), but NOT at the time of loss
What is the purpose of the Fair Credit Reporting Act? - (ANSWER)The act
established procedures that consumer-reporting agencies must follow in order to
ensure that records are confidential, accurate, relevant, and properly used. It also
protects consumers against the circulation of inaccurate or obsolete information
, What is the difference between a consumer report and an investigative consumer
report? - (ANSWER)Investigative consumer reports are similar to consumer
reports in that they also provide information on the consumer's character,
reputation, and habits. The primary difference is that the information is obtained
through an investigation and interviews with associates, friends and neighbors of
the consumer
How can an insurance company use the information it obtains from the MIB? -
(ANSWER)It can use MIB information to conduct further investigation into an
applicant's current insurability
How does a substandard risk policy differ from a standard risk? -
(ANSWER)Substandard risk applicants are not acceptable at standard rates
because of physical condition, personal or family history of disease, occupation,
or dangerous habits. These policies could be issued with the premium rated-up
(higher than the standard risk)
What is stranger-originated life insurance (STOLI)? - (ANSWER)STOLI is an
arrangement in which a person purchases an insurance policy on another without
having insurable interest with the insured. STOLIs are purchased with the intent
to sell policies for life settlements
What information does a Buyer's Guide provide? - (ANSWER)Basic information
about life insurance policies and comparison of policy cost
with Certified Solutions / Newest Practice questions
for this set
What is insurance? - (ANSWER)The transfer of the risk of loss from the individual
or business entity to an insurance company
What is included under the term insurance transaction? - (ANSWER)Solicitation,
negotiating prior to execution of a contract, execution of a contract, and the
transaction of any matters that arise as a result of the contract, as well as the
actual process of insuring.
What is the difference between an authorized/admitted and
unauthorized/nonadmitted insurer? - (ANSWER)An admitted or authorized
insurer is qualified and received a Certificate of Authority from the Department of
Insurance to transact insurance in the state. A nonadmitted or nonauthorized
insurer is an insurance company that has not applied for, or has been denied a
Certificate of Authority and may not transact insurance.
What are the four elements of an insurance contract? - (ANSWER)AGREEMENT-
offer/acceptance, consideration, competent parties, legal purpose
What does representation mean and how does it differ from a warranty? -
(ANSWER)Representations are statements believed to be true to the best of one's
knowledge. A warranty is an absolutely true statement upon which the validity of
the insurance policy depends.
,What information is gathered in Parts 1 & 2 of the application? - (ANSWER)Part 1
of the application includes the general questions about the applicant, including
name, age, address, birth date, gender, income, marital status, and occupation.
Part 2 includes medical information about prospective insured.
What is the purpose of the agent's report? - (ANSWER)The agent's (producer's)
report is used by the agent to discuss his or her personal observations concerning
the proposed insured.
Who is required to sign an application for life insurance? - (ANSWER)Both the
agent and the proposed insured (usually the applicant) must sign the application
When does the insurance policy go in effect? - (ANSWER)The policy will go into
effect when the first premium is paid and the policy has been delivered
What is underwriting? - (ANSWER)Underwriting is the risk selection and
classification process
In a life insurance policy, when must insurable interest exist? -
(ANSWER)Insurable interest must exist between the policyowner and the insured
at the time of application (or time of policy issue), but NOT at the time of loss
What is the purpose of the Fair Credit Reporting Act? - (ANSWER)The act
established procedures that consumer-reporting agencies must follow in order to
ensure that records are confidential, accurate, relevant, and properly used. It also
protects consumers against the circulation of inaccurate or obsolete information
, What is the difference between a consumer report and an investigative consumer
report? - (ANSWER)Investigative consumer reports are similar to consumer
reports in that they also provide information on the consumer's character,
reputation, and habits. The primary difference is that the information is obtained
through an investigation and interviews with associates, friends and neighbors of
the consumer
How can an insurance company use the information it obtains from the MIB? -
(ANSWER)It can use MIB information to conduct further investigation into an
applicant's current insurability
How does a substandard risk policy differ from a standard risk? -
(ANSWER)Substandard risk applicants are not acceptable at standard rates
because of physical condition, personal or family history of disease, occupation,
or dangerous habits. These policies could be issued with the premium rated-up
(higher than the standard risk)
What is stranger-originated life insurance (STOLI)? - (ANSWER)STOLI is an
arrangement in which a person purchases an insurance policy on another without
having insurable interest with the insured. STOLIs are purchased with the intent
to sell policies for life settlements
What information does a Buyer's Guide provide? - (ANSWER)Basic information
about life insurance policies and comparison of policy cost
