Arizona Life Insurance Exam - Life
Insurance Basics UPDATED Study Guide
QUESTIONS AND CORRECT ANSWERS
- Beneficiary - CORRECT ANSWERS A person who receives
the benefits of an insurance policy
Death Benefit - CORRECT ANSWERS The amount paid upon
the death of the insured in a life insurance policy
Cash Value - CORRECT ANSWERS Equity amount
accumulated in permanent life insurance
Estate - CORRECT ANSWERS A person's net worth
Illustrations - CORRECT ANSWERS Presentation or depiction
of nonguaranteed elements of a life insurance policy
Life Insurance - CORRECT ANSWERS Coverage on human
lives
Liquidation - CORRECT ANSWERS Selling assets in order to
raise capital (such as using cash value for capital needs)
Lump-Sum - CORRECT ANSWERS Payment of the entire
benefit in one sum
,Minor - CORRECT ANSWERS A person under legal age
Solvency - CORRECT ANSWERS The ability to meet
financial obligations (an insurance company maintains enough assets
to pay claims)
Survivor Protection - CORRECT ANSWERS Life insurance
can provide the funds necessary for the survivors of the insured to be
able to maintain their lifestyle in the event of the insured's death and
this is called ________________
Estate Conservation - CORRECT ANSWERS Life insurance
proceeds may be used to pay inheritance taxes and federal estate taxes
so that it is not necessary for the beneficiaries to sell off the assets
which is ___________________
Estate Creation - CORRECT ANSWERS The insured will
have an estate worth the amount of the life policy upon the first paid
premium which is ______________
Viatical Settlements - CORRECT ANSWERS
____________________ allows someone living with a life-
threatening condition to sell their existing life insurance policy and
use the proceeds when they are most needed, before their death
Viator - CORRECT ANSWERS The insured selling their life
insurance in a viatical settlement
, Viatical Settlement Provider - CORRECT ANSWERS A
person, other than a viator, that enters into a viatical settlement
contract (the person buying the life insurance policy)
Viatical Producer - CORRECT ANSWERS A person who
represents the viatical settlement provider
Viatical Broker - CORRECT ANSWERS A person who
represents the viator
Life Settlement - CORRECT ANSWERS Any financial
transaction in which the owner of a life insurance policy sells a policy
that is no longer needed to a third party for some form of
compensation, usually cash
Uses of Life Insurance - CORRECT ANSWERS 1. Survivor
Protection
2. Estate Creation and Conservation
3. Liquidity and Cash Accumulation
4. Viatical Settlements and Life Settlements
Human Life Value Approach - CORRECT ANSWERS This
approach gives the insured an estimate of what would be lost to the
family in the event of the premature death of the insured. It calculates
an individual's life value by looking at the insured's wage, inflation,
the number of years to retirement, and the time value of money.
Insurance Basics UPDATED Study Guide
QUESTIONS AND CORRECT ANSWERS
- Beneficiary - CORRECT ANSWERS A person who receives
the benefits of an insurance policy
Death Benefit - CORRECT ANSWERS The amount paid upon
the death of the insured in a life insurance policy
Cash Value - CORRECT ANSWERS Equity amount
accumulated in permanent life insurance
Estate - CORRECT ANSWERS A person's net worth
Illustrations - CORRECT ANSWERS Presentation or depiction
of nonguaranteed elements of a life insurance policy
Life Insurance - CORRECT ANSWERS Coverage on human
lives
Liquidation - CORRECT ANSWERS Selling assets in order to
raise capital (such as using cash value for capital needs)
Lump-Sum - CORRECT ANSWERS Payment of the entire
benefit in one sum
,Minor - CORRECT ANSWERS A person under legal age
Solvency - CORRECT ANSWERS The ability to meet
financial obligations (an insurance company maintains enough assets
to pay claims)
Survivor Protection - CORRECT ANSWERS Life insurance
can provide the funds necessary for the survivors of the insured to be
able to maintain their lifestyle in the event of the insured's death and
this is called ________________
Estate Conservation - CORRECT ANSWERS Life insurance
proceeds may be used to pay inheritance taxes and federal estate taxes
so that it is not necessary for the beneficiaries to sell off the assets
which is ___________________
Estate Creation - CORRECT ANSWERS The insured will
have an estate worth the amount of the life policy upon the first paid
premium which is ______________
Viatical Settlements - CORRECT ANSWERS
____________________ allows someone living with a life-
threatening condition to sell their existing life insurance policy and
use the proceeds when they are most needed, before their death
Viator - CORRECT ANSWERS The insured selling their life
insurance in a viatical settlement
, Viatical Settlement Provider - CORRECT ANSWERS A
person, other than a viator, that enters into a viatical settlement
contract (the person buying the life insurance policy)
Viatical Producer - CORRECT ANSWERS A person who
represents the viatical settlement provider
Viatical Broker - CORRECT ANSWERS A person who
represents the viator
Life Settlement - CORRECT ANSWERS Any financial
transaction in which the owner of a life insurance policy sells a policy
that is no longer needed to a third party for some form of
compensation, usually cash
Uses of Life Insurance - CORRECT ANSWERS 1. Survivor
Protection
2. Estate Creation and Conservation
3. Liquidity and Cash Accumulation
4. Viatical Settlements and Life Settlements
Human Life Value Approach - CORRECT ANSWERS This
approach gives the insured an estimate of what would be lost to the
family in the event of the premature death of the insured. It calculates
an individual's life value by looking at the insured's wage, inflation,
the number of years to retirement, and the time value of money.
