LIFE ONLY AGENT UPDATED END OF COURSE QUESTIONS
AND SOLUTIONS GUARANTEE A+
✔✔UTMOST GOOD FAITH - ✔✔The fair and equal bargaining by both parties in
forming the contract, where the applicant must make full disclosure of risk to the
company, and the insurance company must be fair in underwriting the risk.
✔✔TWISTING - ✔✔A form of misrepresentation in which an agent persuades an
insured/owner to cancel, lapse, or switch policies, even when it's to the insured's
disadvantage.
✔✔RIDER - ✔✔Any supplemental agreement attached to and made a part of the policy
indicating the policy expansion by additional coverage, or a waiver of a coverage or
condition.
✔✔REPRESENTATION - ✔✔WRITTEN OR ORAL STATEMENTS MADE TO THE
BEST OF ONE'S KNOWLEDGE AND BELIEF.
✔✔MORTALITY TABLE - ✔✔A table showing the probability of death at specified ages.
✔✔MORBIDITY TABLE - ✔✔A table showing the incidence of sickness at specified
ages.
✔✔MORBIDITY RATE - ✔✔The ratio of the incidence of sickness to the number of well
persons in a given group of people over a given period of time.
✔✔NON PARTICIPATING POLICY - ✔✔A POLICY THAT DOES NOT PAY
DIVIDENDS.
DOES NOT PARTICIPATE IN THE STOCK MARKET
✔✔RESCISSION - ✔✔The termination of an insurance contract due either to material
misrepresentation by the insured or by fraud, misrepresentation, or duress on the part of
the agent/insurer
✔✔GRACE PERIOD - ✔✔A 30 DAY PERIOD IN WHICH THE INSURED CAN MAKE A
PAYMENT WITHOUT THE POLICY LAPSING.
*GRACE PERIOD GOES IN EFFECT AFTER 3 MONTH PREMIUMS HAVE BEEN
PAYED IN FULL ON TIME.
✔✔EXPOSURE - ✔✔A unit of measure used to determine rates charged for insurance
coverage.
, ✔✔FRIVOLOUS - ✔✔NOT HAVING ANY SERIOUS PURPOSE OR VALUE.
✔✔VIATICAL SETTLEMENT - ✔✔An arrangement that allows someone living with a life
threatening condition to sell their existing life insurance policy and use the proceeds
when and where they are most needed, before death.
✔✔RISK TRANSFER - ✔✔BASIC INSURANCE PRINCIPLE ON WHICH THE RISK OF
LOSS IS TRANSFERRED FROM ONE PARTY TO ANOTHER.
EXAMPLE: PURCHASE OF INSURANCE TRANSFERS THE RISK OF LOSS FROM
THE POLICYHOLDER TO THE INSURANCE COMPANY.
✔✔SUBROGATION - ✔✔The legal process by which an insurance company seeks
recovery of the amount paid to the insured from a third party who may have caused the
loss.
✔✔SPENDTHRIFT CLAUSE - ✔✔A clause that prevents the debtors of a beneficiary
from collecting the benefits before he/she receives them.
✔✔SINGLE PREMIUM WHOLE LIFE - ✔✔A life insurance policy designed to provide a
level death benefit to the insured's age 100 for a one-time, lump sum payment.
✔✔RISK - ✔✔Uncertainty as to the outcome of an event when two or more possibilities
exist.
✔✔PURE RISK - ✔✔The uncertainty or chance of a loss occurring in a situation that
can only result in a loss or no change.
✔✔SPECULATIVE RISK - ✔✔The uncertainty or chance of a loss occurring in a
situation that involves the opportunity for either loss or gain.
✔✔RECIPROCAL EXCHANGE - ✔✔An unincorporated group of individuals who
mutually insure one another, each separately assuming a share of each risk.
✔✔CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT ( C.O.B.R.A 1985 )
- ✔✔EMPLOYERS WITH 20 (FULL/PART - TIIME) OR MORE EMPLOYEES ON
MORE THAN 50% OF THE PREVIOUS CALENDAR YEAR.
GIVES EMPLOYEES CONTINUED PROTECTION AFTER A QUALIFYING EVENT
FOR 18 MONTHS EMPLOYEE AND 36 MONTH SPOUSE AND CHILDREN.
✔✔CASH SURRENDER VALUE - ✔✔A PORTION OF THE EXCESS PREMIUMS
PAID ABOVE THE MORTALITY COSTS OF A POLICY.
AND SOLUTIONS GUARANTEE A+
✔✔UTMOST GOOD FAITH - ✔✔The fair and equal bargaining by both parties in
forming the contract, where the applicant must make full disclosure of risk to the
company, and the insurance company must be fair in underwriting the risk.
✔✔TWISTING - ✔✔A form of misrepresentation in which an agent persuades an
insured/owner to cancel, lapse, or switch policies, even when it's to the insured's
disadvantage.
✔✔RIDER - ✔✔Any supplemental agreement attached to and made a part of the policy
indicating the policy expansion by additional coverage, or a waiver of a coverage or
condition.
✔✔REPRESENTATION - ✔✔WRITTEN OR ORAL STATEMENTS MADE TO THE
BEST OF ONE'S KNOWLEDGE AND BELIEF.
✔✔MORTALITY TABLE - ✔✔A table showing the probability of death at specified ages.
✔✔MORBIDITY TABLE - ✔✔A table showing the incidence of sickness at specified
ages.
✔✔MORBIDITY RATE - ✔✔The ratio of the incidence of sickness to the number of well
persons in a given group of people over a given period of time.
✔✔NON PARTICIPATING POLICY - ✔✔A POLICY THAT DOES NOT PAY
DIVIDENDS.
DOES NOT PARTICIPATE IN THE STOCK MARKET
✔✔RESCISSION - ✔✔The termination of an insurance contract due either to material
misrepresentation by the insured or by fraud, misrepresentation, or duress on the part of
the agent/insurer
✔✔GRACE PERIOD - ✔✔A 30 DAY PERIOD IN WHICH THE INSURED CAN MAKE A
PAYMENT WITHOUT THE POLICY LAPSING.
*GRACE PERIOD GOES IN EFFECT AFTER 3 MONTH PREMIUMS HAVE BEEN
PAYED IN FULL ON TIME.
✔✔EXPOSURE - ✔✔A unit of measure used to determine rates charged for insurance
coverage.
, ✔✔FRIVOLOUS - ✔✔NOT HAVING ANY SERIOUS PURPOSE OR VALUE.
✔✔VIATICAL SETTLEMENT - ✔✔An arrangement that allows someone living with a life
threatening condition to sell their existing life insurance policy and use the proceeds
when and where they are most needed, before death.
✔✔RISK TRANSFER - ✔✔BASIC INSURANCE PRINCIPLE ON WHICH THE RISK OF
LOSS IS TRANSFERRED FROM ONE PARTY TO ANOTHER.
EXAMPLE: PURCHASE OF INSURANCE TRANSFERS THE RISK OF LOSS FROM
THE POLICYHOLDER TO THE INSURANCE COMPANY.
✔✔SUBROGATION - ✔✔The legal process by which an insurance company seeks
recovery of the amount paid to the insured from a third party who may have caused the
loss.
✔✔SPENDTHRIFT CLAUSE - ✔✔A clause that prevents the debtors of a beneficiary
from collecting the benefits before he/she receives them.
✔✔SINGLE PREMIUM WHOLE LIFE - ✔✔A life insurance policy designed to provide a
level death benefit to the insured's age 100 for a one-time, lump sum payment.
✔✔RISK - ✔✔Uncertainty as to the outcome of an event when two or more possibilities
exist.
✔✔PURE RISK - ✔✔The uncertainty or chance of a loss occurring in a situation that
can only result in a loss or no change.
✔✔SPECULATIVE RISK - ✔✔The uncertainty or chance of a loss occurring in a
situation that involves the opportunity for either loss or gain.
✔✔RECIPROCAL EXCHANGE - ✔✔An unincorporated group of individuals who
mutually insure one another, each separately assuming a share of each risk.
✔✔CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT ( C.O.B.R.A 1985 )
- ✔✔EMPLOYERS WITH 20 (FULL/PART - TIIME) OR MORE EMPLOYEES ON
MORE THAN 50% OF THE PREVIOUS CALENDAR YEAR.
GIVES EMPLOYEES CONTINUED PROTECTION AFTER A QUALIFYING EVENT
FOR 18 MONTHS EMPLOYEE AND 36 MONTH SPOUSE AND CHILDREN.
✔✔CASH SURRENDER VALUE - ✔✔A PORTION OF THE EXCESS PREMIUMS
PAID ABOVE THE MORTALITY COSTS OF A POLICY.
