Life and Health Insurance Exam Test with Answers Graded A+
The transfer of risk from one party to another through a
Concept of insurance
legal contract.
The larger the number of risks insured in the same risk
Law of Large Numbers
pool; the more predictable losses become.
Peril An immediate, specific event that causes a loss.
An unintended, unforeseen reduction, or destruction of
Loss
financial or economic value.
Creates an increased possibility that a peril (a cause of a
Hazard
loss) will actually occur.
Occurrence Is any event that causes a loss.
Risk Risk is defined as thepotential or uncertainty for loss.
A situation in which either profit or loss is possible, not
Speculative risk
insured.
Issues very small face amounts, such as $1,000 or $2,000.
Industrial life insurance Premiums are paid weekly and collected by debit agents.
They were designed for burial coverage.
Life insurance of commercial companies not issued on the
weekly premium basis. It is made up of several types of
Ordinary life insurance
individual life insurance, such as temporary (term), per-
manent (whole).
Insurance written for members of a group, such as a
place of employment, association, or a union. Coverage is
provided to the members of that group under one master
Group life insurance contract. The group is underwritten as a whole, not on
each individual member. One of the benefits of group
life coverage is usually there is no evidence of insurability
required.
,Life and Health Insurance Exam Test with Answers Graded A+
Life insurance that pays a death benefit if the policyholder
Term life insurance dies within a specific time period but has no remaining
value at the end of this time.
Sometimes called straight life insurance or ordinary life
insurance; can provide lifetime insurance coverage; in this
Whole life insurance case, fixed premiums are paid for life; pays interest on the
cash value portion with a guaranteed minimum interest
rate during life of the contract.
Cover the lives of two individuals and saves on premium
costs by averaging the ages of the two insureds. Joint Life
Survivor or Last Survivor policies only pay the death benefit
upon the death of the last insured person. For example,
Joint survivor or last survivor life policies say B and M purchase a joint life survivor policy. If B were
to die first and then M died 10 years later, no benefits
would be paid out from the policy until M died. A Joint Life
and Survivor policy covers two lives but only pays benefits
after the death of the last insured.
Pays a monthly income from the date of death of the
Family maintenance policy
insured to the end of the preselected period.
Combines Whole Life insurance with a Decreasing Term
Family income policy
Rider also written on the same person.
Whole life insurance policy, but you can change your pol-
Adjustable life policy icy as your needs change. You can change your premium
payments to increase or decrease coverage.
Incorporates flexible premiums and an adjustable death
benefit. The investment gains from a Universal Life Policy
usually go toward the cash value. The policy owner can
Universal life insurance policy
use the cash value to manipulate the flexible aspects of
a universal life insurance policy. A customer who wants a
policy that gives them the most options and the most con-
, Life and Health Insurance Exam Test with Answers Graded A+
trol would be looking for a Universal Life Policy. Universal
policies use gains to fund the cash value and give the
policy owner options for flexible premiums and adjustable
death benefits.
Life insurance in which the benefits are a function of the
Variable Life Insurance returns being generated on the investments selected by
the policyholder.
Combines most of the features, benefits, and security of
Equity index universal life insurance traditional life insurance with the potential of earned in-
terest based on the upward movement of an equity index.
The equity amount or "savings" accumulation in a whole
Cash value
life policy.
Is a contract providing for payment of the face amount at
the end of a fixed period, at a specified age of the insured,
Endowment policy
or at the insured's death before the end of the stated
period.
Contract that promises to pay at the insured's death the
Face amount plus cash value policy face amount of the policy plus a sum equal to the policy's
cash value.
Written on the lives of children who are within specified
Juvenile Insurance
age limits and generally under parental control.
Typically does not require a medical exam and tends to
be more expensive than medically underwritten policies.
The insurer will average out everyone's risk and charge
Non-medical life insurance
accordingly. Although insurers typically will not require a
medical exam, they will still inquire about the applicant's
medical history and lifestyle.
Is a suggested premium used in Universal Life policies. It
does not guarantee there will be adequate funds to main-
The transfer of risk from one party to another through a
Concept of insurance
legal contract.
The larger the number of risks insured in the same risk
Law of Large Numbers
pool; the more predictable losses become.
Peril An immediate, specific event that causes a loss.
An unintended, unforeseen reduction, or destruction of
Loss
financial or economic value.
Creates an increased possibility that a peril (a cause of a
Hazard
loss) will actually occur.
Occurrence Is any event that causes a loss.
Risk Risk is defined as thepotential or uncertainty for loss.
A situation in which either profit or loss is possible, not
Speculative risk
insured.
Issues very small face amounts, such as $1,000 or $2,000.
Industrial life insurance Premiums are paid weekly and collected by debit agents.
They were designed for burial coverage.
Life insurance of commercial companies not issued on the
weekly premium basis. It is made up of several types of
Ordinary life insurance
individual life insurance, such as temporary (term), per-
manent (whole).
Insurance written for members of a group, such as a
place of employment, association, or a union. Coverage is
provided to the members of that group under one master
Group life insurance contract. The group is underwritten as a whole, not on
each individual member. One of the benefits of group
life coverage is usually there is no evidence of insurability
required.
,Life and Health Insurance Exam Test with Answers Graded A+
Life insurance that pays a death benefit if the policyholder
Term life insurance dies within a specific time period but has no remaining
value at the end of this time.
Sometimes called straight life insurance or ordinary life
insurance; can provide lifetime insurance coverage; in this
Whole life insurance case, fixed premiums are paid for life; pays interest on the
cash value portion with a guaranteed minimum interest
rate during life of the contract.
Cover the lives of two individuals and saves on premium
costs by averaging the ages of the two insureds. Joint Life
Survivor or Last Survivor policies only pay the death benefit
upon the death of the last insured person. For example,
Joint survivor or last survivor life policies say B and M purchase a joint life survivor policy. If B were
to die first and then M died 10 years later, no benefits
would be paid out from the policy until M died. A Joint Life
and Survivor policy covers two lives but only pays benefits
after the death of the last insured.
Pays a monthly income from the date of death of the
Family maintenance policy
insured to the end of the preselected period.
Combines Whole Life insurance with a Decreasing Term
Family income policy
Rider also written on the same person.
Whole life insurance policy, but you can change your pol-
Adjustable life policy icy as your needs change. You can change your premium
payments to increase or decrease coverage.
Incorporates flexible premiums and an adjustable death
benefit. The investment gains from a Universal Life Policy
usually go toward the cash value. The policy owner can
Universal life insurance policy
use the cash value to manipulate the flexible aspects of
a universal life insurance policy. A customer who wants a
policy that gives them the most options and the most con-
, Life and Health Insurance Exam Test with Answers Graded A+
trol would be looking for a Universal Life Policy. Universal
policies use gains to fund the cash value and give the
policy owner options for flexible premiums and adjustable
death benefits.
Life insurance in which the benefits are a function of the
Variable Life Insurance returns being generated on the investments selected by
the policyholder.
Combines most of the features, benefits, and security of
Equity index universal life insurance traditional life insurance with the potential of earned in-
terest based on the upward movement of an equity index.
The equity amount or "savings" accumulation in a whole
Cash value
life policy.
Is a contract providing for payment of the face amount at
the end of a fixed period, at a specified age of the insured,
Endowment policy
or at the insured's death before the end of the stated
period.
Contract that promises to pay at the insured's death the
Face amount plus cash value policy face amount of the policy plus a sum equal to the policy's
cash value.
Written on the lives of children who are within specified
Juvenile Insurance
age limits and generally under parental control.
Typically does not require a medical exam and tends to
be more expensive than medically underwritten policies.
The insurer will average out everyone's risk and charge
Non-medical life insurance
accordingly. Although insurers typically will not require a
medical exam, they will still inquire about the applicant's
medical history and lifestyle.
Is a suggested premium used in Universal Life policies. It
does not guarantee there will be adequate funds to main-
