Illinois Life Insurance Exam Questions
And Answers Solved 100% Correct!
Pooling of Risks CORRECT ANSWERS A large group of people contribute money to a fund out of which their losses can be paid
Policyowner CORRECT ANSWERS is the person or org that applies for the policy and pays the premium
Actuarial Tables CORRECT ANSWERS Are statistical tables that are used when calculating premium rates and mortality loss reserves
Life Insurance Policies transfer: CORRECT ANSWERS financial risks of premature death on a defined amount
Loss of income CORRECT ANSWERS the face amount of life insurance is determined as a multiple of income
Life annuity CORRECT ANSWERS contract which is issued by a life insurance company protects an individual against the financial risk of outliving a normal life expectancy according to the mortality actuarial tables and running out of money in old age
Life annuity CORRECT ANSWERS guarantees monthly income benefits to the annuitant for the rest of his/her life no matter how long he/she lives
Insurable interest CORRECT ANSWERS a person must be in a position where he/she will lose money should loss occur only at the time the policy is issued
Who must have insurable interest? CORRECT ANSWERS the policy owner; he/she will lose money should hte insured die prematurely
tax qualified plans CORRECT ANSWERS contributions can be deducted
non qualified plans CORRECT ANSWERS contributions cannot be deducted
tax deferred plans CORRECT ANSWERS tax on the interest and/or earnings is postponed as it compounds and accumulates until it is withdrawn
tax free CORRECT ANSWERS no tax on benefits
cost basis CORRECT ANSWERS total contributions made to the plan Tax: premiums paid on individual life insurance policies... CORRECT ANSWERS cannot be deducted (non-qualified)
Tax: the benefits paid to the beneficiary at the insured's death... CORRECT ANSWERS is usually not taxed (tax free)
Participating policy CORRECT ANSWERS pays a dividend
Tax: dividends paid to the policyowner on participating policies... CORRECT ANSWERS are usually not taxed (tax free)
Modified Endowment Contract CORRECT ANSWERS The IRS has written rules that define when a life insurance policy does not have a real, valid life insurance purpose and is in substance an investment or savings plan
If a cash value life insurance policy does not have a valid life insurance purpose, the IRS classifies it as a CORRECT ANSWERS modified endowment contract
Underwriter CORRECT ANSWERS is an insurance company employee who reviews applications and additional information and decides whether the applicant is acceptable and what the correct premium rate should be
Application includes (7 items) CORRECT ANSWERS age, sex, occupation, dangerous recreational activities, aviation, smoking, agent's report
Medical reports can be (3 items) CORRECT ANSWERS health questionare, paramedic examiner's report, and physician's report
Who completes the health questionnaire? CORRECT ANSWERS the agent and the applicant with questions about applicant's health history as well as the applicant's parents' health history
Errors and changes on the application CORRECT ANSWERS if an error on an application occurs, underwriter may require that it be correct and changes must be approved and initialed by the applicant
Medical Information Bureau Report (MIB) CORRECT ANSWERS it is a CLEARINGHOUSE for medical information for insurance companies that belong to it
Inspection Report CORRECT ANSWERS does by an outside firm to verity that the producer completed the application accurately and completely and to determine if the applicant has any moral or character risks
Fair Credit Reporting Act (4 items) CORRECT ANSWERS 1. applicant has a right to be advised that there may be information collected from outside sources
And Answers Solved 100% Correct!
Pooling of Risks CORRECT ANSWERS A large group of people contribute money to a fund out of which their losses can be paid
Policyowner CORRECT ANSWERS is the person or org that applies for the policy and pays the premium
Actuarial Tables CORRECT ANSWERS Are statistical tables that are used when calculating premium rates and mortality loss reserves
Life Insurance Policies transfer: CORRECT ANSWERS financial risks of premature death on a defined amount
Loss of income CORRECT ANSWERS the face amount of life insurance is determined as a multiple of income
Life annuity CORRECT ANSWERS contract which is issued by a life insurance company protects an individual against the financial risk of outliving a normal life expectancy according to the mortality actuarial tables and running out of money in old age
Life annuity CORRECT ANSWERS guarantees monthly income benefits to the annuitant for the rest of his/her life no matter how long he/she lives
Insurable interest CORRECT ANSWERS a person must be in a position where he/she will lose money should loss occur only at the time the policy is issued
Who must have insurable interest? CORRECT ANSWERS the policy owner; he/she will lose money should hte insured die prematurely
tax qualified plans CORRECT ANSWERS contributions can be deducted
non qualified plans CORRECT ANSWERS contributions cannot be deducted
tax deferred plans CORRECT ANSWERS tax on the interest and/or earnings is postponed as it compounds and accumulates until it is withdrawn
tax free CORRECT ANSWERS no tax on benefits
cost basis CORRECT ANSWERS total contributions made to the plan Tax: premiums paid on individual life insurance policies... CORRECT ANSWERS cannot be deducted (non-qualified)
Tax: the benefits paid to the beneficiary at the insured's death... CORRECT ANSWERS is usually not taxed (tax free)
Participating policy CORRECT ANSWERS pays a dividend
Tax: dividends paid to the policyowner on participating policies... CORRECT ANSWERS are usually not taxed (tax free)
Modified Endowment Contract CORRECT ANSWERS The IRS has written rules that define when a life insurance policy does not have a real, valid life insurance purpose and is in substance an investment or savings plan
If a cash value life insurance policy does not have a valid life insurance purpose, the IRS classifies it as a CORRECT ANSWERS modified endowment contract
Underwriter CORRECT ANSWERS is an insurance company employee who reviews applications and additional information and decides whether the applicant is acceptable and what the correct premium rate should be
Application includes (7 items) CORRECT ANSWERS age, sex, occupation, dangerous recreational activities, aviation, smoking, agent's report
Medical reports can be (3 items) CORRECT ANSWERS health questionare, paramedic examiner's report, and physician's report
Who completes the health questionnaire? CORRECT ANSWERS the agent and the applicant with questions about applicant's health history as well as the applicant's parents' health history
Errors and changes on the application CORRECT ANSWERS if an error on an application occurs, underwriter may require that it be correct and changes must be approved and initialed by the applicant
Medical Information Bureau Report (MIB) CORRECT ANSWERS it is a CLEARINGHOUSE for medical information for insurance companies that belong to it
Inspection Report CORRECT ANSWERS does by an outside firm to verity that the producer completed the application accurately and completely and to determine if the applicant has any moral or character risks
Fair Credit Reporting Act (4 items) CORRECT ANSWERS 1. applicant has a right to be advised that there may be information collected from outside sources
