NC LIFE INSURANCE STATE EXAM
CREDIT LIFE - Answers - a special type of coverage written to the life of the debtor
and pay off the balance of a loan in the event of the death of the debtor.
BUY-SELL AGREEMENTS - Answers - a legal contract that determines what will be
done with a business in the event that an owner dies or becomes disabled. Otherwise
known as a business continuation agreement
INSURABLE INTEREST - Answers - to purchase insurance the policy owner must
face the possibility of losing money or something of value in the event of loss, insurable
interest must exist between the policy owner and the insured at the time of application
CONCEALMENT - Answers - the legal term for the intentional withholding of
information of a material fact that is crucial in making a decision
MISREPRESENTATION - Answers - statement that if discovered would alter the
underwriting decision of the insurance company
IMPERSONATION - Answers - Otherwise known as false pretense, refers to the act of
assuming the name and/or identity of another person for the purpose of committing a
fraud
UNILATERAL - Answers - only one of the parties to the contract is legally bound to do
anything. The insured makes no legally binding promises however an insurer is legally
bound to pay losses covered by a policy in force
ADHESION - Answers - a contract of adhesion is prepared by one of the parties
(insurer) and accepted or rejected by the other party (insured). Insurance policies are
not drawn up through negotiations, and an insured has little to say about its provisions.
Insurance contract are offered on a take it or leave it basis by an insurer
INDEMNITY - Answers - sometimes known as reimbursement, a provision in an
insurance policy that states that in the event of loss, an insured or beneficiary is
permitted to collect only to the extent of the financial loss, and is not allowed to gain
financially because of the existence of an insurance contract. The purpose of an
insurance contract is to restore, but not let an insured or a beneficiary profit from the
loss
ALEATORY - Answers - an exchange of unequal amounts or values. The premium
paid by the insured is small in relation to the amount that will be paid by the insurer in
the event of a loss.
CONDITIONAL - Answers - requires that certain conditions must be met by the policy
owner and the company in order for the contract to be executed and before each party
fulfills its obligations.
, ELEMENTS OF A VALID CONTRACT - Answers - Agreement - Offer and Acceptance,
Consideration, Competent Parties, Legal Purpose
TERM LIFE INSURANCE - Answers - temporary protection because it only provides
coverage for a specific period of time; pure death protection; if the insured dies during
this term, the policy pays the death benefits to the beneficiary; if the policy is canceled
or expires prior to the insured's death, nothing is payable at the end of the term; there is
no cash value or other living benefits
RENEWABILITY - Answers - allows the policy owner the right to renew the coverage
at the expiration date without evidence of insurability. The premium will be based on the
insured age at the time of renewing
CONVERTIBILITY - Answers - provision that provides the policy owner with the right to
convert the policy to a permanent insurance policy without the evidence of insurability.
Premium will be based on the insured's attained age at the time of conversion
WHOLE LIFE INSURANCE - Answers - provides lifetime protection and includes a
savings element or cash value; endow at age 100 which means the cash value created
by the accumulation of premium is scheduled to equal the face amount of the policy at
age 100
ENDOWMENT - Answers - policies that provide a permanent, level death protection if
the insured should die prematurely, and they accumulate cash values; matures
(endows) at an earlier age and has a considerable higher premium. The sooner the
policy endows, the higher the premiums.
Single Premium Whole Life (SPWL) - Answers - designed to provide a level death
benefit to the insured's age 100 for a one-time, lump sum payment. The policy is
completely paid up after one premium and generates immediate cash.
LIMITED-PAY - Answers - designed so that the premiums for coverage will be
completely paid-up before age 100. Some versions include 20-pay life where coverage
is completely paid for in 20 years, and life paid up at 65 (LP-65) whereby the coverage
is completely paid up for by the insured's age 65
LEVEL - Answers - policyowner pays the premium from the time the policy is issued
until the insured's death or age 100 (whichever comes first)...lowest annual premium.
Adjustable life - Answers - can assume the form of either term insurance or permanent
insurance; as the needs change the policy holder can increase/decrease the premium
or premium paying period; increase/decrease the face amount/ or change the period of
protection. The policy holder can also convert from term to whole life. Some changes
can require proof of insurability
CREDIT LIFE - Answers - a special type of coverage written to the life of the debtor
and pay off the balance of a loan in the event of the death of the debtor.
BUY-SELL AGREEMENTS - Answers - a legal contract that determines what will be
done with a business in the event that an owner dies or becomes disabled. Otherwise
known as a business continuation agreement
INSURABLE INTEREST - Answers - to purchase insurance the policy owner must
face the possibility of losing money or something of value in the event of loss, insurable
interest must exist between the policy owner and the insured at the time of application
CONCEALMENT - Answers - the legal term for the intentional withholding of
information of a material fact that is crucial in making a decision
MISREPRESENTATION - Answers - statement that if discovered would alter the
underwriting decision of the insurance company
IMPERSONATION - Answers - Otherwise known as false pretense, refers to the act of
assuming the name and/or identity of another person for the purpose of committing a
fraud
UNILATERAL - Answers - only one of the parties to the contract is legally bound to do
anything. The insured makes no legally binding promises however an insurer is legally
bound to pay losses covered by a policy in force
ADHESION - Answers - a contract of adhesion is prepared by one of the parties
(insurer) and accepted or rejected by the other party (insured). Insurance policies are
not drawn up through negotiations, and an insured has little to say about its provisions.
Insurance contract are offered on a take it or leave it basis by an insurer
INDEMNITY - Answers - sometimes known as reimbursement, a provision in an
insurance policy that states that in the event of loss, an insured or beneficiary is
permitted to collect only to the extent of the financial loss, and is not allowed to gain
financially because of the existence of an insurance contract. The purpose of an
insurance contract is to restore, but not let an insured or a beneficiary profit from the
loss
ALEATORY - Answers - an exchange of unequal amounts or values. The premium
paid by the insured is small in relation to the amount that will be paid by the insurer in
the event of a loss.
CONDITIONAL - Answers - requires that certain conditions must be met by the policy
owner and the company in order for the contract to be executed and before each party
fulfills its obligations.
, ELEMENTS OF A VALID CONTRACT - Answers - Agreement - Offer and Acceptance,
Consideration, Competent Parties, Legal Purpose
TERM LIFE INSURANCE - Answers - temporary protection because it only provides
coverage for a specific period of time; pure death protection; if the insured dies during
this term, the policy pays the death benefits to the beneficiary; if the policy is canceled
or expires prior to the insured's death, nothing is payable at the end of the term; there is
no cash value or other living benefits
RENEWABILITY - Answers - allows the policy owner the right to renew the coverage
at the expiration date without evidence of insurability. The premium will be based on the
insured age at the time of renewing
CONVERTIBILITY - Answers - provision that provides the policy owner with the right to
convert the policy to a permanent insurance policy without the evidence of insurability.
Premium will be based on the insured's attained age at the time of conversion
WHOLE LIFE INSURANCE - Answers - provides lifetime protection and includes a
savings element or cash value; endow at age 100 which means the cash value created
by the accumulation of premium is scheduled to equal the face amount of the policy at
age 100
ENDOWMENT - Answers - policies that provide a permanent, level death protection if
the insured should die prematurely, and they accumulate cash values; matures
(endows) at an earlier age and has a considerable higher premium. The sooner the
policy endows, the higher the premiums.
Single Premium Whole Life (SPWL) - Answers - designed to provide a level death
benefit to the insured's age 100 for a one-time, lump sum payment. The policy is
completely paid up after one premium and generates immediate cash.
LIMITED-PAY - Answers - designed so that the premiums for coverage will be
completely paid-up before age 100. Some versions include 20-pay life where coverage
is completely paid for in 20 years, and life paid up at 65 (LP-65) whereby the coverage
is completely paid up for by the insured's age 65
LEVEL - Answers - policyowner pays the premium from the time the policy is issued
until the insured's death or age 100 (whichever comes first)...lowest annual premium.
Adjustable life - Answers - can assume the form of either term insurance or permanent
insurance; as the needs change the policy holder can increase/decrease the premium
or premium paying period; increase/decrease the face amount/ or change the period of
protection. The policy holder can also convert from term to whole life. Some changes
can require proof of insurability
