Alabama Life Insurance Exam | Questions & Complete Answers (A+
Grade)
1. Which clauseallowstheinsuredto changean existingpolicy to any other policy of any type
as long as the new policy has a higher premium, without any proof of insurability?:Privilege of
change clause
2. The extendedtermnonforfeitureoptionprovides::Paid-up termcoverage equal to that of
the original policy
3. With a collateralassignmentof a life policytoa creditor::You assigna partial amount of the
policy values to the creditor
4. An accountingmeasureusedto determinea contractowner'sinterestin theseparate account
a variable annuity before payments begin is called::An accumulation unit
5. Group Insurance Market:A certificate of insurance is issued to whom?: -
Each individual coveredby thegroup life insurance
6. The principal difference between an entity purchase and a cross purchase -sell
buyagreemen
is::The identityof thepolicyowner(themain differenceis who owns the policy)
7. How long is the probationaryperiodfor group life insurance?:The proba- tionary period is
usually 90 days.
8. Whatis theprimarypurposeof a section303redemption?:To provideliquidityto pay estate
taxes and administration and funeral costs
9. What is it calledwhenan insurancecompanysellspart of their risk to another
insurance company?:Reinsurance (also, risk -sharing)
10. The policyconditionsrepresenttheobligationof whom?:Both theinsured and the insurer
11. Does social insurance provide equal benefits to all citizens that - tribute?:
con No.As income
is re-distributedthroughthegovernmentalsystem,insuredswho put less into the system such as
the poor, elderly, and those with dependents get proportionately greater benefits.
12. In determiningwhetherdisabilityis permanent,mostcompaniescall for a waiting period o
how long?:3 to 6 months
13. What can the cash value of a permanent life insurance policy be used Cash
for?:
valuescan
be usedas nonforfeitureoption,policy loans,full or partial surrender's, but not for accidental
death benefits.
14. What are the essential elements of a contract?: Remember the acronym: CLOC:
consideration,offerand acceptance,competentparties,and legalpurpose
15. Whatmarketis a privatesourceof coverageof lastresortfor individuals or businesses tha
have been rejected by voluntary market insurers?: The residual marketplace
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Grade)
1. Which clauseallowstheinsuredto changean existingpolicy to any other policy of any type
as long as the new policy has a higher premium, without any proof of insurability?:Privilege of
change clause
2. The extendedtermnonforfeitureoptionprovides::Paid-up termcoverage equal to that of
the original policy
3. With a collateralassignmentof a life policytoa creditor::You assigna partial amount of the
policy values to the creditor
4. An accountingmeasureusedto determinea contractowner'sinterestin theseparate account
a variable annuity before payments begin is called::An accumulation unit
5. Group Insurance Market:A certificate of insurance is issued to whom?: -
Each individual coveredby thegroup life insurance
6. The principal difference between an entity purchase and a cross purchase -sell
buyagreemen
is::The identityof thepolicyowner(themain differenceis who owns the policy)
7. How long is the probationaryperiodfor group life insurance?:The proba- tionary period is
usually 90 days.
8. Whatis theprimarypurposeof a section303redemption?:To provideliquidityto pay estate
taxes and administration and funeral costs
9. What is it calledwhenan insurancecompanysellspart of their risk to another
insurance company?:Reinsurance (also, risk -sharing)
10. The policyconditionsrepresenttheobligationof whom?:Both theinsured and the insurer
11. Does social insurance provide equal benefits to all citizens that - tribute?:
con No.As income
is re-distributedthroughthegovernmentalsystem,insuredswho put less into the system such as
the poor, elderly, and those with dependents get proportionately greater benefits.
12. In determiningwhetherdisabilityis permanent,mostcompaniescall for a waiting period o
how long?:3 to 6 months
13. What can the cash value of a permanent life insurance policy be used Cash
for?:
valuescan
be usedas nonforfeitureoption,policy loans,full or partial surrender's, but not for accidental
death benefits.
14. What are the essential elements of a contract?: Remember the acronym: CLOC:
consideration,offerand acceptance,competentparties,and legalpurpose
15. Whatmarketis a privatesourceof coverageof lastresortfor individuals or businesses tha
have been rejected by voluntary market insurers?: The residual marketplace
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