LIFE INSURANCE PRACTICE- EXAM GUIDE 2025
|MOST COMMON QUESTIONS WITH CORRECTLY
VERIFIED ANSWERS|ALREADY A+
GRADED|GUARANTEED PASS
401k - a qualified retirement plan in which the employee can set aside a portion of their
income with pre-tax dollars
absolute assignment - a permanent and irrevocable transfer of rights and/or benefits by
the policyowner
collateral assignment - a temporary and/or revocable transfer of benefits by the
policyowner
accelerated death benefit - policy provision that allows full or partial payment of the
policy's death benefit before the insured's death if he/she is terminally ill
accidental death benefit - an extra cost rider that requires the insurance company to pay
an additional benefit in the event that the insured dies within 90 days of an accident as a direct
result of the accident
accumulate at interest - the dividend option where the policyowner leaves the dividends
with the insurer to invest and earn interest
adhesion - sine the insurer created all the documents of the contract, any ambiguities in
the contract will be settled in favor of the insured. Since the insurer wrote the contract they are
stuck with it.
adverse selection - the tendency for less favorable risks to seek or continue insurance to
a greater extent than more favorable risks
agency agreement or agency contract - a legal document containing the terms of the
agreement between the agent and the insurance company. it clearly defines what an agent can
and cannot do and how he/she will be compensated.
expressed agent authorities - power or authority specifically granted in writing to an
agent by the insurance company in their agency agreement.
, apparent agent authorities - power or authority that the public reasonably assumes an
agent has based upon his/her actions
implied agent authorities - power or authority that is not expressly granted by the
company but that an agent can assume or that are implied he/she has in order to transact
insurance business
agent/producer - anyone who sells or aids in the selling of insurance. legally represents
the company
agent's report - a written report from the agent submitted to the insurer along with the
application disclosing what the agent knows, observed, or learned about the proposed insured's
risks
aleatory - unequal exchange of value. one party may obtain a far greater value than the
other under the contract
annual renewable term - a term life insurance contract which gives the policyowner the
option to renew the policy each year without showing proof of insurability. premiums increase
at each renewal
annuitant - the person that buys an annuity; may or may not be an annuity's policyowner
annuity - a contact/policy that guarantees to pay income for a specified period of time or
for the life of the annuitant. designed to prevent people from outliving their savings.
appointment - authorization of an agent/producer by an insurer to represent the
company
blackout period - the period of time between the youngest child turning 16 and the
widow(er) reaching retirement age during which no Social Security Survivor Benefits are paid to
the surviving spouse.
buy-sell agreement - business use of life insurance where partners in a business buy life
insurance on each other. They agree that when one of them dies the survivors have the right to
purchase the deceased partner's share of the business. The death benefit from the insurance is
used to finance the purchase.
cash nonforfeiture option - policyowner receives a lump-sum payment of the current
cash value of the policy upon surrender of the policy. the policy cannot be reinstated.
cash settlement option - upon maturity of an insurance policy the beneficiary receives a
lump-sum payment of the entire policy proceeds due.
|MOST COMMON QUESTIONS WITH CORRECTLY
VERIFIED ANSWERS|ALREADY A+
GRADED|GUARANTEED PASS
401k - a qualified retirement plan in which the employee can set aside a portion of their
income with pre-tax dollars
absolute assignment - a permanent and irrevocable transfer of rights and/or benefits by
the policyowner
collateral assignment - a temporary and/or revocable transfer of benefits by the
policyowner
accelerated death benefit - policy provision that allows full or partial payment of the
policy's death benefit before the insured's death if he/she is terminally ill
accidental death benefit - an extra cost rider that requires the insurance company to pay
an additional benefit in the event that the insured dies within 90 days of an accident as a direct
result of the accident
accumulate at interest - the dividend option where the policyowner leaves the dividends
with the insurer to invest and earn interest
adhesion - sine the insurer created all the documents of the contract, any ambiguities in
the contract will be settled in favor of the insured. Since the insurer wrote the contract they are
stuck with it.
adverse selection - the tendency for less favorable risks to seek or continue insurance to
a greater extent than more favorable risks
agency agreement or agency contract - a legal document containing the terms of the
agreement between the agent and the insurance company. it clearly defines what an agent can
and cannot do and how he/she will be compensated.
expressed agent authorities - power or authority specifically granted in writing to an
agent by the insurance company in their agency agreement.
, apparent agent authorities - power or authority that the public reasonably assumes an
agent has based upon his/her actions
implied agent authorities - power or authority that is not expressly granted by the
company but that an agent can assume or that are implied he/she has in order to transact
insurance business
agent/producer - anyone who sells or aids in the selling of insurance. legally represents
the company
agent's report - a written report from the agent submitted to the insurer along with the
application disclosing what the agent knows, observed, or learned about the proposed insured's
risks
aleatory - unequal exchange of value. one party may obtain a far greater value than the
other under the contract
annual renewable term - a term life insurance contract which gives the policyowner the
option to renew the policy each year without showing proof of insurability. premiums increase
at each renewal
annuitant - the person that buys an annuity; may or may not be an annuity's policyowner
annuity - a contact/policy that guarantees to pay income for a specified period of time or
for the life of the annuitant. designed to prevent people from outliving their savings.
appointment - authorization of an agent/producer by an insurer to represent the
company
blackout period - the period of time between the youngest child turning 16 and the
widow(er) reaching retirement age during which no Social Security Survivor Benefits are paid to
the surviving spouse.
buy-sell agreement - business use of life insurance where partners in a business buy life
insurance on each other. They agree that when one of them dies the survivors have the right to
purchase the deceased partner's share of the business. The death benefit from the insurance is
used to finance the purchase.
cash nonforfeiture option - policyowner receives a lump-sum payment of the current
cash value of the policy upon surrender of the policy. the policy cannot be reinstated.
cash settlement option - upon maturity of an insurance policy the beneficiary receives a
lump-sum payment of the entire policy proceeds due.
