Louisiana Life, Health, and Accident Insurance Licensing
Exam questions and 100% correct answers
!@#$%%%%%
Insurance - (ANSWERS)the transfer of Pure risk to the insurance company in consideration for
a premium %%%%%%
Must be pure risk and calculable.
Pure Risk - (ANSWERS)the chance of loss without any chance of gain; insurable
Speculative Risk - (ANSWERS)possibility for gain or loss; not insurable
Risk - (ANSWERS)Chance of loss
Exposure - (ANSWERS)a condition that could result in loss
Hazard - (ANSWERS)something that increases the chance of loss
Eg. Presence of physical hazard increases the chance of a loss occuring
Peril - (ANSWERS)cause of loss
Eg. Fire
Law of large number - (ANSWERS)allows insurers to predict claims more accuratley; applies to
grops of people not individuals. The more people in the group, the more accurate the
predictions are
Reinsurance - (ANSWERS)A form of insurance whereby one insurance company (the reinsurer)
in consideration of a premium paid to it, agrees to indemnify another insurance company (the
ceding company) for part or all of its liabilities from insurance policies it has issued.
Stock insurer - (ANSWERS)may pay dividends to shareholders (stockholders), thought not
guarenteed
Reciprocal insurance company - (ANSWERS)managed by an attorney-in-fact; unincorporated
association of individuals who insure each other
Government insurance offering - (ANSWERS)offers insurance for social needs (eg. Flood
insurance, workers compensation), but doesn't offer to prevent fraud
Foreign company - (ANSWERS)has their home office in another state
Alien company - (ANSWERS)a insurer incorporated outside the US
,Louisiana Life, Health, and Accident Insurance Licensing
Exam questions and 100% correct answers
!@#$%%%%%
Producer liability - (ANSWERS)personally liable when violate producer's contract
%%%%%%
Producer represenation - (ANSWERS)represent the insurance company, not the insured
Independent producer - (ANSWERS)owns their own accounts, and are not insurance company
employees
Producer authority - (ANSWERS)expressed
Implied
Apparent
Express authority of producer - (ANSWERS)authority of producer that is written in his or her
contract
Implied authority of producer - (ANSWERS)authority not expressly (writtten) granted, but actual
authority producer has to transact normal business activities
Legal Elements of Contract - (ANSWERS)Consideration
Offer
Acceptance
Legal Purpose
Legal Capacity
Consideration Clause - (ANSWERS)something of value must be exchanged, though it does not
have to be equal; policy can't be voided for unequal consideration
Offer - (ANSWERS)specific and definte proposal to enter into a contract
Insurance contracts are - (ANSWERS)contracts of adhesion ("take it or leave it"), therefore
policy ambiguities always favor the insured; unilateral contracts (only the insurer has a legal
obligation to uphold)
Principle of Indemnity - (ANSWERS)the purpose of insurance is to restore the insured to the
same position as before the loss occurred
Principle of Utmost Good Faith - (ANSWERS)all parties to an insurance transaction are honest
Representation - (ANSWERS)the truth to the best of one's knowledge
Warranty - (ANSWERS)a sworn truth, guaranteed to be true, and if a breach of warranty is found,
it could potentially makes the contract voidable.
, Louisiana Life, Health, and Accident Insurance Licensing
Exam questions and 100% correct answers
Concealment - (ANSWERS)the failure to disclose a material fact !@#$%%%%%
%%%%%%
Giving up the right to obtain information requires... - (ANSWERS)a waiver
Life Insurance Insurable Interest - (ANSWERS)must exist at the time of application, but not
necessarily at the tie of a claim
May be based on economics or family relationship
Exists if someone would benefit if another person continues to live
Personal Uses of Life Insurance - (ANSWERS)- Provide a benefit to loved ones in case of the
policy owner's death
- Creates an immediate estate
- Estate Conversion
- A life settlement contract
Estate Conversion - (ANSWERS)when life insurance is used to pay estate taxes
Life Settlement Contract - (ANSWERS)between the insurance policy owner and a third party
Human Life Value Approach (Life Insurance) - (ANSWERS)establishes what a family would lose
in income upon the death of the sole or chief income provider
Needs Approach (life insurance) - (ANSWERS)approach to life insurance that doesn't consider
future earnings
Business Use of Life Insurance - (ANSWERS)- Buy-sell agreements funded by life policies
-
Cross purchase Buy/sell Agreement - (ANSWERS)A policy that provides for business
continuation in the event that a business partner dies
Stock Redemption Plan - (ANSWERS)agreement whereby a corporate agrees to buy back the
stock of a deceased shareholder
Third Party Policyowner examples - (ANSWERS)- Key-person & Partnership Insurance
- Policy Written on the life of a spouse or minor child
Executive Bonus - (ANSWERS)the premium paid to the employee as a bonus is deductible by
the business and the amount paid to or for the employee is reportable as taxable income to the
employee;
Exam questions and 100% correct answers
!@#$%%%%%
Insurance - (ANSWERS)the transfer of Pure risk to the insurance company in consideration for
a premium %%%%%%
Must be pure risk and calculable.
Pure Risk - (ANSWERS)the chance of loss without any chance of gain; insurable
Speculative Risk - (ANSWERS)possibility for gain or loss; not insurable
Risk - (ANSWERS)Chance of loss
Exposure - (ANSWERS)a condition that could result in loss
Hazard - (ANSWERS)something that increases the chance of loss
Eg. Presence of physical hazard increases the chance of a loss occuring
Peril - (ANSWERS)cause of loss
Eg. Fire
Law of large number - (ANSWERS)allows insurers to predict claims more accuratley; applies to
grops of people not individuals. The more people in the group, the more accurate the
predictions are
Reinsurance - (ANSWERS)A form of insurance whereby one insurance company (the reinsurer)
in consideration of a premium paid to it, agrees to indemnify another insurance company (the
ceding company) for part or all of its liabilities from insurance policies it has issued.
Stock insurer - (ANSWERS)may pay dividends to shareholders (stockholders), thought not
guarenteed
Reciprocal insurance company - (ANSWERS)managed by an attorney-in-fact; unincorporated
association of individuals who insure each other
Government insurance offering - (ANSWERS)offers insurance for social needs (eg. Flood
insurance, workers compensation), but doesn't offer to prevent fraud
Foreign company - (ANSWERS)has their home office in another state
Alien company - (ANSWERS)a insurer incorporated outside the US
,Louisiana Life, Health, and Accident Insurance Licensing
Exam questions and 100% correct answers
!@#$%%%%%
Producer liability - (ANSWERS)personally liable when violate producer's contract
%%%%%%
Producer represenation - (ANSWERS)represent the insurance company, not the insured
Independent producer - (ANSWERS)owns their own accounts, and are not insurance company
employees
Producer authority - (ANSWERS)expressed
Implied
Apparent
Express authority of producer - (ANSWERS)authority of producer that is written in his or her
contract
Implied authority of producer - (ANSWERS)authority not expressly (writtten) granted, but actual
authority producer has to transact normal business activities
Legal Elements of Contract - (ANSWERS)Consideration
Offer
Acceptance
Legal Purpose
Legal Capacity
Consideration Clause - (ANSWERS)something of value must be exchanged, though it does not
have to be equal; policy can't be voided for unequal consideration
Offer - (ANSWERS)specific and definte proposal to enter into a contract
Insurance contracts are - (ANSWERS)contracts of adhesion ("take it or leave it"), therefore
policy ambiguities always favor the insured; unilateral contracts (only the insurer has a legal
obligation to uphold)
Principle of Indemnity - (ANSWERS)the purpose of insurance is to restore the insured to the
same position as before the loss occurred
Principle of Utmost Good Faith - (ANSWERS)all parties to an insurance transaction are honest
Representation - (ANSWERS)the truth to the best of one's knowledge
Warranty - (ANSWERS)a sworn truth, guaranteed to be true, and if a breach of warranty is found,
it could potentially makes the contract voidable.
, Louisiana Life, Health, and Accident Insurance Licensing
Exam questions and 100% correct answers
Concealment - (ANSWERS)the failure to disclose a material fact !@#$%%%%%
%%%%%%
Giving up the right to obtain information requires... - (ANSWERS)a waiver
Life Insurance Insurable Interest - (ANSWERS)must exist at the time of application, but not
necessarily at the tie of a claim
May be based on economics or family relationship
Exists if someone would benefit if another person continues to live
Personal Uses of Life Insurance - (ANSWERS)- Provide a benefit to loved ones in case of the
policy owner's death
- Creates an immediate estate
- Estate Conversion
- A life settlement contract
Estate Conversion - (ANSWERS)when life insurance is used to pay estate taxes
Life Settlement Contract - (ANSWERS)between the insurance policy owner and a third party
Human Life Value Approach (Life Insurance) - (ANSWERS)establishes what a family would lose
in income upon the death of the sole or chief income provider
Needs Approach (life insurance) - (ANSWERS)approach to life insurance that doesn't consider
future earnings
Business Use of Life Insurance - (ANSWERS)- Buy-sell agreements funded by life policies
-
Cross purchase Buy/sell Agreement - (ANSWERS)A policy that provides for business
continuation in the event that a business partner dies
Stock Redemption Plan - (ANSWERS)agreement whereby a corporate agrees to buy back the
stock of a deceased shareholder
Third Party Policyowner examples - (ANSWERS)- Key-person & Partnership Insurance
- Policy Written on the life of a spouse or minor child
Executive Bonus - (ANSWERS)the premium paid to the employee as a bonus is deductible by
the business and the amount paid to or for the employee is reportable as taxable income to the
employee;
