age 1 of 51
Life and Health Insurance Exam Questions and
Answers
At what point must a life insurance applicant be informed of
their rights that fall under the Fair Credit Reporting Act?
......ANSWER........Upon completion of the application
Who elects the governing body of a mutual insurance company?
......ANSWER........policyholders
An insurance applicant MUST be informed of an investigation
regarding his/her reputation and character according to the
......ANSWER........Fair Credit Reporting Act
What type of reinsurance contract involves two companies
automatically sharing their risk exposure?
......ANSWER........Treaty
The stated amount or percent of liquid assets that an insurer must
have on hand that will satisfy future obligations to its
policyholders is called ......ANSWER........reserves
,age 2 of 51
Which of the following requires insurers to disclose when an
applicant's consumer or credit history is being investigated
......ANSWER........1970 - Fair Credit Reporting Act
What is the consideration given by an insurer in the
Consideration clause of a life policy? ......ANSWER........Promise
to pay a death benefit
When third-party ownership is involved, applicants who also
happen to be the stated primary beneficiary are required to
have ......ANSWER........insurable interest in the proposed insured
Statements made on an insurance application that are believed
to be true to the best of the applicant's knowledge are called
......ANSWER........representations
The part of a life insurance policy guaranteed to be true is
called a(n) ......ANSWER........warranty
Which of these is NOT a type of agent authority?
Express
,age 3 of 51
Implied
Principal
Apparent ......ANSWER........Principal
The Consideration clause of an insurance contract includes
......ANSWER........the schedule and amount of premium payments
E and F are business partners. Each takes out a $500,000 life
insurance policy on the other, naming himself as primary
beneficiary. E and F eventually terminate their business, and four
months later E dies. Although E was married with three children
at the time of death, the primary beneficiary is still F. However,
an insurable interest no longer exists. Where will the proceeds
from E's life insurance policy be directed to? ......ANSWER........In
this situation, the proceeds from E's life insurance policy will go
to F.
, age 4 of 51
Which of the following terms defines the legally enforceable
promise in an insurance contract by the insurer?
......ANSWER........Unilateral
When must insurable interest exist for a life insurance contract to
be valid? ......ANSWER........Inception of the contract
Insurance contracts are known as ____ because certain future
conditions or acts must occur before any claims can be paid.
......ANSWER........conditional
Which of these require an offer, acceptance, and consideration?
......ANSWER........Contract
Which of these arrangements allows one to bypass insurable
interest laws? ......ANSWER........Investor-Originated Life Insurance
Investor-originated life insurance (or IOLI), sometimes called
stranger-originated life insurance (or STOLI) is used to
circumvent state insurable interest statutes. This is done when an
Life and Health Insurance Exam Questions and
Answers
At what point must a life insurance applicant be informed of
their rights that fall under the Fair Credit Reporting Act?
......ANSWER........Upon completion of the application
Who elects the governing body of a mutual insurance company?
......ANSWER........policyholders
An insurance applicant MUST be informed of an investigation
regarding his/her reputation and character according to the
......ANSWER........Fair Credit Reporting Act
What type of reinsurance contract involves two companies
automatically sharing their risk exposure?
......ANSWER........Treaty
The stated amount or percent of liquid assets that an insurer must
have on hand that will satisfy future obligations to its
policyholders is called ......ANSWER........reserves
,age 2 of 51
Which of the following requires insurers to disclose when an
applicant's consumer or credit history is being investigated
......ANSWER........1970 - Fair Credit Reporting Act
What is the consideration given by an insurer in the
Consideration clause of a life policy? ......ANSWER........Promise
to pay a death benefit
When third-party ownership is involved, applicants who also
happen to be the stated primary beneficiary are required to
have ......ANSWER........insurable interest in the proposed insured
Statements made on an insurance application that are believed
to be true to the best of the applicant's knowledge are called
......ANSWER........representations
The part of a life insurance policy guaranteed to be true is
called a(n) ......ANSWER........warranty
Which of these is NOT a type of agent authority?
Express
,age 3 of 51
Implied
Principal
Apparent ......ANSWER........Principal
The Consideration clause of an insurance contract includes
......ANSWER........the schedule and amount of premium payments
E and F are business partners. Each takes out a $500,000 life
insurance policy on the other, naming himself as primary
beneficiary. E and F eventually terminate their business, and four
months later E dies. Although E was married with three children
at the time of death, the primary beneficiary is still F. However,
an insurable interest no longer exists. Where will the proceeds
from E's life insurance policy be directed to? ......ANSWER........In
this situation, the proceeds from E's life insurance policy will go
to F.
, age 4 of 51
Which of the following terms defines the legally enforceable
promise in an insurance contract by the insurer?
......ANSWER........Unilateral
When must insurable interest exist for a life insurance contract to
be valid? ......ANSWER........Inception of the contract
Insurance contracts are known as ____ because certain future
conditions or acts must occur before any claims can be paid.
......ANSWER........conditional
Which of these require an offer, acceptance, and consideration?
......ANSWER........Contract
Which of these arrangements allows one to bypass insurable
interest laws? ......ANSWER........Investor-Originated Life Insurance
Investor-originated life insurance (or IOLI), sometimes called
stranger-originated life insurance (or STOLI) is used to
circumvent state insurable interest statutes. This is done when an
