INDIANA LIFE & HEALTH INSURANCE EXAM | TOP
SCORES MADE SIMPLE | TRUSTED TEST
SOLUTIONS!
ACE EVERY QUIZ | CONFIDENCE BACKED BY
ACCURACY!
Participating Insurance Policy Answer: may pay dividends to the policyowner
Material Misrepresentation Answer: misstatement to a question asked in the application
process; death benefit claim will likely be denied
Law of Large Numbers Answer: the larger a group becomes, the easier it is to predict
losses; used to predict certain types of losses and set appropriate premiums
Substandard Risk Answer: results in higher premium
Standard Risk Answer: results in standard premium
Preferred Risk Answer: results in lower premium
Expense Loading Answer: combined with premiums to spread the operating costs of a
business to all insureds
Net Premium Answer: premiums without expense loading
Concealment Answer: occurs when a person withholds a material fact that is crucial to
making a decision; in insurance, this involves withholding information that would be
crucial to underwriting decisions
Warranty Answer: a statement guaranteed to be true
Representation Answer: a statement true to the best of an applicant's knowledge
3 Basic Types of Term Life Insurance Answer: level, increasing, and decreasing
Level Term Answer: death benefit doesn't change throughout the life of the policy
Annually Renewable Term (ART) Answer: premium increases annually according to
attained age; policy may be guaranteed to be renewable each without proof of
insurability
Re-entry Option Answer: the insured, upon the end of a term policy with guaranteed
renewable option, may qualify for a discounted premium rate with proof of insurability
1
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, Decreasing Term Answer: death benefit decreases each year over duration of the
policy term; typically used when the amount of needed protection is time sensitive, or
decreases over time
Increasing Term Answer: death benefit increases each year over duration of the policy
term (usually by specific amount or percentage of original amount); often used by
insurance companies to fund certain riders that provide a refund of premiums of a
gradual increase in total coverage, such as the cost of living or return of premium riders
Convertible Term Answer: provides the policy owner with the right to convert the policy
to a permanent insurance policy without evidence of insurability; premium will be based
on the insured's attained age at the time of conversion
Continuous Premium (Straight Life or Ordinary Life) Answer: basic whole life policy; will
typically have the lowest annual premium
Limited Payment Answer: premiums for coverage paid-up before age 100; higher
premium and cash value builds up faster; 20-pay life, life paid-up at 65 (LP-65);
Single Premium Whole Life (SPWL) Answer: provides level death benefit to the
insured's age 100 for a one-time, lump-sum payment; policy completely paid-up after
one premium and generates immediate cash
Modified Life Answer: lower premium in first few policy years (3 to 5 years) and higher
level premium for remainder of insured's life
Graded-premium Whole Life Answer: premiums start low, gradually increase each year
(for about 5 to 10 years), and remain level thereafter
Interest Sensitive Whole Life (Current Assumption Life) Answer: provides same
benefits as traditional whole life policies with added benefit of current interest rates
which may allow for either greater cash value accumulation or a shorter premium-
paying period
Equity-Indexed Whole Life Answer: cash value is dependent upon the performance of
the equity index (S&P 500) although there is a guaranteed minimum interest rate;
policy's face amount increases annually to keep pace with inflation
Adjustable LIfe Answer: insured determines how much coverage is needed and the
affordable amount of premium; as insured's needs change, policy owner may make
adjustments such as increase or decrease the premium or the premium paying period,
2
APPHIA - Crafted with Care and Precision for Academic Excellence.
SCORES MADE SIMPLE | TRUSTED TEST
SOLUTIONS!
ACE EVERY QUIZ | CONFIDENCE BACKED BY
ACCURACY!
Participating Insurance Policy Answer: may pay dividends to the policyowner
Material Misrepresentation Answer: misstatement to a question asked in the application
process; death benefit claim will likely be denied
Law of Large Numbers Answer: the larger a group becomes, the easier it is to predict
losses; used to predict certain types of losses and set appropriate premiums
Substandard Risk Answer: results in higher premium
Standard Risk Answer: results in standard premium
Preferred Risk Answer: results in lower premium
Expense Loading Answer: combined with premiums to spread the operating costs of a
business to all insureds
Net Premium Answer: premiums without expense loading
Concealment Answer: occurs when a person withholds a material fact that is crucial to
making a decision; in insurance, this involves withholding information that would be
crucial to underwriting decisions
Warranty Answer: a statement guaranteed to be true
Representation Answer: a statement true to the best of an applicant's knowledge
3 Basic Types of Term Life Insurance Answer: level, increasing, and decreasing
Level Term Answer: death benefit doesn't change throughout the life of the policy
Annually Renewable Term (ART) Answer: premium increases annually according to
attained age; policy may be guaranteed to be renewable each without proof of
insurability
Re-entry Option Answer: the insured, upon the end of a term policy with guaranteed
renewable option, may qualify for a discounted premium rate with proof of insurability
1
APPHIA - Crafted with Care and Precision for Academic Excellence.
, Decreasing Term Answer: death benefit decreases each year over duration of the
policy term; typically used when the amount of needed protection is time sensitive, or
decreases over time
Increasing Term Answer: death benefit increases each year over duration of the policy
term (usually by specific amount or percentage of original amount); often used by
insurance companies to fund certain riders that provide a refund of premiums of a
gradual increase in total coverage, such as the cost of living or return of premium riders
Convertible Term Answer: provides the policy owner with the right to convert the policy
to a permanent insurance policy without evidence of insurability; premium will be based
on the insured's attained age at the time of conversion
Continuous Premium (Straight Life or Ordinary Life) Answer: basic whole life policy; will
typically have the lowest annual premium
Limited Payment Answer: premiums for coverage paid-up before age 100; higher
premium and cash value builds up faster; 20-pay life, life paid-up at 65 (LP-65);
Single Premium Whole Life (SPWL) Answer: provides level death benefit to the
insured's age 100 for a one-time, lump-sum payment; policy completely paid-up after
one premium and generates immediate cash
Modified Life Answer: lower premium in first few policy years (3 to 5 years) and higher
level premium for remainder of insured's life
Graded-premium Whole Life Answer: premiums start low, gradually increase each year
(for about 5 to 10 years), and remain level thereafter
Interest Sensitive Whole Life (Current Assumption Life) Answer: provides same
benefits as traditional whole life policies with added benefit of current interest rates
which may allow for either greater cash value accumulation or a shorter premium-
paying period
Equity-Indexed Whole Life Answer: cash value is dependent upon the performance of
the equity index (S&P 500) although there is a guaranteed minimum interest rate;
policy's face amount increases annually to keep pace with inflation
Adjustable LIfe Answer: insured determines how much coverage is needed and the
affordable amount of premium; as insured's needs change, policy owner may make
adjustments such as increase or decrease the premium or the premium paying period,
2
APPHIA - Crafted with Care and Precision for Academic Excellence.
