CCTC EXAM TWO COMPREHENSIVE SCRIPT
2026 FULL SOLUTION GRADED A
⩥ Pure Risk vs. Speculative Risk. Answer: Pure risks are insurable but
Speculative risks are not
Pure Risks - A possibility of loss, no loss, or gain
Pure Risk - A possibility of loss or no loss; there is no possibility for
gain
⩥ Contract of Adhesion. Answer: One party writes the contract without
inout from the other party on a "take-it-or-leave-it" basis
⩥ Aleatory Contract. Answer: The exchange of value is unequal.
Insured's premium payment is less than the potential benefit to be
received in the event of a loss.
⩥ Indemnity Contract. Answer: An agreement to pay on behalf of
another party under specified circumstances
,⩥ Unilateral Contract. Answer: Only one party is legally bound to the
contractual obligations after the premium is paid to the insurer
Only the insurer makes a promise of future performance, and only the
insurer can be charged with breach of contract
⩥ 4 elements of a valid contract. Answer: 1) Competent Parties
2) Legal Purpose
3) Agreement (offer and acceptance)
4) Consideration
⩥ Preferred Risks vs Standard Risks. Answer: Standard Risks are
individuals who have the same health, habits, sex/gender, and
occupational characteristics as those reflected in the mortality table
Preferred Risks are individuals who meet certain requirements and
qualify for lower premiums because of ideal health, height and weight.
Individuals in this category have a longer than average life expectancy
⩥ Human Life Value Approach vs. Needs Analysis Approach. Answer:
Human Life Value approach is a measure of the projected future
earnings and services of a person at risk in the event of a premature
death.
,The objective is to provide the proper amount of coverage as determined
by the value of the individual to his/her dependents using the following
factors:
- The individual's age and gender
- The individual's occupation, annual wage, and planned retirement age
- Inflation
Needs Analysis Approach determines a need for coverage upon the
premature death of an individual.
It always assumes the death of the individual to be immediate and
factors the following steps into arriving at the proper amount of
coverage needed:
- Calculate all financial needs caused by immediate death, including
debts, medical bills, and final expenses
- Provide lifetime income to the spouse
- Pay off mortgage or other debts
- Provide funds for children's education
- Subtracts any assets available to fund financial needs after death (such
as retirement plan, other insurance, liquid investments, separate savings)
⩥ Waiver of Premium. Answer: Life Insurance Disability Rider
, If the insured becomes totally disabled, the insurer will waive premiums
for the duration of the disability or the end of the policy, whichever
occurs first.
To qualify for the waiver, the insured must be disabled for a waiting
period of 3-6 months.
The policyowner must continue to pay premiums during the waiting
period, but once eligible, the waiver is retroactive to the start of the
disability and the premiums will be refunded.
During the disability, the insured will credit the premiums to the policy
and all benefits, such as cash value accumulation and dividend
payments, will continue.
⩥ Disability Income Rider. Answer: Life Insurance Disability Rider
In the event of total disability and after the initial waiting period (such as
6 months), premiums are waived and the insured is paid a monthly
income.
The monthly disability income benefit is typically limited to a
percentage of the face value.
The benefit paid from the rider does not reduce the death benefits paid
out upon death.
2026 FULL SOLUTION GRADED A
⩥ Pure Risk vs. Speculative Risk. Answer: Pure risks are insurable but
Speculative risks are not
Pure Risks - A possibility of loss, no loss, or gain
Pure Risk - A possibility of loss or no loss; there is no possibility for
gain
⩥ Contract of Adhesion. Answer: One party writes the contract without
inout from the other party on a "take-it-or-leave-it" basis
⩥ Aleatory Contract. Answer: The exchange of value is unequal.
Insured's premium payment is less than the potential benefit to be
received in the event of a loss.
⩥ Indemnity Contract. Answer: An agreement to pay on behalf of
another party under specified circumstances
,⩥ Unilateral Contract. Answer: Only one party is legally bound to the
contractual obligations after the premium is paid to the insurer
Only the insurer makes a promise of future performance, and only the
insurer can be charged with breach of contract
⩥ 4 elements of a valid contract. Answer: 1) Competent Parties
2) Legal Purpose
3) Agreement (offer and acceptance)
4) Consideration
⩥ Preferred Risks vs Standard Risks. Answer: Standard Risks are
individuals who have the same health, habits, sex/gender, and
occupational characteristics as those reflected in the mortality table
Preferred Risks are individuals who meet certain requirements and
qualify for lower premiums because of ideal health, height and weight.
Individuals in this category have a longer than average life expectancy
⩥ Human Life Value Approach vs. Needs Analysis Approach. Answer:
Human Life Value approach is a measure of the projected future
earnings and services of a person at risk in the event of a premature
death.
,The objective is to provide the proper amount of coverage as determined
by the value of the individual to his/her dependents using the following
factors:
- The individual's age and gender
- The individual's occupation, annual wage, and planned retirement age
- Inflation
Needs Analysis Approach determines a need for coverage upon the
premature death of an individual.
It always assumes the death of the individual to be immediate and
factors the following steps into arriving at the proper amount of
coverage needed:
- Calculate all financial needs caused by immediate death, including
debts, medical bills, and final expenses
- Provide lifetime income to the spouse
- Pay off mortgage or other debts
- Provide funds for children's education
- Subtracts any assets available to fund financial needs after death (such
as retirement plan, other insurance, liquid investments, separate savings)
⩥ Waiver of Premium. Answer: Life Insurance Disability Rider
, If the insured becomes totally disabled, the insurer will waive premiums
for the duration of the disability or the end of the policy, whichever
occurs first.
To qualify for the waiver, the insured must be disabled for a waiting
period of 3-6 months.
The policyowner must continue to pay premiums during the waiting
period, but once eligible, the waiver is retroactive to the start of the
disability and the premiums will be refunded.
During the disability, the insured will credit the premiums to the policy
and all benefits, such as cash value accumulation and dividend
payments, will continue.
⩥ Disability Income Rider. Answer: Life Insurance Disability Rider
In the event of total disability and after the initial waiting period (such as
6 months), premiums are waived and the insured is paid a monthly
income.
The monthly disability income benefit is typically limited to a
percentage of the face value.
The benefit paid from the rider does not reduce the death benefits paid
out upon death.
