Colorado Life Insurance Detailed Exam
Practice Questions with Expert Graded A+
Answers | Latest Edition
1. The term insurance transaction includes: - ANSWER 1) Solicitation; 2)
Negotiation; 3) Sales; 4) Advertising
2. Adverse Selection (insurance def) - ANSWER Insuring the risks that are
more prone to losses than the average risk
3. Agent/Producer - ANSWER a legal representative of an insurance
company; the classification of producer usually includes agents and brokers;
agents are the agents of the insurer
4. Unilateral Contract - ANSWER promise in exchange for an act - a one-
sided promise
5. Conditional Contract - ANSWER a contract that becomes enforceable only
on the happening or termination of a specified condition
6. Application Statement - Warranty - ANSWER A absolutely true statement
7. Application Statement - Representations - ANSWER True to the best of the
applicants knowledge
8. Fraud - ANSWER intentional misrepresentation of a material fact, made
with the intention to deceive
,9. Concealment - ANSWER intentional failure of the applicant for insurance
to reveal a material fact to the insurer
10.Material Fact - ANSWER A fact that would lead to a different underwriting
decision had the insurer known about it
11.Utmost Good Faith - ANSWER An obligation to act in complete honesty
and to disclose all relevant facts.
12.Personal Uses of Life Insurance - ANSWER Survivor protection, estate
creation and conservation, cash accumulation and liquidity
13.Key Person Insurance - ANSWER Life insurance that protects a firm
against losses due to the death of a key employee is known as
14.Buy-Sell Agreement - ANSWER A legal contract that determines what will
be done with a business in the event that an owner dies or becomes disabled.
15.Insurable Interest - ANSWER something of value that, if lost, would cause
you financial harm
16.Blood or Business - ANSWER Insurable Interest
17.Types of Term Insurance - ANSWER level, increasing, decreasing
18.Level Term Insurance - ANSWER pays the same death benefit over the
term of the policy
,19.Increasing Term Insurance - ANSWER the death benefit increases over the
life of the policy, and the premium remains level
20.Decreasing Term Insurance - ANSWER term insurance in which the annual
premium remains constant but the face amount of the policy declines each
year
21.According to the Entire Contract provision, a policy must contain: -
ANSWER A copy of the original application for insurance. An insurance
contract must contain a copy of the original application.
22.Applicant or proposed insured - ANSWER a person applying for insurance
23.Beneficiary - ANSWER A person who receives the benefits of an insurance
policy
24.Death Benefit - ANSWER the amount paid upon the death of the insured in
a life insurance policy
25.insurance policy - ANSWER a contract between a policyowner (and/or
insured) and an insurance company which agrees to pay the insured or the
beneficiary for loss caused by specific events
26.Insured - ANSWER person covered by the insurance policy; may or may
not be the policy owner
27.Insurer (principal) - ANSWER the company who issues an insurance policy
, 28.lapse - ANSWER policy termination due to nonpayment of premium
29.Policyowner - ANSWER the person entitled to exercise the rights and
privileges in the policy
30.Agent Authority - ANSWER express, implied, apparent
31.Express Authority - ANSWER authority declared in clear, direct, and
definite terms
32.Implied Authority - ANSWER Authority that is not expressed or written
into the contract, but which the agent is assumed to have in order to transact
the business of insurance for the principal.
33.Apparent Authority - ANSWER The appearance or the assumption of
authority based on the actions, words, or deeds of the principal or because of
circumstances the principal created.
34.Elements of a Legal Contract - ANSWER Agreement (offer and
acceptance), consideration, competent parties, and legal purpose
35.Aleatory Contract - ANSWER The exchange of value is unequal.
36.adhesion contract - ANSWER A take-it-or-leave-it offer made by a party
who holds most of the power in a bargaining session
37.Another name for a substandard risk classification is: - ANSWER Rated.
Substandard risk classification is also referred to as "rated" since these
Practice Questions with Expert Graded A+
Answers | Latest Edition
1. The term insurance transaction includes: - ANSWER 1) Solicitation; 2)
Negotiation; 3) Sales; 4) Advertising
2. Adverse Selection (insurance def) - ANSWER Insuring the risks that are
more prone to losses than the average risk
3. Agent/Producer - ANSWER a legal representative of an insurance
company; the classification of producer usually includes agents and brokers;
agents are the agents of the insurer
4. Unilateral Contract - ANSWER promise in exchange for an act - a one-
sided promise
5. Conditional Contract - ANSWER a contract that becomes enforceable only
on the happening or termination of a specified condition
6. Application Statement - Warranty - ANSWER A absolutely true statement
7. Application Statement - Representations - ANSWER True to the best of the
applicants knowledge
8. Fraud - ANSWER intentional misrepresentation of a material fact, made
with the intention to deceive
,9. Concealment - ANSWER intentional failure of the applicant for insurance
to reveal a material fact to the insurer
10.Material Fact - ANSWER A fact that would lead to a different underwriting
decision had the insurer known about it
11.Utmost Good Faith - ANSWER An obligation to act in complete honesty
and to disclose all relevant facts.
12.Personal Uses of Life Insurance - ANSWER Survivor protection, estate
creation and conservation, cash accumulation and liquidity
13.Key Person Insurance - ANSWER Life insurance that protects a firm
against losses due to the death of a key employee is known as
14.Buy-Sell Agreement - ANSWER A legal contract that determines what will
be done with a business in the event that an owner dies or becomes disabled.
15.Insurable Interest - ANSWER something of value that, if lost, would cause
you financial harm
16.Blood or Business - ANSWER Insurable Interest
17.Types of Term Insurance - ANSWER level, increasing, decreasing
18.Level Term Insurance - ANSWER pays the same death benefit over the
term of the policy
,19.Increasing Term Insurance - ANSWER the death benefit increases over the
life of the policy, and the premium remains level
20.Decreasing Term Insurance - ANSWER term insurance in which the annual
premium remains constant but the face amount of the policy declines each
year
21.According to the Entire Contract provision, a policy must contain: -
ANSWER A copy of the original application for insurance. An insurance
contract must contain a copy of the original application.
22.Applicant or proposed insured - ANSWER a person applying for insurance
23.Beneficiary - ANSWER A person who receives the benefits of an insurance
policy
24.Death Benefit - ANSWER the amount paid upon the death of the insured in
a life insurance policy
25.insurance policy - ANSWER a contract between a policyowner (and/or
insured) and an insurance company which agrees to pay the insured or the
beneficiary for loss caused by specific events
26.Insured - ANSWER person covered by the insurance policy; may or may
not be the policy owner
27.Insurer (principal) - ANSWER the company who issues an insurance policy
, 28.lapse - ANSWER policy termination due to nonpayment of premium
29.Policyowner - ANSWER the person entitled to exercise the rights and
privileges in the policy
30.Agent Authority - ANSWER express, implied, apparent
31.Express Authority - ANSWER authority declared in clear, direct, and
definite terms
32.Implied Authority - ANSWER Authority that is not expressed or written
into the contract, but which the agent is assumed to have in order to transact
the business of insurance for the principal.
33.Apparent Authority - ANSWER The appearance or the assumption of
authority based on the actions, words, or deeds of the principal or because of
circumstances the principal created.
34.Elements of a Legal Contract - ANSWER Agreement (offer and
acceptance), consideration, competent parties, and legal purpose
35.Aleatory Contract - ANSWER The exchange of value is unequal.
36.adhesion contract - ANSWER A take-it-or-leave-it offer made by a party
who holds most of the power in a bargaining session
37.Another name for a substandard risk classification is: - ANSWER Rated.
Substandard risk classification is also referred to as "rated" since these
