State Farm Property Exam Questions with
100% Correct Answers
Absolute Assignment
Policy assignment when assignee receives full control over the policy and full rights to its benefits.
Accelerated benefits rider
Life insurance rider that allow for early payment of some portion of policy's face amount, should the
insured suffer from terminal illness/injury.
adhesion
Contract must be accepted by the insured exactly as it is written by the insurer. Terms of contract
cannot be negotiated. Contract is offered on a take it or leave it basis.
admitted insurer
An insurance company that has been approved to operate within a given jurisdiction.
accidental death benefit rider
Life insurance policy rider providing for payment of an additional benefit when death occurs by
accidental means.
adjustable life
Policy allows the policymaker to adjust the policy's face amount, premium, and type of protection
without having to complete a new application or any additional underwriting.
agents (producer) report
Section of an insurance application where the agent, details personal observations about the
applicant.
annually renewable term (ART)
A form of renewable term insurance that provides coverage for one year and allows policyowner to
renew coverage each year, without evidence of insurability.
apparent authority
The insured believes the agent has authority to act based on actions, words or deeds of the agent.
Even though the agent may not have been granted such authority by the insurer, they will be held
liable for the actions of the agent.
automatic premium loan provision
Authorizes the insurer to automatically pay any premium in default at the end of the grace period.
The premium owed plus interest charged is deducted from the policy's cash value.
beneficiary
Person to whom the proceeds of a life or accident policy are payable when the insured dies.
annuitant
,One to whom an annuity is payable, or a person upon the continuance of whose life further payment
depends.
attained age
With reference to an insured, the current insurance age.
aviation exclusion
The insurer will not pay a claim if the insured dies as a result of flying an aircraft or acting as a
member of a flight crew. In most cases, the insurer will offer the applicant the opportunity to
purchase a rider offsetting the exclusion.
buyers guide
A generic publication that explains life insurance in a way that an average consumer can understand.
It does not contain specific product or policy information
Buy-sell agreement
Agreement that a deceased businessowner's interest will be sold and purchased at a predetermined
price or at a price according to a predetermined formula.
Churning
Replacing one life contract with another within the same company without demonstrating a benefit
to the client.
common disaster provision
This policy provision provides an alternative beneficiary in the event that the insured and the original
beneficiary die as the result of a common accident.
Consideration
Element of a legal contract consisting of premium payment and statements made by the prospective
insured in the application.
Cash Value
The equity amount or savings accumulation in a permanent life policy.
Collateral assignment
Assignment of a policy to a creditor as a security for a debt. At the insured death, the creditor is
entitled to be reimbursed out of policy proceeds for the amount owed and any excess will go to the
beneficiary.
Conditional receipt
Given to the policyowners when they pay a premium at time of application. in this case, the applicant
is covered the later of the date of the application or proof of insurability, even though the policy may
not have been issued.
Consideration, legal purpose, offer, acceptance. and competent parties.
The five parts of a legal contract.
, Contingent beneficiary
Persons named to receive proceeds in case the original beneficiary is not alive.
cost-of-living (col) rider
A rider available with some policies that provides for an automatic increase in benefits ( typically tied
to the consumer price index.) offsetting the effects of inflation. This will result in an automatic
increase in premium.
defined benefit plan
A pension plan under which benefits are determined by a percentage of the recipients salary.
discrimination
In insurance, the act of treating certain groups of people unfairly in the sale and pricing of policies.
This does not apply to age, sex, occupation, and medical history.
conversion privilege (convertibility)
Allows the policyowner, before an original insurance policy expires, to elect to have a new permanent
policy issued that will continue the insurance coverage without evidence of insurability.
credit life insurance
Decreasing term insurance covering the unpaid balance of a mortgage or installment loan. If the
borrower dies, benefits pay balance due. May be individual or group policy.
defined contribution plan
A tax-qualified retirement plan in which annual contributions are determined by a percentage of the
employee's salary.
dividend
Policyowners share in the divisible surplus of a company issuing participating policies, paid as a return
of premium.
dividend options
The different ways in which the insured under a participating, life insurance policy may elect to
receive surplus earnings: in cash, as a reduction of premium, as additional paid-up insurance, left on
deposit at interest, or as additional term insurance.
estate
Most commonly, the quantity of wealth or property at an individual's death.
extended term insurance
Nonforfeiture option providing for the cash surrender value of a policy to be used as a net single
premium at the insured's attained age to purchase term insurance for the net death benefit.
fiduciary
100% Correct Answers
Absolute Assignment
Policy assignment when assignee receives full control over the policy and full rights to its benefits.
Accelerated benefits rider
Life insurance rider that allow for early payment of some portion of policy's face amount, should the
insured suffer from terminal illness/injury.
adhesion
Contract must be accepted by the insured exactly as it is written by the insurer. Terms of contract
cannot be negotiated. Contract is offered on a take it or leave it basis.
admitted insurer
An insurance company that has been approved to operate within a given jurisdiction.
accidental death benefit rider
Life insurance policy rider providing for payment of an additional benefit when death occurs by
accidental means.
adjustable life
Policy allows the policymaker to adjust the policy's face amount, premium, and type of protection
without having to complete a new application or any additional underwriting.
agents (producer) report
Section of an insurance application where the agent, details personal observations about the
applicant.
annually renewable term (ART)
A form of renewable term insurance that provides coverage for one year and allows policyowner to
renew coverage each year, without evidence of insurability.
apparent authority
The insured believes the agent has authority to act based on actions, words or deeds of the agent.
Even though the agent may not have been granted such authority by the insurer, they will be held
liable for the actions of the agent.
automatic premium loan provision
Authorizes the insurer to automatically pay any premium in default at the end of the grace period.
The premium owed plus interest charged is deducted from the policy's cash value.
beneficiary
Person to whom the proceeds of a life or accident policy are payable when the insured dies.
annuitant
,One to whom an annuity is payable, or a person upon the continuance of whose life further payment
depends.
attained age
With reference to an insured, the current insurance age.
aviation exclusion
The insurer will not pay a claim if the insured dies as a result of flying an aircraft or acting as a
member of a flight crew. In most cases, the insurer will offer the applicant the opportunity to
purchase a rider offsetting the exclusion.
buyers guide
A generic publication that explains life insurance in a way that an average consumer can understand.
It does not contain specific product or policy information
Buy-sell agreement
Agreement that a deceased businessowner's interest will be sold and purchased at a predetermined
price or at a price according to a predetermined formula.
Churning
Replacing one life contract with another within the same company without demonstrating a benefit
to the client.
common disaster provision
This policy provision provides an alternative beneficiary in the event that the insured and the original
beneficiary die as the result of a common accident.
Consideration
Element of a legal contract consisting of premium payment and statements made by the prospective
insured in the application.
Cash Value
The equity amount or savings accumulation in a permanent life policy.
Collateral assignment
Assignment of a policy to a creditor as a security for a debt. At the insured death, the creditor is
entitled to be reimbursed out of policy proceeds for the amount owed and any excess will go to the
beneficiary.
Conditional receipt
Given to the policyowners when they pay a premium at time of application. in this case, the applicant
is covered the later of the date of the application or proof of insurability, even though the policy may
not have been issued.
Consideration, legal purpose, offer, acceptance. and competent parties.
The five parts of a legal contract.
, Contingent beneficiary
Persons named to receive proceeds in case the original beneficiary is not alive.
cost-of-living (col) rider
A rider available with some policies that provides for an automatic increase in benefits ( typically tied
to the consumer price index.) offsetting the effects of inflation. This will result in an automatic
increase in premium.
defined benefit plan
A pension plan under which benefits are determined by a percentage of the recipients salary.
discrimination
In insurance, the act of treating certain groups of people unfairly in the sale and pricing of policies.
This does not apply to age, sex, occupation, and medical history.
conversion privilege (convertibility)
Allows the policyowner, before an original insurance policy expires, to elect to have a new permanent
policy issued that will continue the insurance coverage without evidence of insurability.
credit life insurance
Decreasing term insurance covering the unpaid balance of a mortgage or installment loan. If the
borrower dies, benefits pay balance due. May be individual or group policy.
defined contribution plan
A tax-qualified retirement plan in which annual contributions are determined by a percentage of the
employee's salary.
dividend
Policyowners share in the divisible surplus of a company issuing participating policies, paid as a return
of premium.
dividend options
The different ways in which the insured under a participating, life insurance policy may elect to
receive surplus earnings: in cash, as a reduction of premium, as additional paid-up insurance, left on
deposit at interest, or as additional term insurance.
estate
Most commonly, the quantity of wealth or property at an individual's death.
extended term insurance
Nonforfeiture option providing for the cash surrender value of a policy to be used as a net single
premium at the insured's attained age to purchase term insurance for the net death benefit.
fiduciary
