Arkansas Life Insurance Study Guide 2024 Questions and Answers

Arkansas Life Insurance Study Guide 2024 Questions and Answers Adverse Selection - CORRECT ANSWER-Insuring of risks that are more prone to losses than the average risk. Death Benefit - CORRECT ANSWER-The amount paid upon the death of the insured in a life insurance policy. Insurance Policy - CORRECT ANSWER-A contract between a policyowner/insured and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events. Insured - CORRECT ANSWER-Person covered by the insurance policy; may or may not be the policyowner Insurer (Principle) - CORRECT ANSWER-The company who issues an insurance policy. Lapse - CORRECT ANSWER-Policy termination due to nonpayment of premium. Life Insurance - CORRECT ANSWER-Coverage on human lives. Policyowner - CORRECT ANSWER-The person entitled to exercise the rights and privileges in the policy. Premium - CORRECT ANSWER-The money paid to the insurance company for the insurance policy. Insurance transfers what? - CORRECT ANSWER-The risk of loss from and individual to and insurance company. Elements of a Legal Contract - CORRECT ANSWER-1. Agreement (offer and acceptance) 2. Consideration 3. Competent Parties 4. Legal Purpose Offer and Acceptance - CORRECT ANSWER-Offer happens when application is submitted. Acceptance takes place when an insurer's underwriter approves the application and issues a policy. Consideration - CORRECT ANSWER-Binding force. Something of value that each party gives to the other. Competent Parties - CORRECT ANSWER-Both parties be of legal age, mentally competent to understand the contract, and not under the influence of drugs/alcohol. Aleatory Contract - CORRECT ANSWER-There is an exchange of unequal amounts/values. The premium paid by the insured is small in relation to the amount that will be paid by the insurer in the event of loss