PRIMERICA LIFE INSURANCE EXAM 2024 ACTUAL EXAM
COMPLETE 300 QUESTIONS WITH DETAILED VERIFIED
ANSWERS (100% CORRECT ANSWERS) / ALREADY
GRADED A+
What is insurance? - ANSWER: Transfer of the possibility of loss (risk) to an insurance
company.
What is a risk? - ANSWER: The uncertainty of financial loss
There are two types of loss - ANSWER: Pure and Speculative
Which type of loss is insurable? - ANSWER: Pure
Why is Pure loss insurable? - ANSWER: Loss must be financial and uncertain. No
financial gain can occur.
What causes loss? - ANSWER: Peril; such as fire, accident or flood
What causes a peril? - ANSWER: A hazard
What is a hazard? - ANSWER: Increases the likelihood of a loss; such as smoking
What is the concept called, that predicts the appropriate number of deaths that
should occur within a similar group
of people (exposure) within a given period of time? - ANSWER: Law of Large
Numbers
What is adverse selection? - ANSWER: People in bad health keep their policy in force
longer than people in good health
As an agent, you are a legal representative of the ______________. - ANSWER:
company
The person who pays for the policy of insurance is the - ANSWER: policy owner
The _____________ is the person who receives the benefits from the insurance
policy - ANSWER: beneficiary
The person covered by the insurance policy is the ____________. - ANSWER: insured
The insurance company is the ___________. - ANSWER: insurer
, To buy insurance, the policyowner must have ______________ in the insured at the
_________________________________________________. - ANSWER: insurable
interest; time of purchase but not at
time of insured's death.
The 5 recognizable areas of insurable interest are ___________. - ANSWER: 1. your
own life
2. family members
3. business partners
4. key employee
5.financial obligation.
What is person called who holds a position of special trust and confidence? -
ANSWER: Fiduciary
Waiver vs. Estoppel - ANSWER: Waiver is when you voluntarily give up your legal
right. Estoppel is when you are denied the right to enforce a legal right that you have
previously given up. Estoppel AKA The Loss of Defense
What are the business uses of life insurance? - ANSWER: 1. Key Employee
2. Buy and Sell Agreement
3. Cross Purchase Plan
4. Split Dollar Plan
Key Employee - ANSWER: Company is owner and Beneficiary
Employee is Insured Premium NOT tax deductible to Company Third Party
Ownership
Buy and Sell Agreement - ANSWER: NOT INSURANCE - A legal document that states
WHO may purchase a deceased partners share of the business and for HOW MUCH
MONEY
Life Insurance can be used to fund a Buy and Sell Agreement
Drawn up by an Attorney
Cross Purchase Plan - ANSWER: Take the Company Value and divide by number of
Owners Each Owner buys a policy on the other Owners, naming himself as
beneficiary.
Split Dollar Plan - ANSWER: Employee and Owner share in Premium and DB Third
Party Ownership
What is meant by third party ownership - ANSWER: Policy is owned by someone
other than the Insured.
A company with an employee who could not be replaced without considerable
expense might consider buying a____________________ life insurance policy on
that individual - ANSWER: key employee
COMPLETE 300 QUESTIONS WITH DETAILED VERIFIED
ANSWERS (100% CORRECT ANSWERS) / ALREADY
GRADED A+
What is insurance? - ANSWER: Transfer of the possibility of loss (risk) to an insurance
company.
What is a risk? - ANSWER: The uncertainty of financial loss
There are two types of loss - ANSWER: Pure and Speculative
Which type of loss is insurable? - ANSWER: Pure
Why is Pure loss insurable? - ANSWER: Loss must be financial and uncertain. No
financial gain can occur.
What causes loss? - ANSWER: Peril; such as fire, accident or flood
What causes a peril? - ANSWER: A hazard
What is a hazard? - ANSWER: Increases the likelihood of a loss; such as smoking
What is the concept called, that predicts the appropriate number of deaths that
should occur within a similar group
of people (exposure) within a given period of time? - ANSWER: Law of Large
Numbers
What is adverse selection? - ANSWER: People in bad health keep their policy in force
longer than people in good health
As an agent, you are a legal representative of the ______________. - ANSWER:
company
The person who pays for the policy of insurance is the - ANSWER: policy owner
The _____________ is the person who receives the benefits from the insurance
policy - ANSWER: beneficiary
The person covered by the insurance policy is the ____________. - ANSWER: insured
The insurance company is the ___________. - ANSWER: insurer
, To buy insurance, the policyowner must have ______________ in the insured at the
_________________________________________________. - ANSWER: insurable
interest; time of purchase but not at
time of insured's death.
The 5 recognizable areas of insurable interest are ___________. - ANSWER: 1. your
own life
2. family members
3. business partners
4. key employee
5.financial obligation.
What is person called who holds a position of special trust and confidence? -
ANSWER: Fiduciary
Waiver vs. Estoppel - ANSWER: Waiver is when you voluntarily give up your legal
right. Estoppel is when you are denied the right to enforce a legal right that you have
previously given up. Estoppel AKA The Loss of Defense
What are the business uses of life insurance? - ANSWER: 1. Key Employee
2. Buy and Sell Agreement
3. Cross Purchase Plan
4. Split Dollar Plan
Key Employee - ANSWER: Company is owner and Beneficiary
Employee is Insured Premium NOT tax deductible to Company Third Party
Ownership
Buy and Sell Agreement - ANSWER: NOT INSURANCE - A legal document that states
WHO may purchase a deceased partners share of the business and for HOW MUCH
MONEY
Life Insurance can be used to fund a Buy and Sell Agreement
Drawn up by an Attorney
Cross Purchase Plan - ANSWER: Take the Company Value and divide by number of
Owners Each Owner buys a policy on the other Owners, naming himself as
beneficiary.
Split Dollar Plan - ANSWER: Employee and Owner share in Premium and DB Third
Party Ownership
What is meant by third party ownership - ANSWER: Policy is owned by someone
other than the Insured.
A company with an employee who could not be replaced without considerable
expense might consider buying a____________________ life insurance policy on
that individual - ANSWER: key employee
