USAA Test questions well answered
already passed
What type of reinsurance contract involves two companies automatically sharing their risk exposure? -
correct answer ✔✔treaty
A group-owned insurance company that is formed to assume and spread the liability risks of its members
is known as a - correct answer ✔✔risk retention group
What is the name of the law that requires insurers to disclose information gathering practices and where
the information was obtained? - correct answer ✔✔Fair Credit Reporting Act
The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future
obligations to its policyholders is called: - correct answer ✔✔reserves
A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its
members is known as: - correct answer ✔✔fraternal benefit society
If a contract of adhesion contains questionable language, to whom would the interpretation be in favor
of? - correct answer ✔✔insured
What is a warranty? - correct answer ✔✔is a statement guaranteed to be true
A policy of adhesion can only be modified by whom? - correct answer ✔✔insurance company
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following
contractual elements? - correct answer ✔✔Legal Purpose (Insurable Interest)
Which of these is considered a statement that is assured to be true in every respect? - correct answer
✔✔warranty
,Which of these is NOT a type of agent authority? - correct answer ✔✔principal
The Consideration clause of an insurance contract includes: - correct answer ✔✔the schedule and
amount of premium payments
What is the consideration given by an insurer in the Consideration clause of the life policy? - correct
answer ✔✔Promise to pay a death benefit to a named beneficiary
Who makes the legally enforceable promises in a unilateral insurance policy? - correct answer
✔✔insurance company
All of the following are considered to be typical characteristics describing the nature of an insurance
contract, EXCEPT: - correct answer ✔✔bilateral
At what point does an informal contact become binding? - correct answer ✔✔When one party makes an
offer and the other party accepts that offer.
Which of these arrangements allows one to bypass insurable interest laws? - correct answer
✔✔Investor-Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an example of - correct
answer ✔✔fiduciary responsibility
Life and health insurance policies are: - correct answer ✔✔unilateral contracts
What type of life insurance gives the greatest amount of coverage for a limited period of time? - correct
answer ✔✔Term life
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
- correct answer ✔✔Variable Universal Life
, T has a term policy that allows him to continue the coverage after expiration of the initial policy period.
What type of term coverage is this? - correct answer ✔✔renewable
Which of the following policies is characterized by a flexible premium and death benefit and allows the
policyowner control of the investment aspect of the plan? - correct answer ✔✔Variable universal life
D needs life insurance that provides coverage for only a limited amount of time while also paying the
lowest possible premium. What kind of policy is needed? - correct answer ✔✔Level term
A policy that becomes a Modified Endowment Contract (MEC) - correct answer ✔✔will lose many of its
tax advantages
Term insurance has which of the following characteristics? - correct answer ✔✔Expires at the end of the
policy period
What type of life policy covers two people and pays upon death of the last insured? - correct answer
✔✔survivorship
A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have
the policy premiums waived under which provision? - correct answer ✔✔Payor provision
G purchased a Family Income policy at age 40. The policy has a 20-year rider period. If G were to die at
age 50, how long would G's family receive an income? - correct answer ✔✔10 years
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a
faster rate in the early years of the policy. Which of these statements made by the producer would be
correct? - correct answer ✔✔20-Pay Life accumulates cash value faster than Straight Life
Which statement is TRUE regarding a Variable Whole Life Policy? - correct answer ✔✔A minimum
guaranteed Death benefit is provided
already passed
What type of reinsurance contract involves two companies automatically sharing their risk exposure? -
correct answer ✔✔treaty
A group-owned insurance company that is formed to assume and spread the liability risks of its members
is known as a - correct answer ✔✔risk retention group
What is the name of the law that requires insurers to disclose information gathering practices and where
the information was obtained? - correct answer ✔✔Fair Credit Reporting Act
The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future
obligations to its policyholders is called: - correct answer ✔✔reserves
A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its
members is known as: - correct answer ✔✔fraternal benefit society
If a contract of adhesion contains questionable language, to whom would the interpretation be in favor
of? - correct answer ✔✔insured
What is a warranty? - correct answer ✔✔is a statement guaranteed to be true
A policy of adhesion can only be modified by whom? - correct answer ✔✔insurance company
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following
contractual elements? - correct answer ✔✔Legal Purpose (Insurable Interest)
Which of these is considered a statement that is assured to be true in every respect? - correct answer
✔✔warranty
,Which of these is NOT a type of agent authority? - correct answer ✔✔principal
The Consideration clause of an insurance contract includes: - correct answer ✔✔the schedule and
amount of premium payments
What is the consideration given by an insurer in the Consideration clause of the life policy? - correct
answer ✔✔Promise to pay a death benefit to a named beneficiary
Who makes the legally enforceable promises in a unilateral insurance policy? - correct answer
✔✔insurance company
All of the following are considered to be typical characteristics describing the nature of an insurance
contract, EXCEPT: - correct answer ✔✔bilateral
At what point does an informal contact become binding? - correct answer ✔✔When one party makes an
offer and the other party accepts that offer.
Which of these arrangements allows one to bypass insurable interest laws? - correct answer
✔✔Investor-Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an example of - correct
answer ✔✔fiduciary responsibility
Life and health insurance policies are: - correct answer ✔✔unilateral contracts
What type of life insurance gives the greatest amount of coverage for a limited period of time? - correct
answer ✔✔Term life
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
- correct answer ✔✔Variable Universal Life
, T has a term policy that allows him to continue the coverage after expiration of the initial policy period.
What type of term coverage is this? - correct answer ✔✔renewable
Which of the following policies is characterized by a flexible premium and death benefit and allows the
policyowner control of the investment aspect of the plan? - correct answer ✔✔Variable universal life
D needs life insurance that provides coverage for only a limited amount of time while also paying the
lowest possible premium. What kind of policy is needed? - correct answer ✔✔Level term
A policy that becomes a Modified Endowment Contract (MEC) - correct answer ✔✔will lose many of its
tax advantages
Term insurance has which of the following characteristics? - correct answer ✔✔Expires at the end of the
policy period
What type of life policy covers two people and pays upon death of the last insured? - correct answer
✔✔survivorship
A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have
the policy premiums waived under which provision? - correct answer ✔✔Payor provision
G purchased a Family Income policy at age 40. The policy has a 20-year rider period. If G were to die at
age 50, how long would G's family receive an income? - correct answer ✔✔10 years
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a
faster rate in the early years of the policy. Which of these statements made by the producer would be
correct? - correct answer ✔✔20-Pay Life accumulates cash value faster than Straight Life
Which statement is TRUE regarding a Variable Whole Life Policy? - correct answer ✔✔A minimum
guaranteed Death benefit is provided
