Life Insurance Exam-Illinois Test Questions with 100% Verified
Answers Graded A
Pooling of Risks - ANSWER -A large group
of people contribute money to a fund out of Who must have insurable interest? -
which their losses can be paid ANSWER -the policy owner; he/she will
lose money should hte insured die prematurely
Policyowner - ANSWER -is the person or
org that applies for the policy and pays the tax qualified plans - ANSWER -
premium contributions can be deducted
Actuarial Tables - ANSWER -Are statistical non qualified plans - ANSWER -
tables that are used when calculating premium contributions cannot be deducted
rates and mortality loss reserves
tax deferred plans - ANSWER -tax on the
Life Insurance Policies transfer: - interest and/or earnings is postponed as it
ANSWER -financial risks of premature compounds and accumulates until it is withdrawn
death on a defined amount
tax free - ANSWER -no tax on benefits
Loss of income - ANSWER -the face
amount of life insurance is determined as a
multiple of income cost basis - ANSWER -total contributions
made to the plan
Life annuity - ANSWER -contract which is
issued by a life insurance company protects an Tax: premiums paid on individual life insurance
individual against the financial risk of outliving a policies... - ANSWER -cannot be deducted
normal life expectancy according to the mortality (non-qualified)
actuarial tables and running out of money in old
age
Tax: the benefits paid to the beneficiary at the
insured's death... - ANSWER -is usually not
Life annuity - ANSWER -guarantees taxed (tax free)
monthly income benefits to the annuitant for the
rest of his/her life no matter how long he/she
lives Participating policy - ANSWER -pays a
dividend
Insurable interest - ANSWER -a person
must be in a position where he/she will lose Tax: dividends paid to the policyowner on
money should loss occur only at the time the participating policies... - ANSWER -are
policy is issued usually not taxed (tax free)
, Life Insurance Exam-Illinois Test Questions with 100% Verified
Answers Graded A
Medical Information Bureau Report (MIB) -
Modified Endowment Contract - ANSWER - ANSWER -it is a CLEARINGHOUSE for
The IRS has written rules that define when a life medical information for insurance companies that
insurance policy does not have a real, valid life belong to it
insurance purpose and is in substance an
investment or savings plan
Inspection Report - ANSWER -does by an
outside firm to verity that the producer completed
If a cash value life insurance policy does not the application accurately and completely and to
have a valid life insurance purpose, the IRS determine if the applicant has any moral or
classifies it as a - ANSWER -modified character risks
endowment contract
Fair Credit Reporting Act (4 items) -
Underwriter - ANSWER -is an insurance ANSWER -1. applicant has a right to be
company employee who reviews applications advised that there may be information collected
and additional information and decides whether from outside sources
the applicant is acceptable and what the correct 2. the applicant has a right to the name and
premium rate should be address of the inspecting firm if rated or rejected
3. the applicant has a right to see the inspection
report
Application includes (7 items) - ANSWER - 4. the applicant has the right to have medical
age, sex, occupation, dangerous recreational information sent to his or her physician
activities, aviation, smoking, agent's report
Representations must be - ANSWER -
Medical reports can be (3 items) - concealed/false and material and intentional
ANSWER -health questionare, paramedic
examiner's report, and physician's report
Warranties - ANSWER -guaranteed
statements in an application attachment
Who completes the health questionnaire? - regarding extra risk upon which the insurance
ANSWER -the agent and the applicant with company can contest the policy within the first 2
questions about applicant's health history as well years of the policy if the statement is in anyway
as the applicant's parents' health history concealed or false
Errors and changes on the application - Which is more difficult to contest? Warranties or
ANSWER -if an error on an application Representations? - ANSWER -
occurs, underwriter may require that it be correct Representations
and changes must be approved and initialed by
the applicant
most statements are what? Warranties or
Answers Graded A
Pooling of Risks - ANSWER -A large group
of people contribute money to a fund out of Who must have insurable interest? -
which their losses can be paid ANSWER -the policy owner; he/she will
lose money should hte insured die prematurely
Policyowner - ANSWER -is the person or
org that applies for the policy and pays the tax qualified plans - ANSWER -
premium contributions can be deducted
Actuarial Tables - ANSWER -Are statistical non qualified plans - ANSWER -
tables that are used when calculating premium contributions cannot be deducted
rates and mortality loss reserves
tax deferred plans - ANSWER -tax on the
Life Insurance Policies transfer: - interest and/or earnings is postponed as it
ANSWER -financial risks of premature compounds and accumulates until it is withdrawn
death on a defined amount
tax free - ANSWER -no tax on benefits
Loss of income - ANSWER -the face
amount of life insurance is determined as a
multiple of income cost basis - ANSWER -total contributions
made to the plan
Life annuity - ANSWER -contract which is
issued by a life insurance company protects an Tax: premiums paid on individual life insurance
individual against the financial risk of outliving a policies... - ANSWER -cannot be deducted
normal life expectancy according to the mortality (non-qualified)
actuarial tables and running out of money in old
age
Tax: the benefits paid to the beneficiary at the
insured's death... - ANSWER -is usually not
Life annuity - ANSWER -guarantees taxed (tax free)
monthly income benefits to the annuitant for the
rest of his/her life no matter how long he/she
lives Participating policy - ANSWER -pays a
dividend
Insurable interest - ANSWER -a person
must be in a position where he/she will lose Tax: dividends paid to the policyowner on
money should loss occur only at the time the participating policies... - ANSWER -are
policy is issued usually not taxed (tax free)
, Life Insurance Exam-Illinois Test Questions with 100% Verified
Answers Graded A
Medical Information Bureau Report (MIB) -
Modified Endowment Contract - ANSWER - ANSWER -it is a CLEARINGHOUSE for
The IRS has written rules that define when a life medical information for insurance companies that
insurance policy does not have a real, valid life belong to it
insurance purpose and is in substance an
investment or savings plan
Inspection Report - ANSWER -does by an
outside firm to verity that the producer completed
If a cash value life insurance policy does not the application accurately and completely and to
have a valid life insurance purpose, the IRS determine if the applicant has any moral or
classifies it as a - ANSWER -modified character risks
endowment contract
Fair Credit Reporting Act (4 items) -
Underwriter - ANSWER -is an insurance ANSWER -1. applicant has a right to be
company employee who reviews applications advised that there may be information collected
and additional information and decides whether from outside sources
the applicant is acceptable and what the correct 2. the applicant has a right to the name and
premium rate should be address of the inspecting firm if rated or rejected
3. the applicant has a right to see the inspection
report
Application includes (7 items) - ANSWER - 4. the applicant has the right to have medical
age, sex, occupation, dangerous recreational information sent to his or her physician
activities, aviation, smoking, agent's report
Representations must be - ANSWER -
Medical reports can be (3 items) - concealed/false and material and intentional
ANSWER -health questionare, paramedic
examiner's report, and physician's report
Warranties - ANSWER -guaranteed
statements in an application attachment
Who completes the health questionnaire? - regarding extra risk upon which the insurance
ANSWER -the agent and the applicant with company can contest the policy within the first 2
questions about applicant's health history as well years of the policy if the statement is in anyway
as the applicant's parents' health history concealed or false
Errors and changes on the application - Which is more difficult to contest? Warranties or
ANSWER -if an error on an application Representations? - ANSWER -
occurs, underwriter may require that it be correct Representations
and changes must be approved and initialed by
the applicant
most statements are what? Warranties or
