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accumulates until it is withdrawn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