Illinois Life Insurance Exam ACTUAL
QUESTIONS AND CORRECT ANSWERS
Transfer of Risks - Correct answers✔✔Through insurance individuals transfer to insurance
companies financial risk they cannot infividually afford
Pooling of risks - Correct answers✔✔when a large group of people contribute money to a fund
out of their losses can be paid
Premium - Correct answers✔✔The money paid by the policyowner to the insurance company in
exchange for the policy
Lapse - Correct answers✔✔When a policy is terminated due to non-payment of premiums
Policyowner - Correct answers✔✔The person or organization that applies to the policy and pays
the premiums. Can also be known as a policyholder.
Insured - Correct answers✔✔The person at whose death the insurance company will pay benefits
to a beneficiary
Beneficiary - Correct answers✔✔The person or organization to whom the benefits are payable to
at the death of the insured
Rider - Correct answers✔✔A form that can be added to an insurance policy. It is usually added
for an extra premium chard to add coverage. It can however sometimes be added to limit
coverage.
, Actuarial tables - Correct answers✔✔statistical tables that are used when calculating premium
rates and mortality loss reserves. They tell insurance companies how many claims are likely to
be made each year enabling the insurance companies to estimate what their losses will be.
Mortality actuarial tables - Correct answers✔✔actuarial tables that tell the insurance companies
how many people fo each age and sex are likely to die each year
Law of large numbers - Correct answers✔✔says that the more people that an insurance company
insures, the more accurate the actuarial tables will become and the losses will become more
predictable and manageable
Premature death - Correct answers✔✔-dying before the normal age according to the mortality
actuarial tables
-also dying with unsatisfied financial responsibilities to either family or creditors
Premature death - Correct answers✔✔through life insurance policies, which are issued y life
insurance companies, insureds transfer to insurance companies the financial risks of premature
death in a defined amount.
4 premature death risks - Correct answers✔✔-loss of income
-unsatisfied major obligations (debts)
-Incomplete financial goals (child Educ, fin security, spouse independence.)
-final expenses (funeral, burial, illness or injury, taxes, unpaid bills, legal, taxes).
Final expenses can be paid at an individual's death in 4 ways - Correct answers✔✔-in cash out of
the decease's personal savings
-borrowing
-by liquidating property, investments, business
QUESTIONS AND CORRECT ANSWERS
Transfer of Risks - Correct answers✔✔Through insurance individuals transfer to insurance
companies financial risk they cannot infividually afford
Pooling of risks - Correct answers✔✔when a large group of people contribute money to a fund
out of their losses can be paid
Premium - Correct answers✔✔The money paid by the policyowner to the insurance company in
exchange for the policy
Lapse - Correct answers✔✔When a policy is terminated due to non-payment of premiums
Policyowner - Correct answers✔✔The person or organization that applies to the policy and pays
the premiums. Can also be known as a policyholder.
Insured - Correct answers✔✔The person at whose death the insurance company will pay benefits
to a beneficiary
Beneficiary - Correct answers✔✔The person or organization to whom the benefits are payable to
at the death of the insured
Rider - Correct answers✔✔A form that can be added to an insurance policy. It is usually added
for an extra premium chard to add coverage. It can however sometimes be added to limit
coverage.
, Actuarial tables - Correct answers✔✔statistical tables that are used when calculating premium
rates and mortality loss reserves. They tell insurance companies how many claims are likely to
be made each year enabling the insurance companies to estimate what their losses will be.
Mortality actuarial tables - Correct answers✔✔actuarial tables that tell the insurance companies
how many people fo each age and sex are likely to die each year
Law of large numbers - Correct answers✔✔says that the more people that an insurance company
insures, the more accurate the actuarial tables will become and the losses will become more
predictable and manageable
Premature death - Correct answers✔✔-dying before the normal age according to the mortality
actuarial tables
-also dying with unsatisfied financial responsibilities to either family or creditors
Premature death - Correct answers✔✔through life insurance policies, which are issued y life
insurance companies, insureds transfer to insurance companies the financial risks of premature
death in a defined amount.
4 premature death risks - Correct answers✔✔-loss of income
-unsatisfied major obligations (debts)
-Incomplete financial goals (child Educ, fin security, spouse independence.)
-final expenses (funeral, burial, illness or injury, taxes, unpaid bills, legal, taxes).
Final expenses can be paid at an individual's death in 4 ways - Correct answers✔✔-in cash out of
the decease's personal savings
-borrowing
-by liquidating property, investments, business
