IOWA Life & Health Insurance
Frequently Tested Exam Questions With
Verified Multiple Choice and Conceptual Actual 100%
Correct Detailed Answers
Guaranteed Pass!!Current Update!!
1. In insurance, a type of risk that involves the chance of loss or gain and
which is therefore uninsurable is called - ANSWER speculative risk:
Speculative risk is risk that may result in loss or gain. This type of risk is
generally uninsurable.
2. A hurricane is an example of a(n) - ANSWER Peril: A hurricane is an
example of a peril. A peril is a condition that involves danger or risk and is
the cause of a loss. Insurance policies are written to provide financial
protection against losses from stated perils.
3. Which of the following is an example of pure risk? - ANSWER the loss of
life: The loss of a life is a good example of pure risk because there is no
possible gain in this situation.
4. Which of the following is defined as increasing the severity or frequency of
loss? - ANSWER Hazard: A hazard does indeed increase the number of,
or the severity of, losses.
5. Ted is taking out a life insurance policy naming his sister Gail as the insured.
Their brother Randy is the beneficiary. Ted will be responsible for paying the
, premiums. Who is required to sign the application? - ANSWER Ted and
Gail: Both the applicant and the insured must sign the application in this
case.
6. A customer has purchased over a dozen life insurance and annuity contracts
over the past year, using cashier's checks to pay the premiums. If this action
is part of a money laundering operation, what stage does it represent? -
ANSWER layering stage: Money laundering is a process that moves
illegal money through three stages on its way to apparent legitimacy:
placement, layering, and integration. The second stage, layering, is achieved
by using cash or cash equivalents to purchase multiple financial instruments
that can subsequently be converted into clean money.
7. When a producer determines that the sale of a life insurance policy will
replace an existing policy, the producer must do all of the following EXCEPT
- ANSWER notify the state insurance department. A producer is not
required to notify the state insurance department of a transaction that
involves the replacement of a life insurance policy.
8. The insurer has approved the policy, with conditions that the applicant must
meet before delivery is official. The type of policy delivery that the agent
should make in this situation is called ________. - ANSWER Legal: If any
conditions are attached to delivery of a policy then legal delivery is
preferred. Legal delivery requires personal delivery of the policy to the
client, along with an explanation.
9. A policy's effective coverage date begins on - ANSWER the date of the
receipt of a first payment or the date of a medical exam, if required. The
date of the receipt of a first payment or the date of a medical exam, if
, required, controls when the insurance coverage goes into effect. A binding
or conditional receipt identifies this date when the premium is submitted
with the application. If the premium is not submitted until the policy is
delivered, the date the applicant pays the first premium is still the effective
date of coverage.
10.What type of information is typically found in the agent's report? - ANSWER
The agent's report is the primary source for information about any prior
insurance policy, if the new coverage is a replacement policy. The agent may
also be able to identify other policies the applicant has.
11.What information about the proposed insured is available from the Medical
Information Bureau to assist the underwriter in making a decision? -
ANSWER Only the applicant's medical impairments reported by other
insurers are available. The Medical Information Bureau maintains a
database of confidential information on applicants for life and health
insurance that have been underwritten by member insurers and found to
possess a medical impairment. While all impairments must be reported, the
insurer does not report its underwriting decision, therefore this decision is
not available to the next insurance underwriter.
12.According to FCRA, an insurer who requests an MIB, inspection, or
consumer report, is responsible for which of these follow-up actions with
the applicant? - ANSWER They are responsible for disclosing to the
applicant all requests for reports, what each covers, and how to contact the
reporting agency for a copy of a report. The FCRA requires the requesting
agency (in this case the insurer) to notify the applicant that a report is being
requested. What the report will cover must also be disclosed to the
applicant. If the applicant is denied insurance based in part on a report,
, then the insurer must also provide the reporting agency contact
information so that the applicant can request a copy of the report.
13.Nine out of ten people fall into which two risk classifications based on the
underwriter's evaluation process? - ANSWER preferred and standard:
Nine out of ten people fall into the preferred and standard risk
classifications based on the underwriter's evaluation process.
14.Insurers use inspection reports to verify the information applicants provide
to agents and examiners. Who is most likely to be the subject of an
inspection report? - ANSWER applicants who ask for very high amounts
of life insurance or business insurance: Insurers most often order inspection
reports on applicants who ask for very high amounts of life insurance or
business insurance.
15.Harry and Constance want life insurance to provide death benefits in case
either dies, as well as living benefits in the event of financial emergencies.
Which of the following would this couple most likely buy? - ANSWER
whole life insurance: Whole life insurance pays death benefits for the
insureds' lifetimes, or until age 100. Whole life policies also accumulate
cash values, which grow over the life of the policy. These are the "living
benefits" Harry and Constance are seeking.
16.Life insurance has been purchased by ABC Company on the lives of two
partners, Hugh and Danny, and three key employees Eileen, Vern, and June.
Which of the following would apply if Hugh and June were to leave the
business? - ANSWER The company could keep the life insurance it has
on both Hugh and June, even though both are no longer employed there. A
Frequently Tested Exam Questions With
Verified Multiple Choice and Conceptual Actual 100%
Correct Detailed Answers
Guaranteed Pass!!Current Update!!
1. In insurance, a type of risk that involves the chance of loss or gain and
which is therefore uninsurable is called - ANSWER speculative risk:
Speculative risk is risk that may result in loss or gain. This type of risk is
generally uninsurable.
2. A hurricane is an example of a(n) - ANSWER Peril: A hurricane is an
example of a peril. A peril is a condition that involves danger or risk and is
the cause of a loss. Insurance policies are written to provide financial
protection against losses from stated perils.
3. Which of the following is an example of pure risk? - ANSWER the loss of
life: The loss of a life is a good example of pure risk because there is no
possible gain in this situation.
4. Which of the following is defined as increasing the severity or frequency of
loss? - ANSWER Hazard: A hazard does indeed increase the number of,
or the severity of, losses.
5. Ted is taking out a life insurance policy naming his sister Gail as the insured.
Their brother Randy is the beneficiary. Ted will be responsible for paying the
, premiums. Who is required to sign the application? - ANSWER Ted and
Gail: Both the applicant and the insured must sign the application in this
case.
6. A customer has purchased over a dozen life insurance and annuity contracts
over the past year, using cashier's checks to pay the premiums. If this action
is part of a money laundering operation, what stage does it represent? -
ANSWER layering stage: Money laundering is a process that moves
illegal money through three stages on its way to apparent legitimacy:
placement, layering, and integration. The second stage, layering, is achieved
by using cash or cash equivalents to purchase multiple financial instruments
that can subsequently be converted into clean money.
7. When a producer determines that the sale of a life insurance policy will
replace an existing policy, the producer must do all of the following EXCEPT
- ANSWER notify the state insurance department. A producer is not
required to notify the state insurance department of a transaction that
involves the replacement of a life insurance policy.
8. The insurer has approved the policy, with conditions that the applicant must
meet before delivery is official. The type of policy delivery that the agent
should make in this situation is called ________. - ANSWER Legal: If any
conditions are attached to delivery of a policy then legal delivery is
preferred. Legal delivery requires personal delivery of the policy to the
client, along with an explanation.
9. A policy's effective coverage date begins on - ANSWER the date of the
receipt of a first payment or the date of a medical exam, if required. The
date of the receipt of a first payment or the date of a medical exam, if
, required, controls when the insurance coverage goes into effect. A binding
or conditional receipt identifies this date when the premium is submitted
with the application. If the premium is not submitted until the policy is
delivered, the date the applicant pays the first premium is still the effective
date of coverage.
10.What type of information is typically found in the agent's report? - ANSWER
The agent's report is the primary source for information about any prior
insurance policy, if the new coverage is a replacement policy. The agent may
also be able to identify other policies the applicant has.
11.What information about the proposed insured is available from the Medical
Information Bureau to assist the underwriter in making a decision? -
ANSWER Only the applicant's medical impairments reported by other
insurers are available. The Medical Information Bureau maintains a
database of confidential information on applicants for life and health
insurance that have been underwritten by member insurers and found to
possess a medical impairment. While all impairments must be reported, the
insurer does not report its underwriting decision, therefore this decision is
not available to the next insurance underwriter.
12.According to FCRA, an insurer who requests an MIB, inspection, or
consumer report, is responsible for which of these follow-up actions with
the applicant? - ANSWER They are responsible for disclosing to the
applicant all requests for reports, what each covers, and how to contact the
reporting agency for a copy of a report. The FCRA requires the requesting
agency (in this case the insurer) to notify the applicant that a report is being
requested. What the report will cover must also be disclosed to the
applicant. If the applicant is denied insurance based in part on a report,
, then the insurer must also provide the reporting agency contact
information so that the applicant can request a copy of the report.
13.Nine out of ten people fall into which two risk classifications based on the
underwriter's evaluation process? - ANSWER preferred and standard:
Nine out of ten people fall into the preferred and standard risk
classifications based on the underwriter's evaluation process.
14.Insurers use inspection reports to verify the information applicants provide
to agents and examiners. Who is most likely to be the subject of an
inspection report? - ANSWER applicants who ask for very high amounts
of life insurance or business insurance: Insurers most often order inspection
reports on applicants who ask for very high amounts of life insurance or
business insurance.
15.Harry and Constance want life insurance to provide death benefits in case
either dies, as well as living benefits in the event of financial emergencies.
Which of the following would this couple most likely buy? - ANSWER
whole life insurance: Whole life insurance pays death benefits for the
insureds' lifetimes, or until age 100. Whole life policies also accumulate
cash values, which grow over the life of the policy. These are the "living
benefits" Harry and Constance are seeking.
16.Life insurance has been purchased by ABC Company on the lives of two
partners, Hugh and Danny, and three key employees Eileen, Vern, and June.
Which of the following would apply if Hugh and June were to leave the
business? - ANSWER The company could keep the life insurance it has
on both Hugh and June, even though both are no longer employed there. A
