Alabama Life Insurance Exam UPDATED
Study Guide QUESTIONS AND
CORRECT ANSWERS
Insurable Interest - CORRECT ANSWERS The relationship that must
exist between the applicant and insured, at the time of application in order for
the contract to be valid
Producer responsibilities - CORRECT ANSWERS Provide buyers with
a buyers guide and a policy summary no later than when the policy delivered.
Policy Replacement - CORRECT ANSWERS Any transaction in which
a new life policy or annuity is to be purchased, and the producer knows, or
should know, that existing contracts will be either lapsed, reduce the value, re-
issue with the reduced cash value, subject to borrowing.
Buyer's Guide - CORRECT ANSWERS A booklet that describes
insurance policies and concepts, and provides general information to help an
applicant make an informed decision.
Policy Summary - CORRECT ANSWERS An illustration that details the
premiums, the cash value, any projected dividends, surrender values, producers
name and address, address of the insurance company
Field Underwriting - CORRECT ANSWERS Producers probing and
asking questions
types of receipts - CORRECT ANSWERS Conditional, binding,
acceptance conditional
,Conditional Receipt - CORRECT ANSWERS If premium is paid,
coverage will be in effect the date of application or completion of the medical
exam which ever is later, if the policy would have been issued as a platform,
unless it is declined within a stipulated period of time.
Stock insurance company - CORRECT ANSWERS Owned by
stockholders or shareholders
Mutual insurance company - CORRECT ANSWERS Owned by
policyholders. May receive dividends. Dividends can be paid in cash, used to
reduce premiums, left to accumulate an interest, and used to purchase paid up
additional insurance.
Lloyds of London - CORRECT ANSWERS Groups of underwriters call
syndicates each of which specializes in ensuring a particular type of risk. Lloyd
provides a meeting place and clerical services for syndicate members who
actually transact the business of insurance.
Risk retention groups - CORRECT ANSWERS Group owned insurers
that primarily assume and spread the liability related risks of its members.
Owned by policyholders. Membership is limited to risk with similar liability
exposures such as theme parks, go kart tracks, or waterslides.
Domicile - CORRECT ANSWERS The jurisdiction where an insurer is
formed or incorporated
Domestic Insurer - CORRECT ANSWERS An insurance company that
conducts business in the state
Foreign Insurer - CORRECT ANSWERS An insurance company that is
incorporated in another state.
, Alien insurer - CORRECT ANSWERS An insurance company that is
incorporated outside the United States.
Admitted Insurer - CORRECT ANSWERS An insurance company
authorized and licensed to transact business in a particular state.
Nonadmitted Insurer - CORRECT ANSWERS An insurer not authorized
by the state insurance department to do business within that state.
Surplus Lines Insurance - CORRECT ANSWERS An insurance co that
is authorized to sell unauthorized insurance.
Actuarial Department - CORRECT ANSWERS Determines the
probability of loss and sets premium rates
Underwriting Department - CORRECT ANSWERS Responsible for the
selection of risks (persons and property to insure) and rating that determines
actual policy premium.
due diligence - CORRECT ANSWERS The exercise of reasonable care
and fact-finding must be exercise to determine financial soundness of an
insurance company that you place business with as well as during the interview
process of clients.
Marketing and distribution models - CORRECT ANSWERS Exclusive
or captive agency system, direct riding system, independent agency, career
agency system, managerial agency system, personal producing general agent,
direct mail or direct response company, mass marketing.
Express Authority - CORRECT ANSWERS Authority Written into the
producers agency contract.
Study Guide QUESTIONS AND
CORRECT ANSWERS
Insurable Interest - CORRECT ANSWERS The relationship that must
exist between the applicant and insured, at the time of application in order for
the contract to be valid
Producer responsibilities - CORRECT ANSWERS Provide buyers with
a buyers guide and a policy summary no later than when the policy delivered.
Policy Replacement - CORRECT ANSWERS Any transaction in which
a new life policy or annuity is to be purchased, and the producer knows, or
should know, that existing contracts will be either lapsed, reduce the value, re-
issue with the reduced cash value, subject to borrowing.
Buyer's Guide - CORRECT ANSWERS A booklet that describes
insurance policies and concepts, and provides general information to help an
applicant make an informed decision.
Policy Summary - CORRECT ANSWERS An illustration that details the
premiums, the cash value, any projected dividends, surrender values, producers
name and address, address of the insurance company
Field Underwriting - CORRECT ANSWERS Producers probing and
asking questions
types of receipts - CORRECT ANSWERS Conditional, binding,
acceptance conditional
,Conditional Receipt - CORRECT ANSWERS If premium is paid,
coverage will be in effect the date of application or completion of the medical
exam which ever is later, if the policy would have been issued as a platform,
unless it is declined within a stipulated period of time.
Stock insurance company - CORRECT ANSWERS Owned by
stockholders or shareholders
Mutual insurance company - CORRECT ANSWERS Owned by
policyholders. May receive dividends. Dividends can be paid in cash, used to
reduce premiums, left to accumulate an interest, and used to purchase paid up
additional insurance.
Lloyds of London - CORRECT ANSWERS Groups of underwriters call
syndicates each of which specializes in ensuring a particular type of risk. Lloyd
provides a meeting place and clerical services for syndicate members who
actually transact the business of insurance.
Risk retention groups - CORRECT ANSWERS Group owned insurers
that primarily assume and spread the liability related risks of its members.
Owned by policyholders. Membership is limited to risk with similar liability
exposures such as theme parks, go kart tracks, or waterslides.
Domicile - CORRECT ANSWERS The jurisdiction where an insurer is
formed or incorporated
Domestic Insurer - CORRECT ANSWERS An insurance company that
conducts business in the state
Foreign Insurer - CORRECT ANSWERS An insurance company that is
incorporated in another state.
, Alien insurer - CORRECT ANSWERS An insurance company that is
incorporated outside the United States.
Admitted Insurer - CORRECT ANSWERS An insurance company
authorized and licensed to transact business in a particular state.
Nonadmitted Insurer - CORRECT ANSWERS An insurer not authorized
by the state insurance department to do business within that state.
Surplus Lines Insurance - CORRECT ANSWERS An insurance co that
is authorized to sell unauthorized insurance.
Actuarial Department - CORRECT ANSWERS Determines the
probability of loss and sets premium rates
Underwriting Department - CORRECT ANSWERS Responsible for the
selection of risks (persons and property to insure) and rating that determines
actual policy premium.
due diligence - CORRECT ANSWERS The exercise of reasonable care
and fact-finding must be exercise to determine financial soundness of an
insurance company that you place business with as well as during the interview
process of clients.
Marketing and distribution models - CORRECT ANSWERS Exclusive
or captive agency system, direct riding system, independent agency, career
agency system, managerial agency system, personal producing general agent,
direct mail or direct response company, mass marketing.
Express Authority - CORRECT ANSWERS Authority Written into the
producers agency contract.
