LIFE INSURANCE EXAM (TEXAS) STUDY
QUESTIONS WITH CORRECT ANSWERS
Insurance
(General concept) - CORRECT ANSWER - - transfers the risk of loss from an individual
to an insurer
- based on the principle of indemnity
- based on the principle of risk (risk pooling)
insurable interest
(General Concept) - CORRECT ANSWER - - must exist at the time of the application
- insuring one's own life, family member, or a business partner
Solicitation and sales presentation - CORRECT ANSWER - - illustration- presentation of
nonguaranteed elements
- buyer's guide is generic information about life polices which must be provided at the
time of application
- policy summary is a description of features and benefits of the policy being issued and
must be provided when the policy is delivered.
Underwriting (Field underwriting (by agent) - CORRECT ANSWER - - application
completed and signed
- agent's report: agent's observation about the application that can assist in underwriting
-premiums with application and conditional receipts
underwriting ( company underwriting) - CORRECT ANSWER - - multiple sources of
information: applications, consumer reports, MIB (Medical Information Burea)
- Risk Classification: 3 types of risk : standard, substandard, preferred
Underwriting (Federal Regulation) - CORRECT ANSWER - - Fair Credit Reporting Act:
protect consumers against circulations of inaccurate or obsolete information
- USE PATRIOT Act/ Anti-money Laundering and Suspicious Activity Reports Rules
Premium Determination - CORRECT ANSWER - - 3 key Factors for life insurance:
mortality, interest, and expense
- Mode: the more frequently premium is paid, the higher the premium
Policy Issue and Delivery - CORRECT ANSWER - Effective date of coverage - if the
premium is not paid with the application, the agent must obtain the premium and a
statement of continued good health at the time of the policy delivery
, Agent/ Producer - CORRECT ANSWER - a legal representative of an insurance
company; the classification of producers usually includes agents and brokers' agents
are the agents of the insurer
Applicant of proposed insured - CORRECT ANSWER - a person applying for insurance
Beneficiary - CORRECT ANSWER - a person who receives the benefits of an insurance
policy
Broker - CORRECT ANSWER - an insurance producer who is not appointed by an
insurance company and who represents the client
Death benefits - CORRECT ANSWER - the amount paid upon death of the insured in a
life insurance policy
Estate - CORRECT ANSWER - a person's net worth
Insurance policy - CORRECT ANSWER - a contact between a policyowner (and/or
insured) and an insurance company which agrees to pay insured or the beneficiary for
loss caused by specific events.
Insured - CORRECT ANSWER - a person covered by the insurance policy; may or may
not be the policyowner
insurer (principal) - CORRECT ANSWER - the company who issues an insurance policy
Lapse - CORRECT ANSWER - policy termination due to nonpayment of premium
Life insurance - CORRECT ANSWER - coverage on human lives
Policyowner - CORRECT ANSWER - the person entitled to exercise the rights and
privileges in the policy
Premium - CORRECT ANSWER - the money paid to the insurance company for the
insurance policy
Underwriting - CORRECT ANSWER - is the risk selection and classification process
Attained age - CORRECT ANSWER - the insured's age at the time the policy is issued
or renewed
cash value - CORRECT ANSWER - a policy's saving element or living benefit
Face amount - CORRECT ANSWER - the amount of benefits stated in the life
insurance policy
QUESTIONS WITH CORRECT ANSWERS
Insurance
(General concept) - CORRECT ANSWER - - transfers the risk of loss from an individual
to an insurer
- based on the principle of indemnity
- based on the principle of risk (risk pooling)
insurable interest
(General Concept) - CORRECT ANSWER - - must exist at the time of the application
- insuring one's own life, family member, or a business partner
Solicitation and sales presentation - CORRECT ANSWER - - illustration- presentation of
nonguaranteed elements
- buyer's guide is generic information about life polices which must be provided at the
time of application
- policy summary is a description of features and benefits of the policy being issued and
must be provided when the policy is delivered.
Underwriting (Field underwriting (by agent) - CORRECT ANSWER - - application
completed and signed
- agent's report: agent's observation about the application that can assist in underwriting
-premiums with application and conditional receipts
underwriting ( company underwriting) - CORRECT ANSWER - - multiple sources of
information: applications, consumer reports, MIB (Medical Information Burea)
- Risk Classification: 3 types of risk : standard, substandard, preferred
Underwriting (Federal Regulation) - CORRECT ANSWER - - Fair Credit Reporting Act:
protect consumers against circulations of inaccurate or obsolete information
- USE PATRIOT Act/ Anti-money Laundering and Suspicious Activity Reports Rules
Premium Determination - CORRECT ANSWER - - 3 key Factors for life insurance:
mortality, interest, and expense
- Mode: the more frequently premium is paid, the higher the premium
Policy Issue and Delivery - CORRECT ANSWER - Effective date of coverage - if the
premium is not paid with the application, the agent must obtain the premium and a
statement of continued good health at the time of the policy delivery
, Agent/ Producer - CORRECT ANSWER - a legal representative of an insurance
company; the classification of producers usually includes agents and brokers' agents
are the agents of the insurer
Applicant of proposed insured - CORRECT ANSWER - a person applying for insurance
Beneficiary - CORRECT ANSWER - a person who receives the benefits of an insurance
policy
Broker - CORRECT ANSWER - an insurance producer who is not appointed by an
insurance company and who represents the client
Death benefits - CORRECT ANSWER - the amount paid upon death of the insured in a
life insurance policy
Estate - CORRECT ANSWER - a person's net worth
Insurance policy - CORRECT ANSWER - a contact between a policyowner (and/or
insured) and an insurance company which agrees to pay insured or the beneficiary for
loss caused by specific events.
Insured - CORRECT ANSWER - a person covered by the insurance policy; may or may
not be the policyowner
insurer (principal) - CORRECT ANSWER - the company who issues an insurance policy
Lapse - CORRECT ANSWER - policy termination due to nonpayment of premium
Life insurance - CORRECT ANSWER - coverage on human lives
Policyowner - CORRECT ANSWER - the person entitled to exercise the rights and
privileges in the policy
Premium - CORRECT ANSWER - the money paid to the insurance company for the
insurance policy
Underwriting - CORRECT ANSWER - is the risk selection and classification process
Attained age - CORRECT ANSWER - the insured's age at the time the policy is issued
or renewed
cash value - CORRECT ANSWER - a policy's saving element or living benefit
Face amount - CORRECT ANSWER - the amount of benefits stated in the life
insurance policy
