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ARIZONA LIFE INSURANCE EXAM QUESTIONS WITH GUARANTEED ACCURATE ANSWERS
Typology: Exams
1 / 17
Beneficiary - correct answer ✔✔A person who receives the benefits of an insurance policy Death Benefit - correct answer ✔✔The amount paid upon the death of the insured in a life insurance policy Cash Value - correct answer ✔✔Equity amount accumulated in permanent life insurance Estate - correct answer ✔✔A person's net worth Illustrations - correct answer ✔✔Presentation or depiction of nonguaranteed elements of a life insurance policy Life Insurance - correct answer ✔✔Coverage on human lives Liquidation - correct answer ✔✔Selling assets in order to raise capital (such as using cash value for capital needs) Lump-Sum - correct answer ✔✔Payment of the entire benefit in one sum
Minor - correct answer ✔✔A person under legal age Solvency - correct answer ✔✔The ability to meet financial obligations (an insurance company maintains enough assets to pay claims) Survivor Protection - correct answer ✔✔Life insurance can provide the funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of the insured's death and this is called
Estate Conservation - correct answer ✔✔Life insurance proceeds may be used to pay inheritance taxes and federal estate taxes so that it is not necessary for the beneficiaries to sell off the assets which is
Estate Creation - correct answer ✔✔The insured will have an estate worth the amount of the life policy upon the first paid premium which is
Viatical Settlements - correct answer ✔✔____________________ allows someone living with a life-threatening condition to sell their existing life insurance policy and use the proceeds when they are most needed, before their death Viator - correct answer ✔✔The insured selling their life insurance in a viatical settlement
Viatical Settlement Provider - correct answer ✔✔A person, other than a viator, that enters into a viatical settlement contract (the person buying the life insurance policy) Viatical Producer - correct answer ✔✔A person who represents the viatical settlement provider Viatical Broker - correct answer ✔✔A person who represents the viator Life Settlement - correct answer ✔✔Any financial transaction in which the owner of a life insurance policy sells a policy that is no longer needed to a third party for some form of compensation, usually cash Uses of Life Insurance - correct answer ✔✔1. Survivor Protection
Needs Approach - correct answer ✔✔This approach is based on the predicted needs of a family after the premature death of the insured. It includes income, the amount of debt (including mortgage), investments, and other ongoing expenses. Lump-Sum Needs - correct answer ✔✔1. Costs associated with Death
Retirement Funds - correct answer ✔✔Using life insurance as a source of retirement income Bequests - correct answer ✔✔Leaving funds to the insured's church, school, or charity Social Security Income Blackout Period - correct answer ✔✔This is the time when the surviving spouse is younger than 60 and the surviving youngest child is older than 16 Retention of Capital Approach - correct answer ✔✔This approach offers enough insurance so that when added to other liquidated assets, there is enough to pay income benefits without jeopardizing the insured's principal asset (to avoid having to sell a home, for example) Industrial Insurance - correct answer ✔✔Life Insurance written on an individual basis. It is written in small amounts (less than 1000), premiums are payable monthly, and are collected by a representative of the insurance company, and has no medical examination (also known as Home Service Insurance) Ordinary Life Insurance - correct answer ✔✔Similar to Industrial Insurance, this life insurance is written on an individual basis. It has a larger face value, premiums can be paid annually, semiannually, quarterly, or monthly, and premiums are paid directly to the insurance company (also may require a physical examination to prove insurability)
Key Person Insurance - correct answer ✔✔Business Insurance that is bought on a key employee in order to fund replacing them, if need be. The business is the applicant, policyowner, premium payer, and the beneficiary. Employees must give permission for this coverage. Buy-Sell Funding - correct answer ✔✔A legal contract that determines what will be done with a business in the event that an owner dies or becomes disable. Types of Buy-Sell Funding - correct answer ✔✔1. Cross Purchase
Stock Redemption - correct answer ✔✔Buy-sell funding used when the corporation buys one policy on each shareholder Executive Bonus - correct answer ✔✔An arrangement where the employed offers to give the employee a wage increase in the amount of the premium on a new life insurance policy on the employee (the wage increase is tax deductible to the employer and income taxable to the employee) Insurable Interest - correct answer ✔✔To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss which is known as _________________ 15 - correct answer ✔✔Minimum age possible for minors to contract life and disability insurance on their own lives and the lives of their immediate family is __ Stranger-Oriented Life Insurance - correct answer ✔✔Life Insurance arrangement in which a person with no relationship to the insured purchase a life insurance policy on the insured's life with the intent of selling the policy to an investor and profiting financially when the insured dies (Insurers take an aggressive legal stance against policies they suspect are of this type) Process of Issuing a Life Insurance Policy - correct answer ✔✔1. Solicitation and Sales Presentation
Life and Disability Insurance Guaranty Fund - correct answer ✔✔Protects the interests of the insureds and policyholders when insurers become insolvent, and helps detect and prevent insurance company impairments (established by the Department of Insurance) (there is a disability account, a life insurance account, and an annuity account) (cannot say a policy is guaranteed by the existence of this) Interest-Adjusted Net Cost Method - correct answer ✔✔Life Insurance Cost Comparison Method that considers the time value of money by applying an interest adjustment to yearly premiums and dividends Comparative Interest Rate Method - correct answer ✔✔Rate of return that must be earned on a 'side fund' in a buy term invest the different plan so that the value of the side fund will be equal to the surrender value of the higher premium policy at a designated point in time Life Insurance Surrender Cost Index - correct answer ✔✔The index that determines the policy's guaranteed cash surrender value available to the policyowner at the end of the 10th and 20th policy year Suitability - correct answer ✔✔An insurance producer may not recommend the purchase, sale, or exchange of a policy or annuity contract without the reasonable belief that the transaction is in the best interest of the insured which is called ___________.
Replacement - correct answer ✔✔Any transaction in which new life insurance or a new annuity is purchased and, as a result, the existing life insurance or annuity will be replaced through one of several ways Replacing Insurer - correct answer ✔✔Company that issues the new policy in a replacement Existing Insurer - correct answer ✔✔Company whose policy is being replaced in a replacement Duties of a Replacing Producer - correct answer ✔✔1. Present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer. A copy must be left with the applicant.
replacing insurers for at least 5 years and offer the insured information about their existing policy within 5 business days Underwriting - correct answer ✔✔The risk selection and the classification process, involving a careful analysis of many different factors to determine the acceptability of applicants for insurance Field Underwriter - correct answer ✔✔The agent who solicited the potential insured and helps complete the application Duties of Field Underwriter - correct answer ✔✔1. Proper solicitation of applicants
Application Part 2 - correct answer ✔✔The medical information part of the application including information of the insured's medical background, present health, and medical visits in recent years Agent's Report - correct answer ✔✔Provides the agent's personal observations concerning the proposed insured, it is not a part of the entire contract, but a part of the application Signature - correct answer ✔✔Both the agent and the proposed insured must provide their _________ on the application (if a minor is the insured, then their guardian will provide this) Changes - correct answer ✔✔If the agents wish to, they may make _________ to the application by crossing out the line (it must still be visible) and writing in the _______ and having the insured inital Premium Receipt - correct answer ✔✔The agents issues a _______________ upon collecting the first premium which will determine when coverage will be effective Conditional Receipt - correct answer ✔✔Used when the applicant submits a prepaid application, stating the coverage will be effective on the date of application of the date of the medical exam, which ever occurs last, as long as the applicant is found to be insurable at standard risk and the policy is approved as applied for
Unconditional Reciept - correct answer ✔✔Used most often with property and casualty insurance, covering begins immediately until the policy is issued (also known as binding) Notice of Information Practices - correct answer ✔✔Agents are required to disclose to a prospect the facts about information collection practices with the products that are proposing to sell, in the form of a
Company Underwriting - correct answer ✔✔The process of the insurance company reviewing the application and investigating other necessary information Attending Physician Statement - correct answer ✔✔A statement from the applicant's physician which the insurance company may request and must pay for Paramedical Exam - correct answer ✔✔A medical exam that includes blood work and a urine sample that is administered by a registered nurse or a paramedic, which the insurer must pay for Full Medical Exam - correct answer ✔✔Occurs for applicants requesting higher amounts of coverage, if the application raised additional questions, or if the applicant is beyond a certain age which is an exam that investigates all aspects of the applicant's health, which the insurer must pay for
Investigative Consumer Report - correct answer ✔✔An inspection report on the applicant from an independent investigating firm or credit agency, which covers financial and moral information. The individual being investigated must be informed and have the option to request an interview instead. Medical Information Bureau - correct answer ✔✔A membership corporation owned by member insurance companies. It is a nonprofit trade organization which receives adverse medical information from insurance companies and maintains confidential medical impairment information of individuals. Disclosure Authorization Notice - correct answer ✔✔Provided to the applicant or insured when the insurer plans to seek and use information from investigators Unfair Discrimination - correct answer ✔✔Discriminating in policy rates based solely on: -Age or Gender -Physical or Mental Impairment -Blindness or Partial blindness -Genetic Characteristics Is known as ______________________. Rating Classification - correct answer ✔✔The insured is placed into a _______________________ that their premiums and coverage is based off of
Preferred - correct answer ✔✔The highest risk classification for individuals who meet certain requirements and qualify for lower premiums due to superior physical condition Standard - correct answer ✔✔The risk classification for non-smoking adults, they are the average risk Substandard - correct answer ✔✔The risk classification for smoking adults, or with poor physical condition, family history of disease, occupation, or dangerous habits, may have a higher premium Declined - correct answer ✔✔The risk classification where applicants are uninsurable due to: -No insurable interest -Medically unacceptable -Potential for loss is so great -Insurance is prohibited by public policy Factors in Premium Determination - correct answer ✔✔-Mortality -Interest -Expense
Mortality - correct answer ✔✔Ratio of the number of deaths in a specific population over a certain amount of time versus the number of living people in that population Mortality Table - correct answer ✔✔Tool used by insurers that indicates the number of individuals within a specified group of individuals starting at a certain age, who are expected to be alive at a succeeding age Interest - correct answer ✔✔This is earned on premiums by insurance companies and affects the premium determination Expense - correct answer ✔✔Also known as the loading charge, this affects premium rates. This is the costs of the insurance company. Net Single Premium - correct answer ✔✔Includes the mortality and interest components necessary to keep the policy in force until maturity. Mortality-Interest=__________________ Gross Annual Premium - correct answer ✔✔The one year cost for mortality, plus the expense, minus the interest Net Premium+Expense=____________________ Frequency - correct answer ✔✔How often the policyowner pays the premium, affects the price of the premium Higher _________ = Higher Premium
Delivery Receipt - correct answer ✔✔Document verifying when an agent hand delivers an individual policy or annuity to the policy owner Policy Review - correct answer ✔✔The agent delivering the policy and answering any questions or concerns is the ____________ Statement of Good Health - correct answer ✔✔Signed by the insured, this verifies that the insured has not suffered injury of illness since the application date if the initial premium was submitted then