Insurance things

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy

$50,000

An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay

50% tax on the amount not distributed as required

Speculative Risk

A chance of loss, no loss, or gain. Example is gambling which is not insurable

Morale Hazard

A condition of carelessness or indifference that increases the frequency or severity of loss.

Straight Life policy has what type of premium

A level annual premium for the life of the insured

Insured

A person covered by an insurance policy

Who is a third-party owner?

A policyowner who is not the insured

The term "illustration" in a life insurance policy refers to

A presentation of nonguaranteed elements of a policy.

Warrnty

A statement considered to be guaranteed to be true and become part of a contract

insurance

A transfer of risk of loss from an individual or a business entity to an insurance company which in turn spread the cost of unexpected losses to many individuals

Variable universal life insurance

A variable universal life insurance policy combines a flexible premium with an investment component that allows for potentially great returns.

Factors considered in determining rates

Age medical history occupation sex

The minimum interest rate on an equity indexed annuity is often based on

An index like Standard & Poor's 500

All of the following are examples of third-party ownership of a life insurance policy EXCEPT

An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.

Cash option: allows an insurer to send a policyholder an annual, nontaxable dividend check.

An insured receives an annual life insurance dividend check. What term best describes this arrangement

The laws must be definite

And measurable

Which of the following is a short-term annuity that limits the amounts paid to a certain fixed period or until a certain fixed amount is liquidated?

Annuity certain

Which concept is associated with "exclusion ratio"

Annuity payments

peril

Are the causes of loss insured against an insurance policy

All of the following are true regarding a qualified annuity EXCEPT

At distribution, all amounts received by the employee are tax free.

Which of the following is a feature of a variable annuity

Benefit payment amounts are not guaranteed

If found material for underwriting, a misrepresentation

Can void a contract

To legally transact insurance in this state, an insurer must obtain which of the following

Certificate Authority

The loss must be due to

Chance - accidental

hazard

Conditions or situations that increase the probability of an insured loss occurring hazards are classified as physical hazards moral hazards or a morale hazard conditions such as lifestyle and existing hills or activities such as scuba diving are hazardous and may increase the chance of a loss occurring

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?

Corporations are never legal annuitants.

Which of the following is NOT fundable by annuities

Death benefits

An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation

Decreasing term

Adverse Selection

Ensuring of risks that are more prone to losses than the average risk

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount

Equal to the original policy for as long as the cash values will purchase.

Which of the following is true regarding a policy with a face value less than $10,000?

If it's returned during the free look period, the agreement will be void.

What type of insurance would be used for a Return of Premium rider

Increasing Term

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost

Indemnity

Protection against adverse selection

Insurance companies have an option to refuse or restrict coverage for bad risk or charge them a higher rate for insurance coverage

CIC 22

Insurance is a contract whereby one under takes to indemnify another against loss damage or liability arising from a contingent or unknown event

Insured over 60 have the right to

Insureds have a right to cancel an individual life policy for a full refund within 30 days of policy delivery

Casualty Insurance

Insurers against the loss and or damage of property and resulting liabilities

Property Insurance

Insures against the loss of physical property or the loss of its income producing abilities

health insurance

Insures against the medical expenses and or loss of income caused by the insured sickness or accidental injury

Mode of Premium Payment

Is defined as the frequency and the amount of the premium payment.

Why is an equity indexed annuity considered to be a fixed annuity

It has a guaranteed minimum interest rate.

Which of the following statements best describes the effect the Accelerated Benefit provision would have on the benefits paid to the beneficiary

It will decrease the benefits paid to the beneficiary.

An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?

It will increase because the insured will be 5 years older than when the policy was originally purchased.

Person

Legal entity which acts on behalf of it self excepting legal and civil responsibility for the actions it performs and making contracts in its own name

Risk retention groups are prohibited from engaging in all of the following types of insurance, EXCEPT

Liability. Risk retention groups may only engage in the activity of assuming and spreading all or a portion of the liability exposure of its members.

Law of large numbers

Looks at large group of similar risk makes conclusion on pass losses. Allows for insurance company to have general idea for time of death and set premiums accordingly

Reciprocity

Mutual interchange of rights and privileges

Qualified long-term care policies covering home care must provide benefits if the insured is impaired in at least two of the six activities of daily living (ADL). The term "impaired" means

Needs substantial hands on or standby assistance ADLs

Which of the following will be included in a policy summary

Premium amounts and surrender values

What describes a situation when poor risks are balanced with preferred risks, and average risks are in the middle

Profitable distribution of exposures

In the event of a loss, business overhead insurance will pay for

Rent

Broker

Represents client

In case of a loss the indemnity provision in insurance policies

Restores an insured person to the same financial state as before the loss

Adverse selection is a concept best described as

Risks with higher probability of loss seeking insurance more often than other risks

Pure Risk

Situations that can only result in a loss or no change there is no opportunity for financial gain. Pure risk is the only type of risk that insurance companies are willing to accept

The California Insurance Code is

Statutes established by the State Legislature.

Moral Hazard

Tendencies towards increased risk. Moral hazard involves evaluating the character and reputation of the proposed insured moral hazard to refer to those applicants who may lie on an application for insurance or in the past have submitted fraudulent claims against and ensure

Insurance is

The legal agreement or contract whereby two parties involved agreed to the limits of the indemnification the circumstances under which it will occur and what things of value will be exchanged by the parties to the contract

The importance of a misrepresentation is determined by

The materiality of a given concealment

Exposure

Unit of measure used to determine rates changed for insurance coverage

Which of the following products requires a securities license?

Variable annuity

In forming an insurance contract, when does acceptance usually occur

When an insurer's underwriter approves coverage

Agent/Producer

a legal representative of an insurance company

beneficiary

a person who receives something good from someone else such as an inheritance

Premium

an amount to be paid for an insurance policy.

Insurer

an insurance company

What is described as the termination of a plan of insurance between the insurer and the entire group of employees

discontinuance

Entire Contract

he policy, together with the attached application, constitutes the entire contract. This provision limits the use of evidence other than the contract and the attached application in a test of the contract's validity. This is a mandatory provision in life insurance.

Waiver of Premium

if you are disabled, after 90 days, the premium is waved - life insurance its 6 months

life insurance

insurance paid to named beneficiaries when the insured person dies

Exclusion Ratio

investment in the contract/expected return

Attempting to determine how much insurance a family would require based upon their financial objectives is known as

needs approach

The price of insurance for each exposure unit is known as

rate

Policy owner

the person entitled to exercise the rights and privileges in the policy