TN L&H Test Overview
What is the primary difference between a stock life insurance company and a mutual insurance company?
A stock company is owned by its stockholders while a mutual company is owned by policyowners.
What type of medical expense insurance pays for medical expenses incurred while in a hospital?
Basic Hospital and Surgical Policies
What type of insurance provides funds to a partnership or small corporation to purchase the business interests of a totally disabled partner or stockholder?
Buy and Sell Agreement
What is the most liberal definition of the circumstances under which the accidental death rider benefit will be paid?
Death by accidental injury.
What is the traditional definition of total disability in most policies?
Inability to perform the duties of any occupation for which one is reasonably suited by education, training, or experience.
Which of the following persons represents an insurance company when selling life insurance?
Insurance Agent
What is the advantage of a stock redemption plan in a closely-held corporation?
It guarantees that the heirs of a deceased shareholder receive the fair market value of the stock.
What is the mortality factor used for when calculating insurance premiums?
It is used to determine the insurance age of the insured.
As a nation, Americans are saving ______ on credit.
Less and buying more.
Which source of information provides medical facts about applicants for life insurance and is used as an alert signal during underwriting?
Medical Information Bureau
What does the COMDEX rating indicate?
The percentage of companies rated lower than the company in question.
What happens to the premium under the level premium plan as the insured ages?
The premium increases.
In the case of the Life Income settlement option, what happens if the beneficiary dies before the end of a specified period of guaranteed payments?
The remaining payments are given to the beneficiary's estate.
What happens when a mutual life insurance company realizes some efficiency in its operation which reduces expenses?
The savings are passed to the policyowner in the form of policy dividends.
What does the elimination period refer to in disability insurance?
The time period after total disability begins when benefits are retroactively paid.
What is the purpose of the modified endowment contract (MEC)?
To limit the tax benefits of life insurance policies.
What is the purpose of persistency in insurance policies?
To measure the number of policies that stay in force from inception to death.
What is the purpose of adding a term rider to a whole life or modified premium whole life policy?
To pay all premiums beyond the premium offset point.
What is the purpose of the probationary period provision in disability insurance?
To protect the company from pre-existing sicknesses.
What is the primary purpose of life insurance?
To provide financial security for individuals, families, and businesses.
Premium offset, the most popular method of funding permanent life insurance programs in use today, is formerly known as:
Vanishing premium
Life expectancy is the age at which ______ are living
half the people of a particular age group are dead and half.
Which type of insurance policy offers enhanced premium and death benefit flexibility?
Universal Life Insurance
What is the key factor used to determine insurance premiums?
Probability based on a predictable pattern of death.
Ordinary _____ is also known as continuous premium because premiums are based on the assumption that they will be paid until the insured person's death.
whole life insurance