life and health insurance chapter exams

For insurance purposes, similar objects which are exposed to the same group of perils are referred to as…

homongeneous exposure units

Which one of these is NOT considered to be an element of an insurable risk

speculative risk

Risk_________ is the process of analyzing exposuress that create risk and designing programs to handle them

management

Which term describes the elimination of a hazard

risk avoidance

What type of risk involves the potential for loss with no possibility for gain?

Pure risk

Which of the following describes the act of insuring a risk against possible loss

risk transfer

A hold-harmless clause is an example of risk

transfers

ABC company is attempting to minimize the severity of potential losses within its company. The company is engaged in risk

reduction

According to the law of large numbers, how would losses be affected if the numbers of similar insured units increases?

predictability of losses will be improved

an insurable risk requires

the chance of loss be calculable

When must insurable interest be present in order for a life insurance policy to be valid

when the application is made

Which of these is NOT considered to be an element of an insurance contract?

negotiating

An insurance contract is considered a policy of adhesion. This means that the contract can only be modified by ______.

the insurer

If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?

insured

Stranger Oriented Life insurance (STOLI) has been found to be in a violation of which of the following contractual elements?

legal purposes (insurable interest)

Taking receipt of premiums and holding them for the insurance company is an example of

fiduciary responsibility

All of the following are considered to be typical characteristics describing the nature of an insurance contract EXCEPT

Bilateral

E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as a primary beneficiary. E and F eventually terminates their business and four months later E dies. Although E was married with three children at the time of his death, the primary beneficiary is still F. However, an insurable interest no longer exist. Where will the proceeds from E’s insurance policy be directed to?

F’s

What is the consideration given by an insurer in the consideration clause of a life policy?

Promise to pay deaths benefit to a named beneficiary

What type of insurance offers permanent life coverage with premiums that are payable for life?

whole life

What type of life insurance are credit policies issued as ?

term

When a life insurance policy exceeds certain IRS table values, the result would create which of the following?

Modified Endowment Contract (MEC)

G purchased a Family Income policy at age 40. The policy has a 20-year rider period. If G were to die at age 50, how long would G’s family receive an income?

10 years

The cash value in a(n) ________ life policy may fluctuate to reflect changing assumptions regarding mortality cost, interest and expense factors.

universal

K, age 45 and his wife age 43, have three children. They purchase a Family Policy that covers K’s wife to age 65. All of these situations will pay a death benefits EXCEPT

K’s wife dies at age 66

The most important factors to consider when determining whether to convert term insurance at the insured’s attained age or the insured’s original age is:

the cost

P is looking to purchased a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end that 20 years period. What type of policy should P purchase?

Family Maintenance policy

All of these statements about Equity indexed life insurance are correct EXCEPT

The premium can be lowered or raised, based on investment performance

Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?

Variable life

What kind of life policy either pays the face values upons the death of the insured or when the insured reaches age 100?

whole life

An architecture firm would stand to lose a lot of money if the event of the death of its project manager. Which type of policy should the firm purchase on its project manager?

key- person insurance

P owns a $25,000 life policy that pays the face amount to him if he lives to age 70 or to his beneficiary if he dies before age 70. What kind of policy does P own?

Endowment at age 70

S is covered by a whole life policy. which insurance product can cover his children?

child term rider

what kind of premium does a Whole Life policy have?

level

Which of these of life insurance allows the policyowner to have level premium and to also choose from a selection of investment options?

variable life

Stranger Originated Life Insurance (STORI) has been found to be in violation of which of the following contractual elements?

legal purpose (insurable interest)

Which of the following types of policies pays a benefit if the insured goes blind?

AD&D

Term life policies that have the ability to be converted to permanent coverage may do so during a specific time period. This conversion period

varies according to the contract

Which of these needs is satisfied by the Adjustable Life insurance

insured’s needs for flexible premiums