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California Life Insurance Exam parts 1-3
California Life Insurance Practice Exam 1
Which statement about life insurance code and ethics is not true?
-Acts of fair and unfair discrimination are prohibited
which statement best describes “agreement” as it relates to contracts?
-One party accepts the exact terms of the other party's offer
All of the following needs to be included on an application for life insurance except
-Disability income insurance
An insurer invests the cash value of a fixed annuity in which of the following assets?
-General account
Which of the following riders would provide for an insured to increase the face amount of their life insurance policy without proof of insurability?
-A guaranteed insurability/ future purchase option
In a group life policy with a death benefit of more than $50,000
-Premium cost for insurance above $50,000 is taxable as income to the employee
A partial payment of proceeds to cove final expenses is paid to someone not designated as a beneficiary but acting in a legal or fiduciary capacity this is provided in which provision?
-Facility of payment
A life settlement broker
-Negotiates life settlement contracts between the owner and providers
In order to be financially solvent an insurer must accomplish all of the following except
-Contribute a specific amount of capital reserves to the state
The provision that protects the proceeds of a life-insurance policy from attachment by the beneficiaries creditors after the insurance death is known as the:
-Spendthrift (trust) Clause
The Roth and traditional IRAs have some similarities which of the following is not true
-Both are tax-deductible to the investor
How does the incontestability Clause benefit the insured
-It keeps the policy from being cancelled if after two years it is discovered that there was an error, concealment , or misrepresentation by the policy owner.
The comissioner can deny an applicant for a license after a hearing:
-If the applicant has permitted someone in their employment to violate the California Insurance Code
In the insurance planning processes the blackout period is:
-The period of time after the youngest child reaches 16, but before the widow reaches 60, in which the surviving spouse receives no Social Security benefits
The following statements are true about participating in non-participating policies except:
-Non participating policies issued evidence to policy owners.
According to the CIC life only agents must keep records of their transactions for?
5 years
Per the code, the best definitions of “shall” and “may” are
-Mandatory and permissive
Pete, who is 35 years old, has a life insurance policy with a death benefit of $150,000. At the age of 65 the cash value of his policy will be $150,000. What policy does he have?
-An endowment to the age of 65
While collecting underwriting information , certain rules must be followed. Which of the following is incorrect?
-Post-claims underwriting is a valid and necessary means of determining the insurability of a potential applicant.
Which insurance is known for having a level premium with a fixed rate of return resulting in guaranteed cash
Value?
-Whole life
In contrasting stock insurers with mutual insurers, which statement is not false?
-Stock insurers are owned by the shareholders, and issue non-participating policies
A client has purchased an annuity with an annual bonus she received at the end of last year. She has requested annual benefit payments to start at the end of this year. What type of annuity did she purchase?
-Single premium immediate annuity.
When a client is declined after submitting a prepaid application for life insurance
-The insurance company must refund the entire premium paid
Which best describes industrial insurance?
-$2,000 or less in coverage and premiums collected by agent
Which of the following statements is false in regard to a Life Paid-up at -65 whole life policy?
-The policy will endow at age 65
For an insurance contract utmost good faith means?
-Each party relies upon the truthfulness of the other
Which of the following are characteristics of renewable term
-Allows the policy owner the opportunity to renew the policy at the end of term, without evidence of insurability. The premium will increase
Which of the following statements is not included in the entire contract clause?
-Insurer agrees to provide life insurance protection for the named insured which will be paid to a designated beneficiary when proof of death is received by the insurer.
Which of the following transactions would most likely be declined due to lack of insurable interest?
-An employee insures their employer in the fear of losing their job.
All of the following describe differences between binding receipts and conditional receipts except:
-No claim is paid with either receipt until a policy is issued
In life insurance beneficiary succession is the method used to determine who will receive death proceeds. If the primary beneficiary is not living upon the death of the insured who will receive the payment?
-Contingent beneficiary
How does the IRS classify the two different types of retirement accounts?
-Qualified and non-qualified
Mrs. Anderson need to invest the proceeds from her late husband's life insurance. She invests a portion of the money into an annuity. Since she is 62, and is still working, she decides to purchase a single premium deferred annuity. She won't need an incom
-She has a 30-day free look period in case she changes her mind.
Which of the following are common provisions found within many life insurance policies?
-Reinstatement, entire contract, incontestability,
Sam has a $200,000 convertible life insurance policy. If he chooses, he can
-Convert to a whole life policy for the same face amount without proof of insurability.
Which pair activities of daily living ADL's)
-Mobility and bathing
For a flexible premium deferred annuity, the time during which the owner makes premium payments and the time before benefit payments begin is known as the
-Accumulation period
Which of the following becomes part of the contract, is guaranteed to be true and if untrue may be grounds for rescinding the policy
-Warranty
Alient's flexible premium is invested into a separate account. What type of insurance product did he purchase
-A variable universal life
Starting from lowest to highest, rank the initial premium paid by the client for these
insurance policies below
-A modified whole life, ordinary whole life, single premium whole life
A policy pays the face amount if the insured dies before a specified date, or lives to that specified date. This best describe
-An endowment policy
Which action by an insurer, or its representatives, is not considered an unfair claims violation
-An agent advises a claimant to obtain the services of an attorney I
A client has a history of DUIs. To his insurer they see him as_____________
-Morale
Rank from lowest to highest, the amount of monthly income that would result from the following annuity settlement options
- A life with refund option, life with 10 years certain, straight life
The person who will receive the benefit of an annuity and whose life the payout is based upon when the contract is purchased is the
-Annuitant
under which life settlement option does the insurer retain the death benefit but pays the beneficiary the
earnings on the death benefit?
-Interest only option
which of the following is not a qualified 1035 exchange
-A variable annuity exchanged for a variable universal life policy
The future account value of the annuity Alex purchased is connected to the S&P 500 index what type of annuity did he purchase?
- Equity indexed annuity
Who submits a request for life insurance to a company?
-The applicant
all of the following statements about life insurance policy illustrations and the senior market are correct except
-Guaranteed elements must be emphasized in bold print
What non forfeiture option allows a policy owner to use the existing cash value to purchase a policy of the same face amount as the original policy but for a reduced amount of time?
-Extended term insurance
California rules for annuity cells require all agents to present a specific disclosure document in advance to any senior citizen who is not already a client whenever a sales appointment will be conducted in the person's home. how far in advance must the p
-At least 24 hours
In comparing the purchase of individual life insurance to acquiring group life, which statement is not true?
-Group insurance has a non-deductible premium while individual insurance has a tax-deductible premium to the payor
Which is a false statement? The California Insurance Commissioner is:
-Selected by the Governor as an appointee
The definition of mortality and morbidity:
-Odds of dying versus the odds of disability.
All of the following statements about assignments are no false except
-Assignments need not be filed with the insurer if notarized and filed in county records
Which of the following is not excluded from the California life and annuity replacement law
-Purchasing a new policy that will take the place of an existing policy.
Auniversal life policy may be surrendered for its cash value
-At any time
An insured has a terminal illness and needs to access one 1/3 of his death benefit to pay mounting medical expenses. Which rider would meet the insured's current needs
-Accelerated living benefit
In a non-contributory group policy
-100% of eligible employees must participate
which of the following is an incorrect statement about a client's privacy rights?
-A client does not have access to their MIB reports as it belongs to the members life insurers
An employee has lost access to their group term life insurance plan, but they are allowed to convert to a new plan. Which best describes this new plan?
-The new policy will be cash value. The employee pays all the premiums
Roger, who is 35 years old has a whole life insurance policy with a death benefit of $150,000. At the age of 65 he will no longer make premium payments. When will the cash value of his policy be $150,000
-100
A beneficiary decides to take the option that will the largest amount per payment, knowing after death no monies will be paid out to any descendants. The settlement option is
-Life income (straight life)
In disability insurance, the period of time between when the disability started and the commencement of benefits is the:
-Elimination period
Variable insurance and variable annuity products are regulated by
-SEC, FINRA, and DOI
Brian purchased a variable life policy and died 25 months after the issue date it is then discovered that Brian understated his age on the application what will the insurer do in regard to the payment of the death benefit to the beneficiary
-The death benefit will be reduced to reflect the age discrepancy
All of the following are characteristics of the social insurance program known as Social Security except:
-Full retirement ages is 65 for all persons born after 1937
At what age does Social Security Medicare program Part B start providing benefits?
-65
which qualified plan is characterized by having a non-deductible contribution and tax-free distribution?
-Roth IRA
Of the following which is not one of the three major loss exposures faced by insured ?
-Financial losses
A policy illustration may not include
-Vanishing premiums if the policy becomes paid up with non-guaranteed elements paying future premiums
The term aleatory is best defined by which of the following?
-Unequal exchange in value
After the insure passes away, it is discovered that the policy was rated based upon an incorrect age. The client lied about their age when filling out the application eight years earlier. What effect will this have on the benefit? -The proceeds payable wi
E and O coverage
-Protects an agent in the case of unintentional negligence
An agent who knowingly misrepresenting information for the purpose of inducing a client to elapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as:
-Twisting
Which of the following can be written as a group policy?
-Credit life
All of the following statements about a policy grace period are false except
-Grace periods are typically 31 days
Which of the following is considered ordinary insurance?
-Mortgage Redemption
A client has missed her premium payment on her cash value policy, and the grace period has also lapsed. The policy is still enforced because her insurer has been deducting the cost of the premium from her cash value . What provision allows this?
-Automatic premium loan
According to the code any person legally capable of making an insurance policy is considered
-An insurer
In insurance, the agents have authorization to represent the company. The producers may exercise this relationship through
-Express Authority, implied authority and apparent Authority
Gloria owns an annuity in which she has invested $5000 a year for 10 years. She is currently receiving $8.000 annually from her annuity. By the time all of the principal and interest is paid out Gloria will have been paying $100,000. How much of the annua
-$4,000
All of the following statements about policy provisions are true except
-Death during the grace period results in a full death benefit being paid
An agent follows the rules and terms of his agent contract. He is exercising his__________authority
-Express
Which type of insurer requires an attorney -in- fact overseen by an advisory committee of subscribers?
- Reciprocal insurer
which of the following is not an acceptable underwriting classification?
-declined.
When an applicant makes a material statement believed to be true to the best of their knowledge, the statement is considered to be a/and
-Representation
Under the cost of living adjustment writer, the policy
-Will only increase with the inflation rate there. There will be an additional premium charged, but no evidence of insurability is required.
All of these statements about life insurance settlement options are false, except:
- life income with ten years certain provides at least 120 months of payments
Candy owns a participating whole life policy and uses her policy dividends to buy more of the same type of coverage for herself candy has chosen the
-Paid-up Editions option
which of the following characteristics would not stop an insurance company from accepting an insurance risk? the item to be insured
-Is part of a large group of homogeneous exposure units
Concerning qualified plans which statement is False
-ESOP's invest in a portfolio of stocks elected by the employer
which of the following statements about the process of replacement is incorrect?
-Copies of any written illustration or comparisons used in the process of making the replacement do not need to be included with the submitted application
The following statements about survivorship life are true except
-The face amount is payable after the first death
what type of insurance would a person select as the most efficient method of paying the outstanding debt on their home in the event of death
-Mortgage redemption (decreasing term/mortgage protection)
In which type of policy does the insurer apply flexible premium to pay for the cost of insurance and expenses and then uses the remaining balance plus interest to build the cash value account?
-Universal life
The insured dies six months after the policy issue date. Upon death of the insured, it is determined that the applicant made a material misstatement on the application. What is the most likely course of action for the insurer
- Rescind the policy
Tommy Greene has a CLU certification. which of the following names would automatically approve for use as his agency as his agency's name
-None of the would ever be automatically approved
An applicant for an insurance license has had a previous application for a professional license denied for cost with in the last five years. The Insurance Commissioner will
- Deny the application without hearing
All of the following are true about key person insurance, except
-The death benefit is taxable to the business
Upon the death of a primary breadwinner who is fully insured under Social Security a dependent child is eligible to receive an income benefit until the age of
-18 or 19 if unmarried and a student in elementary or secondary school
Members of the MIB are required to report
- Medical conditions found during underwriting
Which of the following would not be considered a speculative risk?
-Any action that could do harm to your clients well-being such as reckless driving.
Any person to whom the Commissioner has issued a seizure order and who refuses to deliver any books records or assets of an insurer faces
-A misdemeanor punishable by fine up to $1,000 a year in jail or both.
How many hours of continuing education are required per renewal for a life only agent ?
- 24 hours, 4 of the hours must be in ethics
what is not likely to happen with the return of premium policy?
-The total premiums paid is returned to the insured when the policy is canceled
Which statement is an accurate description of life insurance policy dividends?
-They are not taxable and are not guaranteed.
All of the following statements about mutual insurance companies are correct except
-Policy dividends issued by mutual companies are guaranteed and not taxable
39:48
which statement is false concerning insurance company regulations
-An insurer suffering from an impairment of their minimum required paid-in capital is labeled solvent
All of the following statements about agents are true except
- Exclusive agents work for themselves
At age 72 mrs. Smith is considering applying for medi-cal so she can afford her medical bills. Today agent Charles is visiting her home and wanting to sell her an annuity product which of the following is true?
-Agent Charles cannot allow mrs. Smith to purchase an annuity if after the purchase, mrs. Smit wouldn't qualify for medical
Premiums paid into a variable annuity purchase which of the following?
-Accumulation units
A client receives the lump sum inheritance he'd like to use some of the money to create a lifetime income since he'll be retiring soon he purchases an annuity and wishes to receive payments beginning in two months. What did he buy?
-Single premium immediate annuity
Your policy contains the guaranteed insurability riter. when can you purchase additional insurance on you policy
-Without evidence of insurability at specified ages or dates
Which statement below is least correct regarding the type of insurance that fits best with the applicant’s needs?
-Aconvertible term can be purchased by applicants who may require a larger death benefit in the future.
The following are dividend options except:
-Interest only option
Under the terms of the 10-day free look period a claim will be paid
-If the premium has been paid and the policy has not been returned
To authorize the release of an attending physicians report, the applicants must
-Sign aconsent form
When a policy continues because of a payer benefit clause, it means
-The owner of the policy is disabled or has died
What is the minimum number of members required for group life insurance?
-10
The applicant works two different jobs the underwriter will rate him according to which job
-The job that is most hazardous
Which of the following cannot be used in a policy illustration if non-guaranteed elements are intended to pay future premiums
-Vanishing premiums
Which statement about reinstatement is false?
-The reinstated policy is incontestable if the first time it was in force it already passed the two-year mark
Any person who misappropriates fiduciary funds for personal use is guilty of a
-Theft
Agent Daren offers life insurance for no cost to people buying property in a local development. When the Commissioner investigates his actions, which of the following is not a likely consequence
-Darren will be charged with a felony and/or up to ten years in jail
what is the usual federal income tax treatment of individual life insurance
-Non deductibility of premiums, non-taxable death benefits
According to the California Insurance Code, what information is the agent required to include on their business card?
-All of these
A policy owner who cannot borrow the equity, change beneficiaries, assign a policy or stop paying premiums without the beneficiary's written consent has designated the beneficiary as a(n)
-Irrevocable beneficiary every
admitted insurer in California must maintain a unit, or department, responsible for investigating which of the following ?
-Possible fraudulent claims by the insured
The entire contract can include many components, which of the following cannot be a part of the entire contract -Any document referenced by the policy
A life-only agent issues a binding receipt to his client since the client did include a check for the initial premium with his completed application . Which is true?
-The agent faces potential suspension or revocation of their license
Which party has the legal authority to name or change the beneficiary?
-Policy owner
According to the California DOI, an insurer whose Articles of Incorporation are registered in Oslo, Norway, is
considered
-An alien insurer
Profit-sharing plans
-Allow for a contribution of a specified proportion of company profits
A 45 year old investor has been laid off from his job. In order to pay bills he takes a premature distribution from his traditional IRA account. what tax penalties, if any, will he face?
-He will be required to pay a 10% tax penalty on the amount withdrawn
Bob and Neil are partners in a law firm together. if one of them were to pass away they want to make sure that their surviving family will receive a fair value for their stake in the business. what life insurance arrangement would be most suited for trans
-Buy-sell agreement
In a seven-year vesting schedule what percentage of employer contributions is vested after seven years
-100%
Which of the following statements about a resident life only-agent licensing is incorrect
-A licensee has 30 days to update a change in address
Which of the following is not a personal use of life insurance?
- A client buys insurance to fund a buy sell agreement
which statement is not true about insurance sales?
-Brokers represent insurers in negotiating coverage with various insurance
Situation where the risk is increased by slippery floors a habit of lying or reckless drunk driving are best described by which of the following
-A hazard
which rider pays a multiple of the original phase amount
-Accidental death benefit
Term insurance is best described by which of the following
-Provides temporary protection, builds no cash value, is less expensive, and may be renewed
An applicant has the right to know that the insurance company will collect certain personal information about their credit, character and reputation. The insurer may gain such information from
-A consumer report
Which of the following is most likely to have a TSA
-School district employee
After 12 years, the policy owner decides she no longer needs the large death benefit on her whole life policy. she calls you, her agent, and you tell her she can use the reduced-paid up non forfeiture option. which of the following is not true about the n
-The new policy will expire in 10 years
Ashley, the policy owner and insured, named Wendell as primary beneficiary and Barbara as contingent beneficiary. Just 6 weeks prior to Ashley's death Wendell and Barbara are killed in a common disaster. The insurance proceeds will be received by whom
-Ashley's estate
Of the following which best describes the difference between life and shuriken and annuities
-Life insurance creates an instant estate, while annuities liquidate a sum of money
The beneficiary chooses to receive the policy proceeds in the form of monthly income at the rate of $3,000 per month, until principal and interest are exhausted. what settlement option did the beneficiary select
-A fixed amount
California Life Insurance Practice Exam 2

California life insurance quiz 2
which of the following best describes the concept of risk
-A possibility of a loss and uncertainty about whether it will occur
Which of the following characterizes a speculative risk?
-A possibility for loss or gain
Causes of loss are also known as
-Perils
If an insurance company doing business in your state has been incorporated under the laws of another state within the United States, it would be considered to be.
-A foreign insurer.
According to the law of large numbers if large numbers of similar risks are combined in a group, future losses become more
-Predictable
which of the following types of insurance company is referred to as a participating Company
-A mutual insurer
submitting premium payments promptly to the insurer is part of an agent's
-Fiduciary responsibilities
A failure to disclose known facts would be an act of
-Concealment
which of the following is consumer publication that describes the type of coverage being offered and provides
general information to help an applicant, compare different policies
-Buyer's guide
The human value approach to determining insurance needs focus is mostly on
-An individual's future stream of income
A social security black out period is the period of time
-After survivor benefits for the youngest child end and before the surviving spouse becomes eligible for Social Security retirement benefits.
Which of the following is provided by the Fair Credit Reporting Act D
-The requirement that an applicant for insurance be informed that a consumer report may be requested regarding his application
Which of the following is CORRECT regarding the existence of insurable interest in a life or health insurance policy?
-Insurable interest must exist at the time of application
All of the following statements are correct regarding the completion of a life or health insurance application except
-The initial premium must be submitted to the insurer with the completed application
which of the following most accurately defines a representation?
-A statement that is true to the best knowledge of the applicant
All of the following are primary sources of information available to a life for health insurance companie’s underwriting department concerning Insurance applicants accept
-Statement of good health
Mr. James burrows funds form a bank to make improvements to his home. The bank suggests that he purchase life insurance that will pay off his loan amount in the event of his premature death. which of the following would best help him achieve this objectiv
-Decreasing term
which of the following statements regarding variable life universal insurance is correct
-It offers a combination of investment options and a guaranteed death benefit
The contract which at issue provides the maximum amount of insurance protection at the lowest outlay of funds best describes
-Term insurance
Credit life insurance protects
-The lender
which of the following is NOT one of the characteristics of a renewable term insurance policy
-Premiums for a renewal policy cannot be increased
Which of the following characterizes a limited payment whole life insurance policy
-It becomes a fully paid-up policy prior to maturity
At what age of the insured with a whole life insurance policy reach maturity
- At age 100
-which type of policy permits the policy owner to request changes in the face amount, premium payments, and/or type of protection during the policy term
-Adjustable life insurance
How many months is the typical waiting period connected with the waiver of premium provision found in a life insurance contract
-see six months
The payor clause in a life insurance policy states that premiums will be
-Waved until the insure child reaches the age of majority
John applies for a policy on September 1. it is received by the under whiting Department on September 5th, approved on September 7, and delivered to John on September 9th. The 10-day free look period would expire on -September 19th
With life insurance the form of assignment where all rights are transferred to another person is knows as
-Absolute assignment
Gladis is the beneficiary of her husband Ben's life insurance policy. When Gladys dies, Ben neglects to name another Beneficiary. At Ben's five years later, the proceeds of his insurance policy will be paid to
-Ben's estate
Ed has $50,000 life policy with cash value of $10,000 a $2,000 loan is outstanding ED finds he can no longer make premium payments on this policy. if Ed chooses the cash surrender value option he will receive
-8,000
For a life insurance policy, the least expensive mode of premium is
-Annual
All the following are types of non forfeiture options accept
-Fixed period
A customer funds an annuity with a lump sum and wants to receive income 3 years from now. She funded
-A deferred annuity
In which type of annuity contract is the interest rate tied to an index that is S & p500
-Equity indexed
When an investor purchases a variable annuity what does she receive in the separate account?
-Units
Mr. and Mrs. Jones are receiving a monthly annuity distribution of $1,000. if mr. Jones dies and mrs. Jones continues to receive the same amount, which payout option was selected
-Joint life
Which of the following types of annuities provides guaranteed unit amounts rather than guarnatee dollar amounts?
-Variable
All of the following are true about an annuity except
-The annuitant shows proof of insurability
Who receives the benefit form an annuity
-Annuitant
An immediate annuity must be purchased with which of the following premiums
-A single
In a contributory plan, what percentage of employees must participate in the plan before a policy will be issued? -75%
A group life insurance plan where employer pays the entire cost is known as
-A non-contributory plan
Which of the following affects the deductibility of contributions made to a traditional IRA
-Whether or not the IRA owner participates in a qualified employer
Keogh plans are designed for and available to
-A self-employed professional
all of the following statements regarding Roth IRAs are true except
-The mandate distributions no later than age 70 1/2
Which of the following statements concerning split-dollar life insurance is correct
-It is useful to the key employee who needs protection but has insufficient funds to meet his needs
Premiums paid on an individual life insurance policy are generally
-Not deductible
All of the following types of plans are reserved for small employers except
-401(k)s
Misrepresenting an insurance policy for the purpose of inducing a policyholder to lapse, forfeits, or surrender existing insurance is an illegal practice
-Twisting
If an act or practice appears to be unfair or deceptive, but there is no specific California citation prohibiting it, the commissioner
-May call for a hearing in the matter
What is the maximum obligation of the life and health insurance Guarantee Funds for all the benefits payable upon any one life
-250,000
California Life Insurance Practice Exam 3

probability is the size of what
-Chance
Must allow application of the “law of large numbers” to predict losses
-Common to a sufficiently large pool
The concept that having a large pool of similar risks enables predictability of losses on a statistical basis. The larger and more similar the group, the more predictability there is. The idea that the greater the number of similar individual risks are co
-Law of large numbers
Hobby of racing cars is an example of a morale hazard
-Moral hazard
Anything that can increase risk or the chance of a loss; a factor that creates the circumstances for a peril
-Hazard
what is the type of risks that is insurable
-Pure risk
Concerning the concept of risk the size of the loss is the_____________
-Exposure
Concerning the annuity the risk is that the individual will die
-Live too long
What are the two types of exposure to loss
-Pure risk and speculative risk
Halon fire suppression systems may mitigate a water damage risk. The cost may be prohibitive (excessively high; difficult or impossible to pay) as a strategy
-Reduction, mitigation , sharing
Human life has a monetary value is the economic basis of a/an
-Life insurance
To conserve protect this monetary value of a human life (“greater human life value”) by providing for and seeing to the needs of those who depend on the insured fort heir economic existence
-Purpose of life insurance
Hazards result from irresponsibility or carelessness; a state of mind or an attitude that increases the chance of peril
-Morale hazard
Hazards due to a person's values or habits that increases the chance of peril
-Moral hazard
The three types of hazards in life insurance are
-Physical, morale, morale
The direct and immediate (specific) cause of a risk (loss)
-Peril
How does life insurance work?
-Law of large numbers and risk pooling
Not performing an activity that carries risk
-Avoidance/elimination
Legal document issued by an insurance company to the policyholder defining the terms and conditions of the
insurance
-Insurance policy
Voluntarily entering a situation that inherently contains the possibility of either loss or gain, such as investing in
the stock market, assumed voluntarily and offers the possibility of gain as well as loss
-Speculative risk
The two dimensions of risk are
-Exposure and probability
Not all pure risks can be insured against
-True
Provides an income over a period while the annuity owner lives
-Annuity
In life insurance the risk is if the insured will die
-When
Risk that is the nature of things and arises without the individual's volition. There's no chance of gain only loss
-Pure risk
Cause, time, place, and amount of loss must be definable the how, when and how much of the benefit must be calculable
-Definite and measurable
Accepting a known risk and entering into the activity that poses the chance of loss with full responsibility for
Consequences. When the desire for the benefits of success at inactivity outweigh the fear and potential loss of failure when we cannot have the gain without taking the risk, and when we cannot reduce or transfer the risk, this is our strategy. We know th
-Retention acceptance budgeting
Pool must include a mixture of “good risks” and “poor risks” to avoid a skewing of exposure that might lead to an unacceptable proportion of losses
-Randomly diverse
The chance of financial loss, stated in quantifiable terms (i.e monetary or non-monetary)
-Risk
Causing another party to accept the risk, typically by contract or by hedging
-Transference, outsourcing, ensuring
Based on mathematical calculations of life expectancy and provides a sum of money when the insured person dies
-Life insurance
Economic security is the idea for ________________ and ______________
-Life insurance and annuity
Avoiding risk also means losing out on the potential gain that accepting (retaining) the risk might allow
-True
Must not expose insurer to catastrophic losses
-Limited
-_____is sharing individual risk with a larger group so that no one bears a loss alone and everyone receives relief; transferring risk from an individual to a group, thus decreasing the amount of loss for each member is -----Risk pooling
taking steps to reduce the severity of a potential loss or the likelihood of the loss occurring is
-reduction- mitigation, sharing
Fee paid to the insurance company by the insured for the benefit of the insurance policy is
-Premium
Synonym for risks is
-____ loss
The person(s) selected by a life insurance policy holder to receive the policy's benefits upon the death of the insured is
-Beneficiary
________is a type of risk transfer that uses contracts is
-insurance
Chance of loss must be outside the control of the insured person
_______ is
-Due to chance
The 4 strategies of dealing with in managing risks are
-Reduction, transference, avoidance, retention
_________is the party providing insurance coverage to a person or organization is
-Insurer
Policy sum amount is the ___________ is
-Benefit
____________ is define as likelihood of occurrence must be amenable to statistical projection is
-Predictable
reckless risk-taking is an example of___________
-Morale hazard
The individual's physical characteristic(s) that increases the chance of peril, occur due to inadequacies or problems with the condition, structure, or operation of an object or property. This is the term for wha?
-Physical hazard
The person who owns an insurance policy and who holds all contractual rights to that policy is
-Policy owner/holder
An icy front porch is an example of an _______________
-Physical hazard

Created by: Saida1

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