Chapter 1

Question 1

All the following influence the premiums charged for life insurance polices except?

Answer 1

Insurance Commissioner

Question 2

Which of the following spreads the risk of loss from one person to a large number of people through pooling of collected premiums?

Answer 2

Insurance

Question 3

Insurance aids in reducing uncertainly with regard to a possible financial losses. Which of the following best identifies the uncertainly concerning loss or the chance of loss?

Answer 3

Risk

Question 4

Which of the following best defines the concept known as life insurance?

Answer 4

Immediate creation of funds

Question 5

An insurance contract is agreement between two parties. Which of the following are the parties involved in a life insurance contract?

Answer 5

Insurer and policy owner

Question 6

Several burdens exist upon death of an individual. Each of the following is a cost associated with death. Except

Answer 6

Indemnification expenses

Question 7

In order one person to purchase life insurance on the life of another a valid insurable interest must be present. When must insurable interest exist in life insurance?

Answer 7

At the time of the application

Question 8

Which of the following help reduce or avoid adverse selection?

Answer 8

Sound underwriting

Question 9

Which of the following approaches used to determine appropriate amount of life insurance involves an individual future earning capacity?

Answer 9

Human Life Value Approach

Question 10

A net premium is comprised of?

Answer 10

Mortality and Interest

Question 11

When a airport uses de icing on a plane ready for take off, it has engaged in risk:

Answer 11

Prevention

Question 12

The purpose of insurance is to protect against?

Answer 12

Pure Risk

Question 13

Is used in cases where the amount of life insurance needed is based upon the individuals or family’s financial goals and objectives.

Answer 13

needs approach