Life Insurance Exam-Illinois Questions and Answers (2023 / 2024) (Verified Answers)
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Course
Life Insurance
Institution
Life Insurance
Life Insurance Exam-Illinois Questions and Answers (2023 / 2024) (Verified Answers)
Pooling of Risks
A large group of people contribute money to a fund out of which their losses can be paid
Policyowner
is the person or org that applies for the policy and pays the premium
Actuarial Tabl...
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Life Insurance Exam-Illinois Questions and
Answers () (Verified Answers)
Pooling of Risks
A large group of people contribute money to a fund out of which their losses can be paid
Policyowner
is the person or org that applies for the policy and pays the premium
Actuarial Tables
Are statistical tables that are used when calculating premium rates and mortality loss reserves
Life Insurance Policies transfer:
financial risks of premature death on a defined amount
Loss of income
the face amount of life insurance is determined as a multiple of income
Life annuity
contract which is issued by a life insurance company protects an individual against the financial risk of
outliving a normal life expectancy according to the mortality actuarial tables and running out of
money in old age
Life annuity
guarantees monthly income benefits to the annuitant for the rest of his/her life no matter how long
he/she lives
Insurable interest
a person must be in a position where he/she will lose money should loss occur only at the time the
policy is issued
Who must have insurable interest?
the policy owner; he/she will lose money should hte insured die prematurely
tax qualified plans
contributions can be deducted
non qualified plans
contributions cannot be deducted
tax deferred plans
tax on the interest and/or earnings is postponed as it compounds and accumulates until it is
withdrawn
tax free
, no tax on benefits
cost basis
total contributions made to the plan
Tax: premiums paid on individual life insurance policies...
cannot be deducted (non-qualified)
Tax: the benefits paid to the beneficiary at the insured's death...
is usually not taxed (tax free)
Participating policy
pays a dividend
Tax: dividends paid to the policyowner on participating policies...
are usually not taxed (tax free)
Modified Endowment Contract
The IRS has written rules that define when a life insurance policy does not have a real, valid life
insurance purpose and is in substance an investment or savings plan
If a cash value life insurance policy does not have a valid life insurance purpose, the IRS classifies it as
a
modified endowment contract
Underwriter
is an insurance company employee who reviews applications and additional information and decides
whether the applicant is acceptable and what the correct premium rate should be
Medical reports can be (3 items)
health questionare, paramedic examiner's report, and physician's report
Who completes the health questionnaire?
the agent and the applicant with questions about applicant's health history as well as the applicant's
parents' health history
Errors and changes on the application
if an error on an application occurs, underwriter may require that it be correct and changes must be
approved and initialed by the applicant
Medical Information Bureau Report (MIB)
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