California Insurance Exam/ 516 Questions with Definitive Solutions.
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Course
California Insurance
Institution
California Insurance
California Insurance Exam/ 516 Questions with Definitive Solutions. Terms like:
Two methods of determining insurance need: - Answer: - Human Life Approach
- Needs Approach
Human Life Value Approach~ - Answer: - One of two ways of calculating insurance need.
- By discounting estimated futur...
California Insurance Exam/ 516 Questions with
Definitive Solutions.
Two methods of determining insurance need: - Answer: - Human Life Approach
- Needs Approach
Human Life Value Approach~ - Answer: - One of two ways of calculating insurance
need.
- By discounting estimated future income
- Calculating the amount of life insurance a family will need based on the financial
loss that they will suffer if the insured person were to pass away today
- 10X salary
- Based on age, gender, planned retirement age, occupation, annual wage,
employment benefits, as well as the personal and financial information of the
spouse and/or dependent children.
Page 1 of 116
,*Needs Approach - Answer: Ask yourself:
1. How much will be needed at death to meet obligations.
2. How much future income is needed to sustain the household.
- Focuses on the financial needs of the family
- Considers final expenses
- Considers disability income
- Consideres monthly income
Main list of private insurance companies - Answer: - Stock insurers
- Mutual insurers
- Lloyd's of London
- Reinsurers
- Risk retention groups
- Fraternal benefit societies
- Home service insurers
Government supplied insurance - Answer: - OASDI (Social Security)
- Medicare
- Medicaid
- Military plans (SGLI & VGLI)
Lloyd's of London - Answer: - Take greater risks and charge larger premiums.
- A British insurance and reinsurance marketplace
- Come together to pool and spread risk
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,Reinsurers - Answer: Companies that take part of the risk of insurance companies.
(The company that is taking a part of the risk)
Ceding Company - Answer: The company that is transferring the risk
Risk retention group - Answer: A mutual company formed to cover a bunch of
people in the same occupation.
Fraternal benefit society - Answer: Membership groups that are created for
membership to purchase insurance and gain other benefits.
Home service insurers - Answer: - Sell low dollar value policies (e.g. $1000/$2000
of face amount)
- Paid for by bank draft of check sent in by mail
Insurance is sold through - Answer: Career agents
Brokers
Aka Producers (independent insurance agents)
Agent - Answer: - Sells the company's products to the public
- When someone becomes an agent, they become a "field underwriter"
- Develops base for long-term sources of clients by using referrals, occupational,
and special-interest groups to compile lists of prospects.
Page 3 of 116
, - Approaches potential clients by utilizing mailings and phone solicitation; making
presentations to groups at company-sponsored gatherings; speaking publicly to
community groups on the subject of financial well-being.
- Determines clients' particular needs and financial situations by scheduling fact-
finding appointments; determining extent of present coverage and investments;
ascertaining long-term goals.
- Develops a coordinated protection plan by calculating and quoting rates for
immediate coverage action and long-term strategy implementation.
- Obtains underwriting approval by completing application for coverage.
- Completes coverage by delivering policy; planning future follow-up visits and
evaluations of needs.
- Provides continuing service by providing direct deposit forms; processing
changes in beneficiary and policy loan applications.
- Provides death benefits by delivering policy proceeds; reassessing client needs.
- Updates job knowledge by participating in educational opportunities; reading
professional publications; maintaining personal networks; participating in
professional organizations.
- Enhances insurance agency reputation by accepting ownership for accomplishing
new and different requests; exploring opportunities to add value to job
accomplishments.
Brokers - Answer: - Represents the people and finds a company to insure them
- Assist prospective insureds with developing risk management strategies
appropriate to their risk profiles.
- *Cannot legally bind insurance
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