NJ LIFE INSURANCE EXAM QUESTIONS AND ANSWERS
Lapse - Answer-Termination of a policy because the premium has not been paid by the end of the grace period.
Law of Large Numbers - Answer-A principle stating that the larger the number of similar exposure units considered, the more closely the los...
Lapse - Answer-Termination of a policy because the premium has not been paid by the
end of the grace period.
Law of Large Numbers - Answer-A principle stating that the larger the number of similar
exposure units considered, the more closely the losses reported will equal the
underlying probability of loss.
Level Premium - Answer-A policy premium that remains the same over the period of
time premiums are paid.
Life Expectancy - Answer-Average number of years remaining for a person of a given
age to live, as shown on the mortality table.
Life Settlement - Answer-An arrangement that allows the policyowner sell their existing
life insurance policy to a third party for compensation
Limited pay whole life - Answer-A variation of whole life insurance that charges a level
annual premium and provides a level, guaranteed death benefit to the insured's age 100
and will endow for the face amount if the insured lives to age 100. Limited-pay life is
designed so that the premiums for coverage will be completely paid-up well before age
100
liquidation - Answer-Selling assets as a method of raising capital
living benefits rider - Answer-A rider attached to a life insurance policy that provides
LTC benefits or benefits for the terminally ill by using available life insurance benefits
Lloyd's associatins - Answer-Organizations that provide support facilities for
underwriters or groups of individuals that accept insurance risk
loan value - Answer-The amount of money an insured can borrow using the cash value
of his/her life insurance policy as collateral.
loss - Answer-The reduction, decrease, or disappearance of value of the person or
property insured in a policy, by a peril insured against
lump sum - Answer-Settlement method that pays the beneficiary the entire proceeds of
a life insurance policy in one payment rather than in installments.
, market value adjusted annuity - Answer-a single-premium deferred annuity that allows a
contract owner to lock in a guaranteed interest rate over a specified maturity period
maturity date - Answer-The date when the face amount of the life insurance becomes
payable
maturity information Bureau (MIB) - Answer-An information database that stores the
health histories of individuals who have applied for insurance in the past. Most
insurance companies subscribe to this database for underwriting purposes.
misrepresentation - Answer-A false statement or lie that can render the contract void.
mode of payment - Answer-The method of premium payment, whether annually,
semiannually, quarterly, or monthly.
mortality table - Answer-A table showing the probability of death at specified ages.
mutual companies - Answer-- Insurance organizations that have no capital stock, but
are owned by the policyholders.
Nonadmitted (Nonauthorized) - Answer-An insurance company that has not applied for,
or has applied and been denied a Certificate of Authority and may not transact
insurance in a particular state
Nonauthorized (Nonadmitted) - Answer-An insurance company that has not applied for,
or has applied and been denied a Certificate of Authority and may not transact
insurance in a particular state
Noncancellable - Answer-An insurance contract that the insured has a right to continue
in force by payment of premiums that remain the same for a substantial period of time
Nonforfeiture Values - Answer-Those guaranteed values in a life insurance policy that
cannot be taken from the insured, even if he or she ceases to pay premiums
Agency - Answer-An insurance sales office or company
agent - Answer-An individual who is licensed to sell, negotiate, or effect insurance
contracts on behalf of the insurer.
agent appointment - Answer-The authorization of an agent to act for or represent an
insurer
aleatory - Answer-A contract in which participating parties exchange unequal amounts.
Insurance contracts are aleatory in that the amount the insured will pay in premiums is
unequal to the amount the insurer will pay in the event of a loss.
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