WebCE Exam Tutor Questions with accurate answers. 2022/2023. Rated A

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WebCE Exam Tutor Questions with accurate answers. 2022/2023. Rated A All of the following are eligible to purchase a group life insurance policy EXCEPT: the Wonderful Widget Company, which emp... loys more than 200 people the State Electrical Workers Union the Retailers Multiple Employer Trust, formed by two retailers to purchase insurance for their employees Stan and his neighbors, who form their own group to buy group coverage at a lower cost than their individual coverages - ✔✔Stan and his neighbors are not eligible to purchase group life insurance because a group cannot be formed solely to obtain life insurance With respect to the difference between variable life insurance (VLI) and variable universal life insurance (VUL), which of the following statements is correct? Variable life policies require a fixed premium payable for the life of the policy while variable universal life permits premium flexibility. Only variable life policies allow the policyowner to put funds in investment subaccounts. Only variable universal life policies offer a minimum death benefit. Only variable universal life is a securities product. - ✔✔Variable life policies require a fixed premium payable for the life of the policy while variable universal life permits premium flexibility Jessica, age 25, buys a $100,00 life insurance policy. The initial premium is lower than straight whole life rates and increases each year for the first ten years of the policy period. After that, the premium levels off and remains at that amount for the life of the policy. What type of policy does Jessica own? indeterminate premium whole life single premium life graded premium whole life 20-pay life - ✔✔graded premium whole life Which statement about modified premium whole life insurance is NOT correct? It does not build cash value. It charges lower premiums in the early policy years. At the end of the initial period, the premium increases and stays at the new level for the life of the policy. It is good for people who want the guarantees of whole life insurance and lower early premiums. - ✔✔It does not build a cash value A life insurance policy matures or endows when its guaranteed cash value equals its face amount. With an endowment contract, when does the policy endow? when the insured dies at age 120 after age 120 well before age 120, usually at age 65 - ✔✔well before age 120, usually at age 65 A type of permanent life insurance that lets the policyowner increase, reduce or even skip premium payments at will without the policy lapsing best describes: variable life insurance universal life insurance adjustable life insurance modified premium whole life insurance - ✔✔universal life insurance Variable universal life combines features of variable life and universal life. Variable universal life and universal life are alike in all the following ways EXCEPT: The premium payments for both are flexible. Both types of policies let the policyowner choose a death benefit from two (or sometimes three) options. For both policies, the insurer deducts insurance and expenses monthly from the cash value. Both are considered securities products as well as life insurance. - ✔✔both are considered securities products as well ass life insurance All the following statements about term life insurance are correct EXCEPT: It offers protection for a specified, limited period. A small cash value gradually accumulates while the policy is in force. Upon issue, it is generally less expensive than permanent insurance of comparable face amount. It pays a benefit only if the insured dies during the specified period. - ✔✔a small cash value gradually accumulates while the policy is in force A type of life insurance that covers two people and pays the death benefit only upon the second insured's death is called survivorship life family life spousal life joint life - ✔✔survivorship life Under a joint life insurance policy, when does the insurer pay the death benefit? when the first insured dies only when the surviving insured dies only when the older insured dies only when the younger insured dies - ✔✔when the first insured dies Which of the following types of whole life insurance is paid with one premium at the time the policy is bought? modified premium whole life limited pay life graded premium whole life single-premium life - ✔✔single-premium life Which of the following life insurance products is best suited for insuring a mortgage or other long-term loan with the least premium possible? increasing term life insurance level term life insurance decreasing term life insurance whole life insurance - ✔✔decreasing term life insurance A married couple is insured under a joint life policy. The first spouse dies. What can the surviving spouse do with the policy? The surviving spouse can renew the policy. The surviving spouse can convert the policy if he or she proves insurability. The surviving spouse may convert the policy without proving insurability. The surviving spouse cannot convert the policy. - ✔✔the surviving spouse can convert the policy if he or she proves insurability Alan and his wife are expecting their first child. Alan wants the most death protection that he can get for the smallest amount of premium, at least while he's starting his family. Ideally, he would like to be able to upgrade his coverage to a whole life policy at some point. Which of the following products would you recommend? whole life insurance policy variable life insurance policy universal life policy ten-year convertible term life policy - ✔✔ten-tear convertible term life policy Michael and his friends and family, who are tired of paying high premiums for their individual policies, decide to get together and buy a group life insurance policy. Why will their approach not work? Group policies are only available to employers. Family members cannot be covered under the same group policy. A group cannot be formed just for the purpose of obtaining insurance. None of the members in the group is a licensed agent. - ✔✔a group cannot be formed just for the purpose of obtaining insurance While completing an application for a life insurance policy, Dan discloses his partial blindness. The insurer will treat this blindness as a: peril moral hazard morale hazard physical hazard - ✔✔physical hazard Peril vs Hazard - ✔✔Peril is the CAUSE of loss Hazard is a characteristic that increases the chance of a peril occurring Which of the following best illustrates risk transfer? Anita buys health insurance to protect herself in case of serious illness. Abigail continues to rent her home because she thinks homeowners insurance is too expensive. Refusing to buy a home and insure it is an example of risk avoidance. Anne does not venture out after dark because she is afraid of being assaulted. Arlene decides not to purchase life insurance because she has no dependents and plenty of cash in her savings accounts to cover any final expenses. - ✔✔Anita buys health insurance to protect herself in case of a serious illness When classifying insurance risks, insurance underwriters most often use the: numerical rating system judgment method adverse selection system risk assessment scale - ✔✔numerical rating system Which is not an example of a hazard? Ron forgets to wear his seat belt when he drives. Sue smokes a pack of cigarettes every day. John takes medication to control high blood pressure. Jane neglects to fix a broken sidewalk in front of her shop. - ✔✔John takes medication to control high blood pressure Robin falls while snow skiing and breaks a leg. She decides to never again attempt this activity. What method is she using to manage this risk of falling? risk retention risk avoidance risk reduction risk transfer - ✔✔risk avoidance Which of the following presents a situation of pure risk? Knowing that his family depends on his income, Franklin wants to insure his life. Wanting to increase his retirement savings, Saul invests his life savings in the stock market. Ralph takes a second mortgage on his house and uses the proceeds to gamble. Wanting better job security, Ron cashes in his life insurance policy to start a business. - ✔✔Knowing his family depends on his income, Franklin wants to insure his life A person who smokes heavily and drinks alcohol to excess exhibits what kind of an insurance risk? physical hazard moral hazard legal hazard planned hazard - ✔✔physical hazard Jeremy has had an individual health insurance policy for many years because of his family's history of cancer. The tendency of someone like Jeremy to buy and maintain insurance is known as: implied selection adverse selection exposure reduction risk avoidance - ✔✔adverse selection An insurance policy provides financial protection against: hazards risks losses caused by perils losses caused by hazards - ✔✔losses cased by perils When an insurer employs field agents, who is responsible for delivering a new policy to a policyholder? insurance company agency for which the agent works agent Department of Insurance - ✔✔agent Emily postpones buying a life insurance policy, believing that her family will use its savings to pay her final expenses if she dies prematurely. Which method is she using to deal with risk? retention avoidance reduction transfer - ✔✔retention Which condition must exist for a risk to be considered insurable? The potential loss must be catastrophic. The potential loss must be due to a force of nature. The potential loss must happen within six months of the policy's effective date. The loss must be ascertainable. - ✔✔the loss must be ascertainable Blackstone Insurers is incorporated in New York, where it also has a certificate of authority to transact insurance. What type of insurer is Blackstone in New York? certified insurer alien insurer foreign insurer admitted insurer - ✔✔admitted insurer An insurable risk is not: ascertainable catastrophic uncertain an economic hardship - ✔✔catastrophic Which two parties form a contract for life insurance? agent and insurer agent and beneficiary insurer and beneficiary insurer and policyowner - ✔✔insurer and policyowner Which statement is correct about insurance regulation? The federal government alone regulates the insurance industry. The federal government primarily regulates the insurance industry, and state governments regulate some aspects of it. State governments alone regulate the insurance industry. State governments primarily regulate the insurance industry, and the federal government regulates some aspects of it. - ✔✔State governments primarily regulate the insurance industry, and the federal government regulates some aspect of it When may an Insurance company call a consumer on the Do Not Call list? The DNC listing is in error. The insurer has an existing relationship with the consumer. The insurer has never sold a product to the consumer. The insurer did business with the consumer within the last two years. - ✔✔the insurer has an existing relationship with the consumer Which entity spreads the cost of losses among its members by having each member pay a pro-rated share of the losses? risk retention group reciprocal insurer reinsurer self-insurer - ✔✔reciprocal insurer Which is a non-admitted insurance company? a foreign insurer with a certificate of authority a domestic insurer without a certificate of authority an alien insurer with a certificate of authority a domestic insurer with a certificate of authority - ✔✔a domestic insurer without a certificate of authority Which does not rate the financial strength of insurance companies? A.M. Best Duff and Phelps Moody's Securities and Exchange Commission - ✔✔securities and exchange commission Which is not a means of regulating the insurance business? producer peer review state regulation federal regulation industry self-regulation - ✔✔producer peer review ABC Insurance Company is domiciled in Delaware and does business in Ohio. Which of the following is correct about ABC? ABC is a domestic insurer in Delaware and an alien insurer in Ohio. ABC is a domestic insurer in Delaware and a foreign insurer in Ohio. ABC is a domestic insurer in Ohio. ABC is a foreign insurer in Delaware. - ✔✔ABC is a domestic insurer in DE and a foreign insurer in OH Why would a business self-insure instead of buying an insurance policy? to avoid having to comply with state insurance laws to cover against an occasional high-severity loss to insure against frequent low-severity losses to reduce its tax liabilities - ✔✔to insure against frequent low-severity losses Which term applies to an insurance company domiciled in one state but operating in another, from the perspective of the state in which it operates? alien company foreign company unauthorized company domestic company - ✔✔foreign company Johnson Industries funds its workers' compensation program. It will use these funds to pay employee's claims. What type of insurer is Johnson Industries? reciprocal insurer risk retention group self-insurer mutual insurer - ✔✔self-insurer Which of the following terms categorize insurers by their location or domicile? domestic and international internal and external private, state, and national domestic, foreign, and alien - ✔✔domestic, foreign, and alien The federal Risk Retention Act of 1986 applies to which businesses? self-insuring businesses re-insurers credit life insurance companies high-risk business insurers - ✔✔self-insuring businesses An insurance company with a home office in Wisconsin that does business in Illinois is a domestic company in Wisconsin. What kind of company is it in Illinois? regional branch divisional foreign - ✔✔foreign Life and health insurance companies regulate themselves through each of the following entities or organizations EXCEPT: National Association of Life Underwriters American Society of Chartered Life Underwriters International Association of Health Underwriters Financial Industry Regulatory Authority - ✔✔Financial Industry Regulatory Authority Which entity does not rate the solvency of insurance companies? A-M Best Duff and Phelps Lloyd's of London Standard and Poor - ✔✔Lloyd's of London Which type of insurance company pays dividends to its stockholders? stock company mutual company fraternal benefit society reciprocal insurer - ✔✔stock company What is not required to obtain an insurance producer's license? residency in state satisfaction of state prelicensing requirements character assessment intent to serve the general public - ✔✔character assessment Which statement is correct about the types of insurance sales systems? Captive agents may represent any number of insurance companies. Direct response companies sell insurance to consumers without the use of a licensed producer. General agencies sell insurance only through independent brokers. To sell for another insurer, independent brokers must get permission from the primary company they represent. - ✔✔direct response companies sell insurance to consumers without the use of a licensed producer An agent who sells insurance for an insurance company that does not have a certificate of authority to operate in the state represents: an alien insurer a non-admitted insurer an unregistered insurer a limited lines insurer - ✔✔a non-admitted insurer John owns a life insurance policy. The policy insures Mary, his wife. This is possible through which type of policy ownership? joint third-party common survivorship - ✔✔third-party An agent meets with a prospect and learns that he already owns a life insurance policy. He is interested in replacing it with a new policy. Which must the agent do? notify the Commissioner that replacement may occur obtain an affidavit from the applicant acknowledging that the new policy will cover all of his life insurance needs inform the applicant that he may return the recommended policy within 45 days of delivery for a full refund of premium give the applicant the 'Notice Regarding Replacement' - ✔✔give the applicant a "notice regarding replacement" An errors and omissions insurance policy protects the: agent or producer underwriter beneficiary policyowner - ✔✔agent or producer Stacey is a captive agent for Best Rates Insurance Company. Her agency contract gives her permission to print and use business cards with the company's logo and submit applications for its policies. Which type of authority does Stacey have to take these actions? apparent express implied imputed - ✔✔express Which is not correct about the agency contract between the insurance company and the agent it appoints to represent it? The principal gives the agent implied authority. The principal has express authority; the agent does not. The principal is bound only by the agent's authorized acts. The agent has legal authority to act on the company's behalf. - ✔✔the principle has express authority; the agent does not When does an insurance policy take effect? when the insured receives the policy when the insurance company sends the policy to the agent when the insured signs the application when the first premium is paid - ✔✔when the first premium is paid When taking an insurance application, what should an agent try to accomplish? risk assessment, pre-screening, and verification mortality, morbidity, and risk assessment accuracy, thoroughness, and clarity credit, character, and moral assessment - ✔✔accuracy, thoroughness, and clarity Protection from damages resulting from a lawsuit brought by an insurance customer against an insurance producer for breach of fiduciary duties would be covered under what kind of policy? reinsurance supplier insurance errors and omissions insurance self-insurance - ✔✔errors and omissions insurance As a field underwriter, what does an agent do for the insurance company? set the premium help actuaries assess a risk apply the law of large numbers collect information from an applicant - ✔✔collect information from an applicant Stacey is a captive agent for Best Rates Insurance Company. Her agency contract gives her permission to print and use business cards with the company's logo and submit applications for its policies. Which type of authority does Stacey have to take these actions? apparent express implied imputed - ✔✔express An agent for ABC Insurance Company meets with a client. The agent shows the client ABC's sample policies, refers to the ABC rate book, and gives the client an ABC business card. The client assumes that ABC has appointed the agent to represent it. What kind of authority does the agent have? implied authority apparent authority express authority imputed authority - ✔✔apparent authority Which is not among an agent's responsibilities [Show More]

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