Free Life Insurance Basics Practice Questions
Indiana Life exam — 142 practice questions.
Subtopics: Principle of insurable interest, Risk concepts, Adverse selection, Law of large numbers, Mortality and morbidity, Stock vs mutual, Participating policies, Warranties and representations, Viatical settlements, HIV underwriting, HIV testing, HIV testing confidentiality, HIV exclusions, STOLI, Employer-owned life insurance, Insurable interest, Insurable interest parties, Personal uses, Liquidity, Human life value, Needs approach, Buy-sell funding, Key person, Term vs permanent, Separate account, Variable products licensing, Premium factors, Mortality, Interest assumption, Premium mode, Advertising, Field underwriting, Application accuracy, Sources of underwriting, Risk classification, Substandard risk, Effective date, Statement of good health, Backdating, MIB, Unfair discrimination underwriting, Group vs individual, Warranties vs representations, Disclosure statement, Estate conservation, Executive compensation, Expense factor, Declined risk, Surrender comparison index, Net amount at risk, Legal reserve, CSO mortality table, Level premium funding, Cash value accumulation, Endowment maturity, Free look period, Policy replacement rules, Twisting, Churning, Rebating, Defamation, Binding receipt, Insuring clause, Consideration clause, Owner vs insured, Stranger-originated life insurance, Suitability, Sales illustration, Producer appointment, Paramedical exam, Inspection report, Nonmedical limit, Split-dollar plan, Section 162 executive bonus, Dependency period need, Social Security blackout period, Capital retention approach, Final expense need, Insurance age, Flat extra premium, Postponed risk, Agent's report, Policy summary, Material misrepresentation, Estate creation, Cash accumulation, Charitable giving, Buy-sell cross purchase, Buy-sell entity purchase, Cross purchase count, Key person beneficiary, Deferred compensation, Split dollar collateral assignment, Executive bonus taxation, Business overhead uses, Information for needs analysis, Group vs individual class, Nonparticipating policy, Fixed vs variable, Variable minimum death benefit, Gross vs net premium, Modal factors, Mortality table use, Gender and mortality, Producer delivery duties, Constructive delivery, Rated policy delivery, Conditional receipt insurability, No premium with application, Application signatures, Application corrections, Insurable interest third party, Self insurable interest, Attending physician statement, MIB adverse decisions, MIB pre-notice, HIV testing consent, Underwriting prohibited factor, Rated policy, Standard risk, Prescription database, Social Security fully insured, Currently insured, Survivor benefits children, Spouse caring for child, Blackout period end, Lump-sum death benefit, Full retirement age, Social Security disability, Social Security as offset, Producer report purpose
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Sample questions & answers
1. Which relationship would most clearly establish insurable interest in another person's life?
A spouse
A spouse has a clear economic and emotional interest in the continued life of the other, satisfying insurable interest.
2. The possibility of loss with no possibility of gain is referred to as what type of risk?
Pure risk
Pure risk involves only the chance of loss or no loss and is the type of risk that is insurable, unlike speculative risk.
3. Insurers guard against adverse selection primarily through which activity?
Underwriting and risk classification
Underwriting screens applicants and classifies risk so that those more likely to file claims do not disproportionately obtain coverage.
4. The law of large numbers allows insurers to do what?
Predict losses more accurately as the number of similar exposures increases
As the number of similar independent exposure units increases, predicted losses more closely match actual losses, enabling accurate pricing.
Practice: Life Insurance Basics
Answer choices are shuffled every time, and every question comes with an explanation.
Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.
