1. Without written consent, a policyowner CANNOT change the beneficiary if he has named
A. a contingent beneficiary.
B. a revocable beneficiary.
C. a permanent beneficiary.
D. an irrevocable beneficiary. Correct
Explanation
An irrevocable beneficiary cannot be changed without their written consent, as they have a vested interest in the policy. A contingent beneficiary (A) is a secondary beneficiary and can be changed. A revocable beneficiary (B) can be changed freely by the policyowner. Permanent beneficiary (C) is not a standard term in insurance.
2. Open perils are BEST defined as
A. losses specifically named in the policy.
B. losses that have specific coverage limits within the policy.
C. losses that are not specifically limited or excluded. Correct
D. basic plus broad perils.
Explanation
Open perils cover all losses except those specifically excluded in the policy. Losses specifically named (A) describe named peril policies. Specific coverage limits (B) refer to policy restrictions, not open perils. Basic plus broad perils (D) is a term used for specific coverage types, not open perils.
3. Statements made by a proposed Insured on an application for life Insurance are called
A. provisions.
B. guarantees.
C. representations. Correct
D. warranties.
Explanation
Representations are statements made by the insured on an application, believed to be true to the best of their knowledge. Provisions (A) are policy terms. Guarantees (B) are promises of performance. Warranties (D) are statements guaranteed to be true, with stricter consequences if false.
4. The applicant must face the possibility of losing something of value in the event of the Insured’s death. This principle is known as
A. insurable interest. Correct
B. adverse selection.
C. indemnification.
D. vistical settlement.
Explanation
Insurable interest requires the applicant to have a financial or emotional stake in the insured’s life. Adverse selection (B) is the tendency for higher-risk individuals to seek insurance. Indemnification (C) is compensating for a loss. Viatical settlement (D) involves selling a policy for cash, not insurable interest.
5. What is the approach to assessing the consumer's need for life insurance that focuses on an individual's future stream of income?
A. Needs approach
B. Affordability approach
C. Human Life Value approach Correct
D. Return of investment approach
Explanation
The Human Life Value approach calculates life insurance needs based on the insured’s future income stream. Needs approach (A) focuses on specific financial needs of survivors. Affordability approach (B) considers what the insured can pay. Return of investment approach (D) is not a standard insurance term.