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AFIP CERTIFICATION EXAM
QUESTIONS AND ANSWER S
UPDATE
Question :All of the following are included within the
Insurance Commissioner's duties EXCEPT
a) Conducting investigation of all domestic insurers.
b) Reviewing the insurers' annual reports.
c) Writing North Carolina insurance laws.
d) Reporting any violations of insurance laws to the
Attorney General.
Correct answer:c) Writing North Carolina insurance laws.
Writing insurance law is not the Insurance Commissioner's responsibility, but enforcing the law is.
Question :Which of the following insurance providers
must be nonprofit and sell insurance only to its members?
a) Reciprocal
b) Fraternal
c) Service
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d) Mutual
Correct answer:b) Fraternal
To be characterized as a fraternal benefit society, the organization must be nonprofit, have a lodge system that includes ritualistic work and maintain a representative form of government with elected officers. Insurance may only be sold to members of the society.
Question :A married couple owns a permanent policy
which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that?a)Second-to-Die b)Family Income Policy c)Joint Life Policy d)Survivorship Life Policy
Correct answer:c)Joint Life Policy
Joint life policies cover the lives of two insureds; rates are blended. Upon the death of the first insured, the policy ends.
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Question :The insured under a $100,000 life insurance
policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?a)$0 b)$50,000 (50% of the policy value) c)$100,000 d)$300,000 (triple the amount of policy value)
Correct answer:c)$100,000
The triple indemnity accidental death rider obligates the company to pay three times the face amount of the policy if the insured dies as a result of an accident. The death must be accidental and not contributed to by any other factors and must occur within 90 days of the accident. In this case, since the insured contributed to his own death, the triple indemnity rider is void, but the beneficiary will still receive the policy's death benefit.
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Question :In term policies, what happens to the premium
throughout the term of the policy?
a) Premium gradually increases.
b) Premium gradually decreases.
c) Premium fluctuates.
d) Premium always remains level.
Correct answer:d) Premium always remains level.
There are three basic types of term coverage available, based on how the face amount (death benefit) changes
during the policy term: Level, Increasing, and Decreasing.
Regardless of the type of term insurance purchased, the premium is often level throughout the term of the policy.
Question :An insurer neglects to pay a legitimate claim
that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?