Free Insurance Licensing OH-Life-Agent-Series-11-44 Practice Exam with Questions & Answers | Set: 6

Life insurance premiums are calculated based on mortality (the likelihood of death), interest (investment earnings), and expenses (operational costs). Morbidity, which relates to illness rates, is primarily used in health insurance, not life insurance.

A contract of adhesion is one in which the terms are set by one party—typically the insurer—and the other party, the insured, must accept the terms as written. There is no negotiation involved, and the contract must be accepted or rejected in full. Any ambiguity in such contracts is typically interpreted in favor of the insured.

Insurable interest is a fundamental principle in life insurance, requiring that the policyholder has a financial or emotional interest in the continued life of the insured. This principle prevents individuals from taking out policies on strangers for speculative purposes. According to Ohio Revised Code Section 3911.09, a person may procure life insurance on their own life or on the life of another person in whom they have an insurable interest, such as a spouse, child, or business partner. This ensures that the policyholder would suffer a genuine loss upon the death of the insured.

Misrepresentationinvolves providingfalse or misleading informationabout a policy’s benefits, terms, or conditions. It is a violation of insurance regulations and considered an unethical marketing practice.

"Misrepresentation occurs when a licensee makes false or misleading statements about the benefits, advantages, or terms of an insurance policy."

Alimited pay life insurance policyallows the policyholder to pay premiums for ashorter, limited period(e.g., 10, 20 years), after which the policy ispaid-up for lifeand continues to provide coverage.

"A limited payment whole life policy has premiums payable for a specified number of years or to a specified age. After that period, no more premiums are required."

Reinsurersprovide insuranceto insurance companies, helping themmanage risk exposureby sharing large or risky policies. This is known asreinsurance.

"Reinsurers insure insurance companies by accepting part of the risk from the primary insurer. This process is called reinsurance."