LICENSING SYSTEM

Pre-course workbook
welcome to the Primerica Licensing System!
You’ve made the right decision in seeking financial
freedom for you and your family.
our goal is to help you obtain your insurance
license and get on the road to success!
It doesn’t matter what kind of educational background you have or how much you know about
financial services. Primerica’s pre-licensing courses are designed to meet you where you are and
help you get to where you want to be — a life licensed representative! our highly qualified
Licensing Coaches will guide you through the entire licensing process — from what you need to do
before class, to passing your exam and getting your license. There’s no need to worry about
“going back to school.” Your Licensing Coach will be there for you every step of the way to help
you personalize your study plan and succeed.

WHAT DO I DO NEXT?
• Prepare for success by reviewing the Insurance Basics information on the next two
pages and watching the Pre-course video series. To watch the videos, log on to
www.primericaonline.com (POL) and click on the Education link under the Licensing
& Education tab. There are five short, easy-to-understand videos that will give you
an excellent overview of some of the important terms that will be covered in your
pre-licensing course.
• Schedule to take your state insurance exam within five days of completing class.
• Sign into POL (www.primericaonline.com) and get familiar with its benefits.
• Be sure to participate in your base shop and recruiter’s activities.
• Attend pre-licensing. Show up excited and ready to learn!
• Complete pre-licensing.
• “Go Green” on a Practice Test on POL’s PassNow.
• Most of all, dream big! You joined this business to do something amazing for yourself
and your family. Getting licensed is the first step. You can do it!
Insurance Basics
Life is unpredictable. No one can predict the future. The best we can do is to try to protect our loved ones and
ourselves from harm. People want to protect the things they value — whether it’s a loved one, a home or a
car. Life insurance is one simple way people can protect their families by providing financial protection in the
event of the breadwinner’s death.

In everyday life, the term “risk” is usually associated with the chance that something could go wrong. In insurance,
“risk” is a financial loss. There are two types of risk:
• Pure risk
• Speculative risk
Only “pure risk” is insurable. By purchasing life insurance, a person transfers their financial risk (loss) to an
insurance company. It protects families by providing financial security in the event of the premature death of the
insured (the person covered on the policy). Basically, insurance guarantees that a specific amount of money called the
“policy proceeds” will be paid to a beneficiary.

Here are some commonly used life insurance terms:

• Policyowner: This is a person who owns the policy, pays the premium and chooses the beneficiary (the person
who will receive the “policy proceeds” should the insured die).
• Insured: This is the person whose life the policy covers. The “insurer” is the insurance company who issues the
policy and pays the death benefit to the beneficiary upon the death of the insured.
• Policy Proceeds: The money paid out to the beneficiary when the insured dies. The policy proceeds of a life
insurance policy can also be referred to as the death benefit, face amount, coverage, or insurance amount.
• Estate: Proceeds of a life insurance policy create an immediate “estate” to the beneficiary. The beneficiary can
use the proceeds from a life insurance policy to pay for daily expenses, mortgage, college, or any other expenses.

Underwriting application to the insurance company. A life insurance

application is an essential document used by the
Insurance producers (agents) assist clients in
insurance company to assess risk. The process of
determining how much life insurance their family needs
assessing risks or evaluating the application is called
and what they can afford. The process of issuing a life
“underwriting.” The company’s underwriters will
insurance policy begins when an insurance producer
evaluate whether an applicant is insurable. The main
(agent) solicits a client to buy a policy. A solicitation
purpose of the underwriting process is to assess the
is actually an offer to sell the policy. An insurance
eligibility of an applicant to receive a life insurance policy
producer is also known as a “field underwriter.” A field
and to protect the insurance company.
underwriter fills out the life insurance application with
The underwriters will give the applicant a rating of
the applicant.
“preferred,” “standard,” or “substandard.” A policy will be
An insurance application has three parts: declined if the underwriter determines that the applicant
I. General information will be too great of a risk to the company. After the
2. Medical information underwriting process is completed, the policy is issued and
3. Agent’s report delivered by the agent.

The field underwriter must make sure that accurate Types of Policies
information is collected on the application and complete
Life insurance policies can be sold to groups or
the Agent’s Report, which is a series of questions
individuals and are divided into two main types:
regarding the applicant.
• Term life insurance
Once the application is completed, the field
• Whole life insurance
underwriter will collect the premium and send the
 Term life insurance is the simplest of all life • Policy provisions protect the policyowner, the
insurance to understand and the cheapest to buy. Term insured and the insurer.
insurance is temporary insurance because it is coverage • Options are choices on how to distribute a sum of
for a specified period of time, it has no cash value money.
and it can usually be renewed or converted. It is also • Riders are additions to a life insurance policy.
referred to as “pure protection” because it provides the They cost extra and are added to a policy to
policyowner with the most amount of protection at the individualize it.
lowest cost.
Since term insurance is temporary coverage, it is In every life insurance policy there are several
available for set periods of time such as 10, 15, 25, or 30 different types of policy provisions.
years. An example of one policy provision is the “free
The different types of term insurance are classified look” provision. The free look provision allows the
according to what happens to the face amount over a policyowner to review the policy and return the policy
specific period of time. for a full refund. Usually, the free look period is for 10
days after the date of policy delivery.
There are three different types of term insurance: The grace period allows the insured’s coverage to
I. Level continue 30 days from the premium past due date, but
2. Increasing to protect the insurer, the policy terminates after that
3. Decreasing 30 days if premiums are not received.
An example of an option is a settlement option.
Whole life insurance is also called “permanent Settlement options are the choices that a policyowner
protection,” which means the coverage lasts as long can make on how their beneficiary will receive the policy
as the insured lives or to age 100. Whole life products proceeds. The most common settlement option is a cash
provide a saving element that is referred to as “cash payment. The beneficiary will receive one lump sum for
value.” With cash value, the premiums remain level and if the amount of the policy proceeds.
the insured dies before age 100, only the death benefit is An example of a rider is the waiver of premium
paid, not the cash value. rider. This rider protects the policyowner and may be
added to a policy to waive the premiums if the primary
Whole life provides both protection and cash value. insured becomes totally disabled.
The three different types of whole life insurance are: Insurance policies also have exclusions; insurance
• Straight life companies include exclusions in their policy to protect
• Limited pay themselves against higher risks, such as hazardous
• Single pay occupations or hobbies, war, private aviation, and
felonies.
The different types of whole life insurance are
classified according to how the policy owner pays the Annuities
premiums. An annuity is a way to provide income for the rest
of your life. An annuity is saving for retirement. It
Policy Provisions, converts a large sum into a series of payments for the
Options and Riders rest of your life. An annuity owner pays premiums into
an annuity.
Life insurance policies are legally binding contracts
At some point in the future, the annuity will pay out
between the insured (who can also be the policyowner)
an income stream to the annuitant. The pay in period
and the insurer (the insurance company). The insured/
that the annuity owner is paying into the annuity is
policyowner wants insurance in order to protect
called the accumulation period. When the annuity
their family and the insurance company wants to sell
begins to pay out payments to the annuitant, this is
insurance but still protect themselves. To protect both
called the annuitization period.
parties, life insurance policies contain provisions, options
The two types of annuities are immediate and
and riders:
deferred.