Arkansas Life and Insurance Examination

which policy component decreases in decreasing term insurance?

Face amount. Decreasing term policies feature a level premium and a death benefit benefit that decreases each year over the duration of the term

All of the following are types of dividend options, EXCEPT

Fixed period installments. Is a settlement option

The automatic premium loan provision is activated at the end of the

Grace period. If there enough cash value in the policy, it will trigger at the end of the grace period to keep the policy in force

If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy?

The death benefit will be smaller

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?

Answer; 100 000. 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. Has to be accidental

which of the following would help prevent a universal life policy from lapsing?

Answer; Target premium. A recommended amount that should be paid on a policy in order to cover the cost of insurance prot and to keep the policy in force throughout its lifetime

Which of the following is INCORRECT regarding a $100 000 20-year level term policy

At the end of 20 years, the policy's cash value will equal $100 000. Term policies dont develop cash values. The policy will expire at the end of 20 yrs, premiums will remain level for 20 yrs, and if the insured dies before the expiration the beneficiary will get $100 000

Which of the following best describes fixed-period settlement option?

Both the principal and interest will be liquidated over a selected period of time.

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?

Collateral assignment

AN insured pays an annual premium to his insurer. In return, the insurer promises to pay benefits in accordance with the terms of the contract. This is called

Consideration. The value offered by the insured to the insurer

All of the following statements concerning dividends are true EXCEPT

Dividends amounts are guaranteed in the policy. They cant be

An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?

If the primary beneficiary predeceased the insured

A return of premium term life policy is written as what type of term coverage?

Increasing. ROP life insurance is an increasing term insurance policy that pays an added death benefit to the beneficiary equal to the amount of the premiums paid

Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?

Insuring clause. States the insurer agrees to provide life insurance for the named insured which is paid to the beneficiary when proof of loss is given

Which of the following best describes annually renewable term insurance?

It is level term insurance. That offers the most insurance at the lowest cost

Which two terms are associated directly with the premium?

Level or flexible

The premium of a survivorship life policy compared with that of a joint life policy would be?

Lower. The difference from survivorship life and joint life is it pays on the last death rather than first death like joint, making it lower since its longer

What universal life option has a gradually increasing cash value and a level benefit?

Option A, the death benefit remains level while the cash value increases. The death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures

Which of the following riders would NOT cause the Death Benefit to increase

Payer benefit rider

An insured pays 1200 annually for her life insurance premium. The insured applies this year's 300 worth of accumulation dividends to the next year's premium thus reducing it to 900. What option does this describe?

Reduction of premium

Which of the following is NOT one of the three types of term coverage based on what happens to the face amount during the policy term?

Renewable. The 3 are decreasing, level, and increasing based on how the face amount (death benefit) changes during the term. The premium is level throughout the term regardless the type

A man decided to purchase a $100,000 annually renewable term life policy to provide additional protection until his children finished college. He discovered that his policy required?

Required a premium increase each renewal

Which of the following is called a second to die policy

Survivorship life. Is much the same as joint life in the it insures two or more lives for a premium that is based on a joint age

all of the following are true of an annuity owner EXCEPT?

The owner must be the party to receive benefits.The Owner is the person who purchases the contract and has all of the rights such as naming the beneficiary and surrendering the annuity.

which of the following is true for both equity indexed annuities and fixed annuities?

They have a guaranteed minimum interest rate.

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?

Universal life. Allows for policyholders to withdraw a limited portion of the policy's cash value at a charge

When would a 20-pay whole life policy endow?

When the insured reaches age 100. The premium is paid off in 20 years though

What allows the insurer to relieve a minor insured from premium payments if the minors parents have dies or become disabled?

payor benefit.

who bears all of the investment risk in a fixed annuity?

the insurer. Fixed annuities guarantee a minimum amount of interest to be credited to the purchase payment.

All of the following are true regarding the guaranteed insurability rider EXCEPT

this rider is available to all insureds with no added premium