Chapter 11 insurance

Which of the following about the use of ordinary life insurance is true? I- it's use is appropriate if a person needs lifetime insurance protection II- it enables a person to purchase significantly more insurance than if the same premium were used to purchase term insurance

I only

Which of the following statements about endowment policies is true? I- the face amount is paid if the insured dies during the policy period or at the end of the period if the insured is still alive II- the use of endowment insurance has increased in recent years

I only

Which of the following about a Variable universal life insurance (VUL) is (are) true: I-there is a minimum guaranteed interest rate on all sub-accounts II- the policy owner has a variety of options for investment of the CV

II only

Which of the following statements about a life insurance policy is true? I. It is a policy of indemnity II. The insured event is the uncertainty regarding the time of death

II only

Which of the following statements about universal life insurance is true? I-the interest rate credited to the cash value at the time of issuance remains fixed over the life of the policy II- a monthly deduction is made from a policy's cash value for the cost of insurance protection

II only

All of the following statements about ordinary life insurance are true except - A- premiums are level throughout the policy period B- the face amount of the policy is paid if the insured lives to 65 C- there is buildup of CV that can be borrowed by the policy owner D-it offers policyowners flexibility to meet a variety of goals

B

Which statement is true concerning premature death and life expectancy? I- life expectancy has increased in US over last century II- surviving family members may experience a reduction in their standard of living if the breadwinner dies prematurely

BOTH

All the following statements about universal life insurance are true except: A-interest is credited monthly to a policy's cash value B-Ant withdrawal of cash value reduces the death benefit C-interest credited to a policy's cash value is taxable to the policyowner in the year credited D-the policyowner can add to a policy's cash value at any time subject to policy guidelines

C

Tammy purchased a term life ins policy when she had life insurance needs and limited income. Now she can afford whole life ins. What term life ins provision will permit Tammy to switch h her term ins to whole life ins without having to show she is still insurable? A- renewal provision B-tax free exchange provision C-conversion provision D- free look provision

C

The NAAR for a life insurance policy is the difference between the: A- PV of future benefits and the PV of future premiums B-face amount of the policy and the total premiums that have been paid C-face Amt of the policy and the legal reserve D-annual premium and the annual policy dividend

C

The purpose of an estate clearance fund is to pay for all of the following except: A-burial expense B-estate administrative expenses C- education costs D-installment debts

C

Which of the following about yearly renewable term insurance is true? I- it requires evidence of insurability for renewal II- it is most appropriate when an insured needs lifetime protection

Neither of them

How do premiums for yearly renewable term insurance change as an insured gets older? A- they increase at an increasing rate B- the increase at a decreasing rate C-the decrease at a constant rate D-they remain level

A

James purchased yearly renewable term insurance. All of the following are common characteristics of this coverage except: A- evidence of insurability is not required to renew coverage B-cash value accumulation is slow to moderate C-the number of times the coverage can be renews is limited D- premiums increase at an increasing rate upon renewal

B

Rachel needs permanent insurance. Which method make sense for her to employ? A- capital retention approach B-level premium method C-human life value method D-yearly renewable term

B

Which of the following about decreasing term insurance is true? A- face ant decreases during the policy period- premiums increase B- face amount decreases during the policy period,but premiums remain level C- premium decreases during policy period, but the face amount remains level D- both the premium and face amount of the policy decrease during the policy period

B

Carl wants to buy life insurance - he would also like to invest in a mutual fund. What type of life insurance has fixed premiums and the cash value is not guaranteed (bc savings component is invested)? A- universal life ins B-current assumption whole life C- variable life ins D- independent premium whole life

C

Diane is a single parent with limited income and significant life insurance needs - what type of life insurance makes sense for her situation? A- limited payment whole life insurance B- variable life ins C-term ins D-endowment ins

C

The human life value is defined as: A-present value of a deceased breadwinners future gross income B-future value of a deceased breadwinners past earnings C-PV of the family's share of a deceased breadwinners future earnings D-FV of the family's share of a deceased breadwinners future earnings

C

Which family below is likely to have the least need for a large life insurance policy? A- a blended family B-a traditional family C-a single person family D-a sandwiched family

C

Alex age 26, purchased a 20 not whole life insurance policy. After he has made 20 premium pmts his life insurance policy is considered: A- matured B-reduced C-expired D-paid uo

D

All of the following statements are true except: A-The insurance provides protection for a temporary period of time B-Most policies can be renewed without evidence of insurability C-most policies can be concerted to a permanent life insurance policy D-most policies have a CV that is refunded when coverage ceases

D

Tom and nanc provide financial support for their 2 children. In addition, they provide financial support for toms aged father and nancys aged mother. This family is a... A- blended fam B-single parent fam C-2 income earner fam D- sandwiched fam

D

Which of the following statements about limited pmt life insurance is true? A-it is a form of term insurance B-it natures at the end of the premium-paying period C-the premium decreases each year during the premium paying period D-it's use may be appropriate if a person wants paid-up life insurance by retirement

D