CHP 8 - D2L Quiz - Life Insurance

Policy dividends- For the insured who needs more life insurance, the best option for receiving policy dividends is to

buy additional paid-up coverage.

Death benefit: The death benefit of ____ life insurance may go down due to poor investment returns.

c and d = (universal + variable)

Nonforfeiture rights guarantee that a policy owner will not lose his or her ____.

cash value.

Life insurance If life insurance is convertible, the policy can be

changed to another type of life insurance.

Variable life insurance- An insured usually chooses variable life insurance in order to

emphasize the savings portion while still having death protection.

Policy features- Which of the following policy features allow the insured to increase coverage periodically without showing proof of insurability?

guaranteed purchase options

Life insurance policies with small face amounts where the premium may be collected weekly by agents is

industrial life insurance.

Insurance premium- You want to pay premiums for 20 years and have your insurance premium obligations finished at that time, but you feel you will need life insurance for the rest of your life. You should choose ____ insurance.

limited pay

Loss The probability of a loss occurring can be reduced by

loss prevention.

Participating policy- A participating policy

may pay dividends.

Group life insurance is

often more expensive than private coverage.

Life insurance policy- If a life insurance policy pays dividends, it is called:

participating

Term life insurance is characterized by

premium amounts related to age.

Whole life insurance is designed to provide

protection and savings.

Insurance Through insurance, society is able to

reduce financial risks and share losses.

Risk Management Technique - The purchase of insurance is a common form of which risk management technique:

risk transfer

whole life insurance The least expensive form of whole life insurance protection is

straight life.

Life insurance If the objective of your life insurance program is to get the greatest death protection now for your insurance dollars, you should choose ____ insurance.

term

Universal life policy- The insurance portion of a universal life policy is most analogous to

term insurance.

Name: Rodney and Toni are a young couple with two small children. They are doing well financially but their life insurance needs are high and their budget is tight. What type of life insurance will give them the most protection for their money?

term life

Underwriting The underwriting function is designed to be sure that premiums are based on

the chance of loss.

Underwriting is

the determination of which exposures to insure.

Name: Kurt purchased a policy with an initial premium of $3,000 and may elect how much he desires to pay in premiums from now on. He has purchased a face value of $100,000 and can accumulate cash value. What type of life insurance has Kurt purchased?

universal life

Policies- Which of the following types of policies is most likely to allow you to switch investments?

variable life

Name: Marilyn Simms died with a $200,000 life insurance policy. Her husband, Jack, was the primary beneficiary and their children, Mimi (age 24) and Ann (age 30), were the contingent beneficiaries. All three survived Marilyn. How would the policy proceeds be distributed?

$200,000 to Jack

Traditional whole life policies- With traditional whole life policies sold by an agent, sales commissions and marketing expenses account for at least ___ % of the first year's premium and at least ___% of total premiums paid over the life of the policy.

100, 20

Grace period- A grace period permits the policy holder to retain insurance even though the premium has not been paid for

30 days

Common provision: ____ is a common provision in many term policies.

A renewable clause

Underwriting is best described as:

Activities related to selecting acceptable risks so that general insurer objectives are met.

Personal risk management- The most valuable single technique in personal risk management to assist an individual in determining how much life insurance is needed is:

Assessing the family's total economic needs and subtracting financial resources available to meet those needs.

Life insurance policy should contain all the following except

Co-insurance clause

Decreasing-term life insurance ____ and ____ are both relatively expensive types of decreasing-term life insurance.

Credit life; mortgage life

Settlement option: Which type of settlement option pays for over a predetermined time frame?

Fixed period

Universal life insurance- ____ can be both an advantage and a disadvantage of universal life insurance.

Flexible premiums

Term insurance: ____ is not a type of term insurance.

Limited pay

Interest in the life insurance policy- What is it called when an insured sells an interest in the life insurance policy to an investor, who then becomes the policy's beneficiary?

Viatical settlement

Universal life insurance- Which of the following is not characteristic of universal life insurance?

Which of the following is not characteristic of universal life insurance?

Universal life insurance is-

a combined investment plan and insurance policy.

Term insurance Decreasing term insurance usually has a decreasing face value and

a level premium.

Underwriting helps protect life insurance companies from which of the following

adverse selection

Life insurance contract- A life insurance contract contains clauses for

all of the above. (settlement options, policy reinstatement, change of policy)

Life insurance The needs approach to determining the amount of life insurance considers

all of these (family income, paying off debts, special financial needs, liquidity)

Life insurance premiums- Paying life insurance premiums on a(n) ____ basis will be the most economical.

annual