Life and Health Quiz Questions

Which two terms are associated directly with the way an annuity is funded? 1 Immediate or deferred 2 Single payment or periodic payments 3 Renewable or convertible 4 Increasing or decreasing

Single payment or periodic payments

All of the following statements are true regarding installments for a fixed amount EXCEPT 1 The annuitant may select how big the payments will be. 2 This option pays a specific amount until the funds are exhausted. 3 Value of the account and future earnings will determine the time period for the benefits. 4 The payments will stop when the annuitant dies.

The payments will stop when the annuitant dies.

Which of the following statements is correct regarding a whole life policy? 1 The death benefit may increase or decrease during the policy period. 2 The policy premium is based on the attained age. 3 Cash values are not guaranteed. 4 The policyowner is entitled to policy loans.

The policyowner is entitled to policy loans.

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT 1 Evidence of insurability is not required. 2 Upon conversion, the premium for the permanent policy will be based upon attained age. 3 Most term policies contain a convertibility option. 4 Upon conversion, the death benefit of the permanent policy will be reduced by 50%.

Upon conversion, the death benefit of the permanent policy will be reduced by 50%.

When would a 20-pay whole life policy endow? 1 In 20 years 2 After 20 payments 3 When the insured reaches age 100 4 At the insured's age 65

When the insured reaches age 100

Which of the following best describes a pure life annuity settlement option? 1 Pure life provides payments for as long as the annuitant is alive. 2 Pure life guarantees that all the proceeds will be paid out. 3 Benefits are paid for a fixed period of time, specified when the policy begins to pay. 4 Pure life provides payments for as long as both the annuitant and the spouse are living.

1. Pure life provides payments for as long as the annuitant is alive. Pure or straight life annuity settlement option will only pay for as long as the annuitant lives; however, if the annuitant dies after receiving the first payment, no more payments would be made to any other person. For this reason, pure life has the potential to pay larger monthly benefits than other options.

A Universal Life Insurance policy is best described as a/an 1 Flexible Premium Variable Life policy. 2 Variable Life with a cash value account. 3 Annually Renewable Term policy with a cash value account. 4 Whole Life policy with two premiums: target and minimum.

Annually Renewable Term policy with a cash value account. Reasoning A universal policy has two components: an insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.

Which of the following features of the Indexed Whole Life policy is NOT fixed? 1 Cash value growth 2 Premium 3 Death benefit 4 Policy period

Cash value growth

Which policy component decreases in decreasing term insurance? 1 Dividend 2 Face amount 3 Premium 4 Cash value

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

A Return of Premium term life policy is written as what type of term coverage? 1 Level 2 Renewable 3 Increasing 4 Decreasing

Increasing

A domestic insurer issuing variable contracts must establish one or more 1 Separate accounts. 2 Annuity accounts. 3 Liability accounts. 4 General accounts.

Separate Accounts

Which of the following types of annuities will generally provide the highest monthly income? 1 Joint and survivor 2 Installment refund 3 Life with a 10-year period certain 4 Straight life

Straight life Reasoning Pure or straight life annuity settlement option will only pay for as long as the annuitant lives; therefore, it has the potential to provide the highest monthly income. Any time a "period certain" option is included, it will reduce the monthly payout amount because, even if the annuitant dies, the company must continue to pay benefits for the period certain.

All of the following statements about equity index annuities are correct EXCEPT 1 The annuitant receives a fixed amount of return. 2 The interest rate is tied to an index such as the Standard & Poor's 500. 3 They have a guaranteed minimum interest rate. 4 They invest on a more aggressive basis aiming for higher returns.

The annuitant receives a fixed amount of return.

An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it? 1 Immediate 2 Flexible premium 3 Deferred 4 Fixed

3. Deferred Deferred annuities may be purchased with either a single lump sum or periodic payments, but they do not begin the income payments until sometime after 1 year from the date of purchase.

Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated? 1 Refund life 2 Annuity certain 3 Variable annuity 4 Fixed annuity

Annuity certain

Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive 1 The amount paid into the annuity. 2 Nothing; the payments will cease. 3 The remainder of the principal. 4 Guaranteed minimum benefit.

Nothing; the payments will cease. Reasoning Straight or pure life annuity will pay a specific amount of income for the remainder of the annuitant's life. This payment will cease at death, regardless of the amount of principal that hasn't been paid out. There is no refund or payments to survivors.

An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase? 1 Payments for 15 years 2 Payments for life 3 Nothing 4 Payments for 20 years

Payments for 15 years

Which of the following is NOT true about a joint and survivor annuity benefit option? 1 The surviving annuitant may receive reduced payments. 2 This option guarantees income for two or more recipients. 3 Payments stop after the first death among the annuitants. 4 A period certain option may be included.

Payments stop after the first death among the annuitants.

Which of the following is TRUE regarding the premium in term policies? a. Only level term policy has a level premium. b. Decreasing term policy will have a decreasing premium. c. The premium in term policies is not based on the insured's age. d. The premium is level for the term of the policy.

d. The premium is level for the term of the policy. Reasoning The premium on a term life insurance policy is level throughout the term of the policy. Only the amount of the death benefit may change. This does not apply to annual renewable term insurance, in which the premium increases annually according to the attained age.