LIFE INSURANCE PREMIUMS(3)
Cash value is the __________________ of a whole life policy.
Savings portions
Some life insurance policies allow policyholders to pay one large ____________________________. This greatly reduces the costs of administering the policy since the insurer only needs to process one payment.
Single premium payment
Net single premium + loading = gross single premium. Therefore, the gross single premium minus the net single premium yields the loading: ($2,000 - $1,700 = $300). The loading is?
$300.
Which of the following are the actuarial tables used by insurers for underwriting?
C.S.O. tables
Mortality tables are used to predict the likelihood of ___________ in a given population. Data in mortality tables are categorized by underwriting factors such as ______, ______, and _________ habits.
Death, age, sex, smoking
In life insurance the risk of _________ increases with age, so premiums must be ________ in later years to account for this risk.
Death, higher
Employer-paid premiums used to fund group life insurance for the benefit of employees are tax-_________ as a business expense.
Deductible
Premiums for life insurance used for business purposes are generally not tax-__________.
Deductible
Mortality describes the rate, at which a specific population _____, and is used to calculate ___ insurance premiums.
Dies, life
Level premium policyholders are essentially paying more in the _________ years of the policy, and _______ in later years than the risk of death warrants.
Earlier, less,
Premium payment mode describes the ___________ that premiums are paid.
Frequency
Morbidity is used for determining __________ insurance premiums. Mortality is used in determining __________ insurance premiums.
Health, life
More, frequent premium payments means ________ premiums.
Higher
Level premium policies usually have __________ premiums in order to account for the greater risk of death with _________ age.
Higher, advancing
Morbidity describes the rate at which _________ occurs; mortality describes the rate at which a specific population ______.
Illness, dies
Another term for insurers' expense is:
Loading
Level premium policyholders are essentially paying ________ in the earlier years of the policy, and ____ in later years than the risk of death __________.
More, less, warrants
Which best describes the rate at which men age 35 die?
Mortality
Which of the following best describes the tool underwriters use to determine the rate at which a group of people die?
Mortality table
The C.S.O. tables are ____________ tables that portray the chance of a person dying at a ___________ age.
Mortality, particular
_____________________ includes mortality and interest. More specifically, Its mortality minus interest.
Net premium
Employer-paid premiums used to fund group life insurance for the benefit of employees are:
Tax-deductible as a business expense
_______________________ is the frequency that premium payments are made. More premium payments mean higher premiums.
The premium payment mode
Premiums for life insurance purchased for charitable purposes are:
Premiums used for a charity are tax-deductible.
Which factor is the most crucial for underwriting life insurance?
Proposed insured's age
Which describes the term, net single premium?
Net single premium is Mortality - Interest
Which statements correctly describes net single premium?
Net single premium is mortality minus interest
Morbidity describes the rate at which illness occurs, and is used to calculate health insurance premiums.
Illness, health
____________________________ treat reserves as a liability, not an asset because reserves are funds the insurance company must set aside to pay future claims.
Insurance companies
Acquisition costs, overhead, contingency funds, and immediate claims payments. The following are who's expenses
Insurers
A permanent withdrawal of cash value or surrender is only taxable up to the portion of the surrender that accumulates:
Interest
Premiums are invested to earn __________. Higher interest rates allow insurers to charge ________ premiums.
Interest, lower
Insurance companies need to set aside a certain amount of funds called reserves. Reserves are treated as a(n):
Liability
Premiums paid on individual ________ insurance policies are generally not tax ___________.
Life, deductible
Insurers' expenses are called __________. These are the daily ___________ of operating an insurance company.
Loading, expenses
Net single premium is mortality __________ interest.
Minus
Generally, premiums paid on business life insurance policies are:
Not tax-deductible
Generally, premiums paid on individual life insurance policies are:
Not tax-deductible
What is true regarding level premiums?
Policyholders are paying more premium than is needed in the early years of policy
If a life insurance policy's cash value is surrendered, what portion is taxable?
Portion that is interest
Joan pays premiums quarterly. What is the term that describes the frequency that Joan pays her premiums?
Premium payment mode
Martin pays his policy premiums on a monthly basis. Which of the following terms best describes the frequency that Martin pays his premiums?
Premium payment mode
The _______________ insured's age is most important, as it is the basis for establishing _________.
Proposed, mortality
If a policyowner wants to pay the cheapest premiums, what premium payment mode should he use?
Single premium payment