primerica exam 5

15. 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 a)Decreased death benefit at each renewal b)Required a premium increase each renewal c)Built cash values d)Required proof of insurability every year

b)Required a premium increase each renewal Annually Renewable Term policies' premiums are adjusted each year to the insured's attained age; however, the policy may be guaranteed renewable. Death benefits remain level, and as with any term policy, there are no cash values.

d)Gradually increases each year by the amount that the cash value increases. Under Option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases

#44. Universal Life Option B includes the annual increase in cash value; the death benefit under this option a)Decreases by the amount that the cash value increases. b)Increases for the first few years of the policy, and then levels off. c)Remains level. d)Gradually increases each year by the amount that the cash value increases

#6. Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?a)Limited pay whole life insurance b)10-year endowment c)Life annuity, period certain d)Increasing term insurance

#6. Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?a)Limited pay whole life insuranceb)10-year endowmentc)Life annuity, period certaind)Increasing term insurance Premium payments will cease at her age 65, but coverage will continue to her death or age 100.

b)The guardian may or may not be accountable for assets The guardian and trustee may be the same person or different people. The primary difference in function is that the trustee is accountable for assets, whereas the guardian may or may not be accountable for assets.

#14. Life insurance benefits for minors must be placed in the hands of either a guardian or a trustee. Which of the following is true? a)The trustee is not accountable for assets b)The guardian may or may not be accountable for assets c)The guardian must also be the trustee d)The guardian and trustee cannot be the same person

d)The annuitant's life expectancy is taken into consideration for the annuity. While they don't have to be, the annuitant and annuity owner are often the same person. The annuitant is the person who receives benefits or payments from the annuity and for whom the annuity is written. Since the annuitant's life expectancy is taken into consideration, the annuitant must be a natural person

#19. Which of the following is NOT true regarding the annuitant? a)The annuitant receives the annuity benefits. b)The annuitant must be a natural person. c)The annuitant cannot be the same person as the annuity owner. d)The annuitant's life expectancy is taken into consideration for the annuity.

a)Option A Under Option A, the death benefit remains level while the cash value gradually 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.

#29. Which Universal Life option has a gradually increasing cash value and a level death benefit? a)Option A b)Juvenile life c)Term insurance d)Option B

c)Concealment In insurance, concealment is the withholding of information that will result in an imprecise underwriting decision.

10. An applicant who knowingly fails to communicate a fact that would help an underwriter make a sound decision regarding coverage is guilty of a)Fraud b)Misrepresentation c)Concealment d)Lying.

b)Transfer When insurance is purchased, the insured is, in return for the payment of the premium, transferring the risk of financial loss by certain perils to the insurance company.

#32. When a homeowner purchases insurance on his home, what risk management technique is he practicing?a)Retention b)Transfer c)Avoidance d)Sharing

b)Fraud False advertising is the illegal practice of advertising or circulating materials that are untrue, deceptive, or misleading

#46. An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? a)False advertising b)Fraud c)Embellishment d)Defamation

While equity indexed annuities earn higher interest rates than fixed annuities, both types of annuities guarantee a specific minimum interest rate. c)It has a guaranteed minimum interest rate

#9. Why is an equity indexed annuity considered to be a fixed annuity? a)It has a fixed rate of return b)It is not tied to an index like the S&P 500 c)It has a guaranteed minimum interest rate d)It has modest investment potential.

d)They are expensive to administer. The major disadvantage of trusts is that they are expensive to administer.

16. What is a major problem with naming a trust as the beneficiary of a life insurance policy? a)The insurance company will not pay the proceeds to a nonliving beneficiary. b)It is illegal to name a trust as the beneficiary. c)The insured must have the Superintendent's permission to name a trust as the beneficiary. d)They are expensive to administer

a)Pay dividends to the policyowner A participating insurance policy will pay dividends to the owner based upon actual mortality cost, interest earned and costs.

24. A participating insurance policy may do which of the following? a)Pay dividends to the policyowner b)Provide group coverage c)Pay dividends to the stock holder d)Require 80% participation