AmPro Chapter 9

The Conversion Provision in a Term policy allows the Insured to: Select one: a.Increase the death benefit b.Decrease the death benefit c.Change the beneficiary d.Obtain Whole Life insurance

A "convertible" life insurance policy means that it may be converted from Term to Whole Life. It will usually only be convertible within a fairly short time, such as the first two years. The correct answer is: Obtain Whole Life insurance

Which of the following would be most appropriate for Mortgage Protection Insurance? Select one: a.A 30-year Increasing Term policy. b.A 30-year level Term policy. c.A Whole Life policy. d.A 30-year Decreasing Term policy.

A 30-year Decreasing Term policy.

Renewable Term usually provides for renewal at which of the following times? Select one: a.At policy expiration. b.Within two months of policy lapse. c.During the month of the Insured's last birthday prior to policy expiration. d.When the Insured needs to increase the death benefit.

At policy expiration.

Which of the following permits a Term Policy to be changed to a permanent policy without proof of insurability? Select one: a.Renewability Provision b.Conversion Provision

Conversion Provision

Which provides a death benefit that may be changed to Whole Life without proof of insurability? Select one: a.Renewable Term b.Convertible Term

Convertible Term

Which permits me to buy Whole Life? Select one: a.Annually Renewable Term b.Convertible Term

Convertible Term permits me to exchange the Term policy for a Whole Life policy. See page 9-4, line 1. The correct answer is: Convertible Term

Which Term policy will be the most expensive? Select one: a.Convertible and Renewable b.Noncovertible and Nonrenewable

Convertible and Renewable

Another name used for Decreasing Term Insurance is: Select one: a.Ordinary Life b.Straight Life c.Mortgage Protection Insurance d.Universal Life

Decreasing Term is used almost exclusively to pay the Insured's mortgage in the event of death. Thus, Decreasing Term is also called Mortgage Protection Insurance. The correct answer is: Mortgage Protection Insurance

What is decreasing with a Decreasing Term Life policy? Select one: a.Cash value b.Face value c.Term d.Premium

Decreasing Term is used to provide coverage that will pay the Insured's mortgage payments. Because the balance owing on the mortgage decreases each month, Decreasing Term has a decreasing death benefit. Remember that premiums are presumed to be level and fixed. The correct answer is: Face value

What happens to the premium over the course of a Decreasing Term policy? Select one: a.It increases. b.It remains level and fixed. c.It decreases. d.None of the above.

Don't forget our "almost" sacred rule - the premium is "almost" always level and fixed. So, what changes is the death benefit. Term Insurance has traditionally been sold to people who can't afford Whole Life at this time. The convertibility provision allows such people to buy the fancier Whole Life when their financial situation improves. The correct answer is: It remains level and fixed.

Which provision in a term policy provides for continued term insurance coverage? Select one: a.conversion provision b.renewability provision

If the policy is renewed, we still have term coverage. However, if we convert, we now have whole life coverage. So, the renewability provisions permits the Insured to continue the term coverage. The correct answer is: renewability provision

Which of the following Term policies would cost the least? Select one: a.Non-renewable and convertible. b.Renewable and convertible. c.Non-renewable and non-convertible. d.Renewable and non-convertible.

Insurance companies charge extra for extra bells and whistles. So, having no "extras" would cost the least. Nonrenewable and nonconvertible would be cheapest. The correct answer is: Non-renewable and non-convertible.

What happens to the premium over the life of an Increasing Term policy? Select one: a.It increases by a set amount each year. b.It decreases. c.It remains level and fixed. d.It increases with inflation.

It remains level and fixed.

With Annually Renewable Term, each year the premium: Select one: a.Varies depending on the commission paid to the Producer b.Is increasing c.Remains level and fixed d.Is decreasing

LH Addendum, Page 9-1, Line 11. Although the face value of an Annually Renewable Term policy doesn't change, the premium goes up each year and eventually becomes almost prohibitively expensive as the Insured's attained age reaches 80 or so. The correct answer is: Is increasing

Credit Life is usually: Select one: a.Whole Life b.Decreasing Term c.Level Term d.Increasing Term

LH Addendum, Page 9-1, Line 34. Credit life policies are always sold as term rather than whole life policies. More specifically, they are decreasing term policies so that the amount of the policy's death benefit is equal to the amount of the debt. The correct answer is: Decreasing Term

Who always pays the premium with either an individual or group credit policy? Select one: a.The Insured b.The debtor c.The creditor d.The owner

LH Addendum, Page 9-2, Line 2. With credit life and disability policies, premiums are always paid by the debtor (for both group and individual policies). The correct answer is: The debtor

Who is always the beneficiary with a credit insurance policy? Select one: a.The owner b.The debtor c.The Insured d.The creditor

LH Addendum, Page 9-2, Lines 1-3. Note that with Credit Life or Disability insurance, the beneficiary is always the creditor. The creditor then uses the money to pay the debt. The correct answer is: The creditor

Which form of Term insurance requires the Insured to pass a medical exam in order to have a lower cost of renewal? Select one: a.Renewability Clause b.Reentry

Reentry

Which type of insurance is used to pay a mortgage debt if the owner dies? Select one: a.Whole Life b.Term

Term

With a Convertible Term policy, what is required to convert to Whole Life? Select one: a.A conversion fee. b.Permission from the beneficiary. c.Proof of insurability. d.The Insured must pay a higher premium.

The Insured must pay a higher premium.

With Renewable Term Life, the annual premium increases with each renewal for which of the following reasons? Select one: a.Changes in the Insured's health. b.The Insured's attained age has increased. c.Changes to the Insured's credit. d.A change to the Insured's occupation.

The Insured's attained age has increased.

Why is the premium higher when an Insured converts from Convertible Term to Whole Life? Select one: a.Because of the Insurer's expenses involved in the conversion. b.Because Whole Life costs more than Term Life and the new premium is based on the Insured's age at the time of conversion. c.Because the policy has to rapidly build cash value. d.Because the new premium is based on the Insured's health at the time of conversion.

The Whole Life policy will accumulate a cash value, but not "rapidly." The premium at the time of conversion will be based on the Insured's higher attained age. However, the Insured's health is not a factor because proof of insurability (medical exam) is not required at the time of conversion. The correct answer is: Because Whole Life costs more than Term Life and the new premium is based on the Insured's age at the time of conversion.

Under Increasing Term Life Insurance, what increases over time? Select one: a.The cash value b.The length of the term c.The death benefit d.The premium

The death benefit

Under an Increasing Term Life Insurance, what will increase over time? Select one: a.The length of the term b.The cash value c.The premium d.The death benefit

The death benefit

How is the settlement handled for a 20-Year Renewable Term policy if the Insured dies in year 15? Select one: a.The policy pays a monthly benefit to the beneficiary for 20 years. b.The death benefit is paid out over the remaining five years. c.The death benefit is paid to the beneficiary upon the Insured's death. d.The policy is automatically converted to a Whole Life policy.

The death benefit is paid to the beneficiary upon the Insured's death.

At the end of the policy term, a Term Life policy will: Select one: a.Lapse. b.Mature. c.Convert. d.Expire.

This is a review of what we learned earlier. A Term Policy "expires" if the Insured is alive when the policy term ends. If the Insured has died before the policy term ends, the policy has "matured." That is a big deal on the exam! The correct answer is: Expire.