Life & Health Ch 3
A 22 year-old applicant for life insurance has a limited budget for premiums. Which of the following policies would provide for the highest face value, for the lowest premium amount? A Annually Renewable Term B 30 year Term C 10 Year Term D 20 Year Term
a
A convertible term life insurance policy may be converted _____ time(s) for a permanent life policy based on the original or attained age. A 1 B 2 C 3 D 4
a
All of the following are reasons why a new policy issued through a term conversion costs more, except: A The insured's health has changed for the worse B The new policy is permanent C The new policy was issued at the attained age D The new policy has cash values
a
How much of a cash value policy loan will an insurer normally grant with a variable type policy? A 75-90% B 50-75% C 100% D 80-90%
a
The net amount at risk to the insurance company at the endowment date is: A Zero B The total of the premiums paid to date C The face amount D The cash values
a
A married couple purchases a $250,000 Joint Life Policy. When the older of the two dies, what is the amount payable to the survivor? A Zero B $250,000 C $500,000 D $125,000
b
A $100,000 policy with a waiver of premium rider and $30,000 of cash value is in force. The base policy costs $750 and the rider is $50. What is the total premium annually the policyowner must pay to keep the policy in force if the policyowner decides to cancel the rider? A $50 B $800 C $750 D $700
c
How is Variable Whole Life different from Variable Universal Life? A Cash values can be invested in a separate account B It is designed to provide a hedge against inflation C The policy has a guaranteed minimum face amount D The policyowner takes on all of the investment risk
c
Which of the following policies must be sold by prospectus? A Ordinary Whole Life B Equity Indexed Whole Life C Variable Whole Life D Universal Life
c
A Variable Universal Life (VUL) is a combination of: A Term and Universal Life B Whole Life and Variable Life C Term and Whole Life D Universal and Variable Life
d
An insured owns a whole life policy that ends at age 100 and lives to be 100 years of age. Why does the insurer pay the face value to the insured? A Because the cash values exceed the death benefit B Because the mortality costs exceed the premium C Because risk exceeds reward to the insurer D Because the policy endows
d
Each of the following are characteristics of a Current Assumption Whole Life insurance policy, except: A The insurance company can change the interest rate credited to the policy B The insurance company can change the premium C If interest rates increase premiums can be reduced or cash values can increase at a faster rate D The death benefit is not guaranteed
d
Which of the following traditional whole life policies has the highest first-year annual premium, all other factors being equal? A 40-pay life B 10-pay life C 30-pay life D 20-pay life
b
A Universal Life insurance policy is similar to a Whole life policy in which of the following ways? A Expenses, loans or withdrawals, mortality charges (cost of insurance) are deducted from the cash value account monthly B Both current and minimum guaranteed interest rates are provided C They are both supported by the insurer's general account D Surrenders, policy loans, and partial withdrawals are permitted
c
All of the following are riders that can provide for additional temporary coverage on a new or existing policy, except: A Spouse B Children C Neighbor D Insured
c
Angie is the insured under a $100,000 10 year term life insurance policy with her spouse named as her beneficiary. If she dies in year 9, what will her spouse receive? A The policy's cash values B Nothing since this is term insurance C The face amount of the policy D A refund of all premiums paid
c
Generally, Universal Life has how many death benefit options to choose from? A 4 B 3 C 1 D 2
d
Q has an ordinary straight whole life insurance policy for $100,000. Due to a change in circumstances, Q finds that there is now a need for more coverage, but the budget is not sufficient for another similar policy. What can Q do to satisfy the need for additional coverage at a low price? A Use the cash values of the policy to cover the difference B Ask for an increase in the existing policy's face amount C Add an accidental death rider D Add a term rider
d
Term life insurance will not pay out a death claim in which of the following situations? A Death while at work B Death as a result of accident C Death as a result of sickness D Death after the term expires
d
Universal Life provides for an increasing death benefit only if the applicant chooses: A To add an increasing term rider to the policy B A return of premium rider to the plan C To include an inflation rider at the time of application D Death Benefit Option B
d
What happens to the overall policy premium when most riders on a life insurance policy expire? A It goes up B It stays the same C It is refunded D It goes down
d
A __________ is a contractual agreement that allows a company or person to buy one or more of the rights of ownership in a life policy on the life of another person, should the owner/insured become terminally ill. A Viatical Settlement B Leveraged Insurance Agreement C Emergency Fund Rider D Living Needs Rider
a
In the event a parent becomes disabled or dies while paying premiums on a life insurance policy for a minor child, which provision would allow the policy to continue in force until the child reaches a predetermined age? A Payor Benefit (Waiver of Payor Premium) B Cost of Premium Rider C Minor Child Rider D Return of Premium Rider
a
When the death of an insured occurs within a specified period, causing the policy to pay double or triple benefits, this policy must have which of the following riders? A Accidental Death Rider B Enhanced Settlement Rider C Increased Death Benefit Rider D Accelerated Benefit Rider
a
Which of the following statements is correct regarding a Waiver of Premium Rider on a participating whole life policy? A The premiums are waived until either the insured recovers from the disability, the policy achieves paid-up status, or the insured dies B Dividends cease when the rider activates C The death benefit is reduced by the amount of all premiums waived D Cash values do not grow
a
A $100,000 policy with a waiver of premium rider and $30,000 of cash value is in force when the insured dies at age 65. The beneficiary receives how much of the policy's values? A $70,000 B $100,000 C 30,000 D $130,000
b
All of the following are correct regarding renewable term insurance, except: A The policy is renewable until the expiration date B Evidence of insurability is required to renew the policy C The premium increases at renewal based on attained age D The policy renews as long as the premium continues to be paid
b
C has a $100,000 traditional whole life insurance policy with a $30,000 cash surrender value. What is the insurer's net amount at risk? A $30,000 B $70,000 C $130,000 D $100,000
b
Universal Life and Variable Universal Life share all of the following characteristics, except: A Policy loans, surrenders, and partial withdrawals are permitted B The investment risk C Adjustable death benefit options D Flexible premiums
b
What is the 'waiver of premium' called on a Universal Life insurance policy? A Disability premium income B Waiver of Cost of Insurance C Waiver of flexible premium D Monthly premium waiver
b
What is the name of the rider (benefit) that, in the event of a claim, the policy normally pays double or triple the face amount if death was a result of an accident. A Additional Indemnity B Accidental Death C Auto Insurance D Occupational
b
If X has a life insurance policy that is no longer wanted or needed and is considering selling their policy, how much might X receive if the premiums are $10,000 annually, the cash value is $200,000, and the face amount is $1,000,000? A $200,000 B Nothing, because selling the policy is a prohibited transaction C More than $200,000 but less than $1,000,000 D Less than $200,000
c
Money accumulated in a permanent policy that the policyowner may borrow via a policy loan or receive if the policy is surrendered, refers to: A Savings Account B Accumulated at Interest Account C The Cash Value D Deferred Savings Account
c
Sara applies for a $100,000 30 year level term life insurance policy. The producer quoted her a price of $750 annually if issued as applied for. She wants to make sure that the policy premiums are taken care of just in case she has a total disability. The policy is issued but the premium is now $825. What is the most likely reason why the overall premium increased? A Sara just increased the face amount of the policy and the premiums reflect that B The policy was not issued at the underwriting class quoted C Sara now has added a waiver of premium rider, which requires an additional premium payment D Sara was most likely issued a policy type other than applied for
c
Universal Life is similar to Whole Life in all of the following ways, except: A Any internal cash value growth is tax-deferred B Cash values accumulate based on premium deposits and interest C The timing and amount of premium is flexible D It provides a death benefit
c
Which of the following is a true characteristic of a Variable Universal Life policy? A The policy requires only a life license to sell B The insurer bears all risks in accumulating cash value C The policy has a fixed premium schedule D As long as there is sufficient cash value to cover policy expenses when due, the insured is not required to pay the planned premium
d
Which of the following term policies cost the least all other factors being the same? A Nonrenewable and convertible B Renewable and convertible C Renewable and non-convertible D Nonrenewable and non-convertible
d
Which type of term protection has an increasing face value as the insured gets older? A Level Term B Renewable Term C Convertible Term D Increasing Term
d
With a Current Assumption Whole life policy, what can happen if the cash values increase too quickly? A The policy will lapse B The face amount of the policy will decrease C The insurer will be forced to pay out the excess to the policyowner D The policy could mature sooner than expected
d
What is the name of a single policy covering two or more lives that pays benefits upon the death of the first insured? A Universal Life B Accidental Death C Joint Survivorship Life D Joint Life
d
What is the risk to the purchaser in a viatical settlement transaction? A The purchaser paid too little for the policy B The check given to the seller does not clear the bank C The insured dies sooner than expected D The insured does not die within the time period anticipated
d
