AD Banker Chapter 3 Exam Questions

Which Term Life insurance Policy would have the highest initial premium, all else being equal? a. 20-year Term b. 10-year Term c. 5-year Term d. 1-year Term

a. 20-year Term

With Joint Life Insurance policies, the premium is based on the: a. Average age of both insureds b. Age of the youngest insured c. Age in a specialized table used for this type of policy d. Age of the oldest insured

a. Average age of both insureds

The value within a permanent life insurance policy that the policyowner can access through a policy loan or policy surrender is known as the ___________. a. Cash value b. Endowment Value c. Rider Value d. Annuity Value

a. Cash Value

Which of the following policies is used in estate planning to fun irrevocable trusts? a. Joint Survivorship Life Policy b. Juvenile Insurance c. Variable Life d. Joint Life

a. Joint Survivorship Life Policy

A ______________ policy is one that is written on the life of a minor. a. Juvenile b. Joint Life c. Joint Survivorship Life d. Equity-Indexed Whole Life

a. Juvenile

Which of the following term life insurance policies would be the most expensive, everything else being equal at the time of issuance? a. Renewable and Convertible b. Renewable c. Convertible d. Non-Renewable and Non-Convertible

a. Renewable and Convertible

A(n) ___________ is an added benefit attached to a life insurance policy for which an additional premium is generally paid. a. Rider b. Reduction c. Extension d. Exception

a. Rider

How is a Variable Universal Life Insurance policy different from a Universal Life Insurance policy? a. The ability to invest the cash values in various separate accounts b. The premium payments c. The adjustability of the face amount d. The death benefit options

a. The ability to invest the cash values in various separate accounts

If an insured has a Life Paid-Up at 75 Policy ( a limited-pay life paid-up at age 75), what would the beneficiary receive if the insured died at age 68? a. The face amount b. The cash value c. The face amount minus the cash value d. The face amount plus the cash value

a. The face amount

If a policyowner of a convertible term life insurance policy exercises his/her right to convert, which of the following will happen? a. The term policy will be replaced by the permanent life insurance policy b. The new policy will have must more life insurance coverage than the previous one c. The new policy will only be issued after proof of insurability is provided d. The new life insurance policy will likely have must lower premium

a. The term policy will be replaced by a permanent life insurance policy

Timothy is the insured.owner of a universal life insurance policy and is concerned that in the even of a disability, the policy might lapse. Which rider would keep he policy from lapsing if he become disabled? a. Waiver of Cost of Insurance b. Waiver of Premium Rider c. Return of Premium Rider d. Guaranteed Insurability Rider

a. Waiver of Cost of Insurance

If Jon dies with an outstanding policy loan of $10,000 on his $100,000 policy that has $15,000 of cash value, what will his beneficiary receive at the time of claim? a. $115,000 b. $90,000 c. $100,000 d. $105,000

b. $90,000

What is the typical time limit on life expectancy for a Viatical Settlement candidate? a. 5 years b. 2 years c. 4 years d. 3 years

b. 2 years

Joe has a whole life policy with a guaranteed insurability rider. He was 21 at the time the policy was issued. If he exercises all of the options at the ages specified under the typical rider, how many policies will he end up with? a. 3 b. 7 c. 6 d. 2

b. 7

Jacob owns a policy that pays a death benefit only if he dies within the 20-year policy period. If Jacob dies anytime that the policy is in force, his beneficiary will receive $100,000. The premium that Jacob pays for this policy will be the same through the 20-year policy period. Jacob owns: a. A Re-Entry Term policy b. A Level Term policy c. A Decreasing Term policy d. An Increasing Term policy

b. A Level Term policy

A rider is usually requested at the time of __________. a. Claim b. Application c. Conversion d. First policy renewal

b. Application

What is the name of a single policy covering two or more lives that pays benefits upon the death of the first insured? a. Accidental Death b. Joint Life c. Joint Survivorship Life d. Universal Life

b. Joint Life

Which of the following policies requires a producer to have both a life and securities license to sell? a. Equity-Indexed b. Variable Universal c. Indeterminate Premium d. Universal

b. Variable Universal

All of the following life insurance policies have a cash value that increases based on interest being credited to the cash value, except: a. Universal Life b. Variable Universal Life c. Current Assumption Whole Life d. Equity-Indexed Whole Life

b. Variable Universal Life

Which rider allows a disabled insured policyowner to forgo future premiums on his or her whole life insurance policy while continuing to enjoy full policy benefits? a. Cost of Living Benefit b. Waiver of Premium c. Waiver of Cost of Insurance d. Living Needs

b. Waiver of Premium

Bess received information in regard to her individual Term Insurance explaining that she could convert the policy be doing which of the following? a. Prove insurability and pay higher premiums based on her attained age b. Without providing proof of insurability, pay higher premiums based on her attained age c. Prove insurability and pay the same life premium d. Without providing proof of insurability and pay the same level premium

b. Without providing proof of insurability, pay higher premiums based on her attained age

Jason has a Whole Life insurance policy with a face amount of $100,000, an annual premium of $1,000, and a cash value of $10,000. If he wants to borrow money from the insurer, what is the maximum he can obtain? a. $100,000 b. $90,000 c. $10,000 d. The sum of the premiums paid up to that point in time

c. $10,000

The double Indemnity Rider requires that the insured die within ________ days of the accident. a. 365 b. 180 c. 90 d. 120

c. 90

Which of the following best describes the return of premium rider? a. An increasing term benefit that matches the cash value accumulation b. A level term rider in the amount of 20 annual premiums c. An increasing term benefit that matches the cumulative premiums paid d. A benefit similar to waiver of premium but is free of charge

c. An increasing term benefit that matches the cumulative premiums paid

All of the following are true of the Universal Life policy, except: a. Adjustments to the face amount may be requested by the policyowner to reflect changes in need b. It allows the owner to make additional contributions that increase the cash value or skip some premiums if the owner desires to do so c. Any borrowing or partial withdrawal from the cash value account terminates the policy d. The cash value account earns interest at the current rate with a guaranteed minimum rate established

c. Any borrowing or partial withdrawal from the cash value account terminates the policy

The premium charged for new policies obtained by exercising the Guaranteed Insurability Rider is based upon the: a. Original policy issue age of the insured b. Original policy issue age of the policyowner c. Attained age of the insured d. Attained age of the policyowner

c. Attained age of the insured

The net amount at risk in an Ordinary Whole Life Insurance Policy ___________ over the life of the policy. a. Increases b. Varies c. Decreases d. Remains the same

c. Decreases

Quentin, age 65, has a life insurance policy he no longer needs and no longer can afford, but he does have a need for cash. XYZ Inc. purchased his policy for less than the face amount but more than the cash value and is not the policyowner and premium payor. This was which of the following transactions? a. Buy/Sell Agreement b. Viatical Trust Settlement Agreement c. Life Settlement d. Living Needs Transaction

c. Life Settlement

An insured dies within the time limit of an Increasing Term Rider and the beneficiary receives the face amount plus the value of all paid premiums. Which rider is attached to the policy? a. Waiver of Premium b. Return of Cash Value c. Return of Premium d. Term to age 100

c. Return of Premium

If an insured is concerned about being unable ot pay the premiums on his or her whole life policy in the event of a total disability, which of the following riders should be added to the policy? a. Waiver of Cost of Insurance b. Payor Benefit c. Waiver of Premium d. Disability Income Benefit

c. Waiver of Premium

An insured purchases a 20-Pay Life Policy with a face amount of $25,000 and an annual premium of $1,000. The insured dies 15 years later when the cash value is $5,000. What amount will the beneficiary receive? a. $15,000 b. $30,000 c. $20,000 d. $25,000

d. $25,000

If Alvin purchases a Variable Universal Life Policy with a face amount of $250,000, and chooses death benefit Option B, upon his death the amount of the benefit payable to the beneficiary would be ___________ if the policy had $25,000 in cash values. a. $250,000 b. $225,000 c. Nothing d. $275,000

d. $275,000

For an insured to be deemed terminally ill under the accelerated death benefit rider, he or she must be expected to live no more than ______ months. a. 12 b. 18 c. 6 d. 24

d. 24

Which of the following riders is used to increase the death benefit if death is the result of an unintended fatal injury, paying a multiple of the face amount? a. Disability Benefit b. Payor Benefit c. Accelerated Death Benefits d. Accidental Death

d. Accidental Death

Which of the following is a type of life insurance that provides an amount of coverage that diminishes while the policy is in effect and is most often used to pay an outstanding loan or mortgage balance upon the death of the insured? a. Renewable Term b. Ordinary Term c. Split Level Term d. Decreasing Term

d. Decreasing Term

The _____________ is the amount payable to the beneficiary upon death of the insured named in a life insurance policy. a. Loan value b. Cash value c. Premium refund d. Face amount

d. Face amount

The Return of Premium Rider, the Return of Cash Value Rider, and the Cost of Living Rider all use which type of term insurance to accomplish their objective? a. Level Term b. Decreasing Term c. Re-Entry Term d. Increasing Term

d. Increasing Term

Which of the following Whole Life insurance policies has the lowest annual premium payment per $1,000 of coverage for a 35-year-old, all other factors being equal? a. Limited Pay Ordinary Whole to age 85 b. 30-Pay Ordinary Life c. 20-Pay Ordinary Life d. Ordinary Straight Whole life

d. Ordinary Straight Whole Life

The face amount of an Ordinary Whole Life Policy ____________ over the life of the policy. a. Increases b. Varies c. Decreases d. Remains the same

d. Remains the same

Term Life insurance is primarily a __________ form of life insurance protection. a. Renewable b. Convertible c. Permanent d. Temporary

d. Temporary

A life insurance premium is paid each month. The insurer then subtracts a mortality and expense charge from the policy's cash value. This best describes which of the following life insurance policies? a. Whole Life b. Variable Whole Life c. Adjustable Whole Life d. Universal Life

d. Universal Life

Which of the following is NOT a type of Term Life Insurance Policy? a. Decreasing b. Increasing c. Level d. Variable

d. Variable