life and health

Alma, age 35, earns $50,000 a year and expects to retire when she is 65. What is Alma's human life value?

$1.5 million

In a universal life policy with a guaranteed interest rate of 5% and a current interest of 9%, what would be the dollar amount of the annual policy load generated by not paying excess interest on the first $1,000 in cash value amount?

$40

Interim term insurance

- term insurance to cover the period of time between now and the time permanent is to begin -automatically convertible

which of the following factors determine an annuity premium

-age and gender -assumed interest rate and load -the income amount and payment guarantee

characteristics of a contract

-competent parties -legal purpose -offer and acceptance -consideration

Family Plans

-contracts that cover each of the family members at the time the policy is issued -combination of blended policies -insurance on the insured is permanent, insurance on the spouse and children is term -term insurance is issued without addition premium is child is born or adopted after policy is issued -children eventually come off plan

5 obligations of death

-final expenses -mortgage -family future living expenses -education expenses -death taxes

individual variable annuity contract may be

-immediate, with or without guarantee payment periods -joint and survivor, for more than one life -deferred, with or without guaranteed payment periods

Term Insurance

-limited income -temporary need for coverage -used to provide maximum coverage at minimum cost

indeterminate premium policies

-low initial premium -after the first two years the premium is adjusted based on insurance company: 1 investment return 2.mortality 3. expenses

premium determination

-mortality risk -operating expense risk -investment risk

Renewable Term Insurance

-must be written and requested into policy at time of purchase -gives the policyholder the right to renew each year -without having to pass a physical exam, -must renew within 30days of the policy expiration date, -premiums increase as insured ages

function of contract owner

-naming annuitant -naming the beneficiary -purchasing the contract

Convertible Term Insurance

-offers policyholders the option of exchanging a term policy for a cash-value policy without evidence of insurability -choice of age: attained(current) age or original age (must pay back premiums) -time limit to do this -must be included in time of purchase

straight life annuity

-provides for a periodic income to be paid to the annuitant for life -does not provide a guarantee as to maximum benefits -provides that periodic income payments cease upon the annuitants death

which of the following takes place during annuitization

-the accumulated cash value is converted into a stream of periodic payments -payments begin which are based upon actuarial principals -distributions are made which are the same for the remainder of the contract

what takes place during an annuity accumulation phase

-the contract may be funded with a lump sum -the principal earns interest -the contract may be funded with a series of premium payments

insurance companies' separate accounts

-their value equals the total market value of all securities purchased by the account and held in inventory -account values change from day to day -accumulation units fluctuate

When a group plan is noncontributory, what percentage of employees must be covered?

100%

if Sarah has a family maintenance policy purchased when she was 25 that has a 15 year payment period, how many years will Sarah's beneficiary receive income from this policy if Sarah should die at age 39?

15 years

The normal waiting period for benefits under the disability income rider is

3 to 6 months

if an insured is receiving continuing disability claims, the insurance company can require notice of continuance of claim every how many days/months

6 months

if an A&H policy provides any periodic payments contingent on continuing loss, written proof of loss must be furnished by the insured within how many days of the termination of the period for which the insurer is liable?

90 days

Should the proposed insured desire to correct an application, he or she a. can make the change but must initial it b. must complete another application as no changes are ever allowed on an application c. can telephone the agent or an officer of the company and let them make the change d. must do so within 10 days

???d

Survivorship Policy

A Second-to-Die policy ends with the death of the second insured. purchased to help the surviving children pay estate taxes after the death of the second parent.

Clete names his wife, Anna, as the primary beneficiary of a $10,000 whole life policy with a common disaster provision. Their son, Jimmy, is the contingent beneficiary. Clete and Anna are involved in a serious private airplane accident. Clete is killed immediately but Anna lives for another two months before she dies to. Which of the following is likely to occur?

Anna receives the proceeds of the policy, which in turn are paid to her estate upon her death.

Modified Endowment Contract (MEC)

Any cash value policy that builds cash value faster than a Seven-Pay Whole Life Contract and therefore loses the tax advantages of life insurance.

The lucrative lozenge company provides a $5000 monthly income to retirees who served as senior executives. This benefit is not available to other retirees of the company. This is an example of a A profit sharing plan B qualified retirement plan C Nonqualified plan D defined contribution plan

C Nonqualified plan

Joint Life Policy

Covers two or more lives and provides for the payment of the proceeds at the death of the first among those insured, at which time the policy automatically terminates.

which of the following is NOT permitted to a fraternal benefit society A A representative form of government B A ritualistic form of work C nonprofit organization D Issuance of capital stock

D Issuance of capital stock

Which of the following statements regarding the medical information bureau is not true? A. it is a nonprofit agency established by life insurance companies to aid their underwriting B. it supplies member companies with information concerning insurability of proposed insured's C. it must be authorized by the applicant to give them permission to member companies D. it is not obligated to supply applicants with information it holds about them

D. it is not obligated to supply applicants with information it holds about them

The Kalamazoo Stove and Screen Door Company applies for life insurance on its key vice president, Harold. Kalamazoo S and SD Company is the premium payer and beneficiary, and controls all rights to the policy. Which following is true?

Harold is the proposed insured; his company is the applicant

Estate Builder

Juvenile life insurance policy in which a parent or guardian purchases a life insurance policy on a child. The face amount is small (e.g. $1,000), but jumps fivefold upon the child's 21st birthday. Synonymous with jumping juvenile.

Single Premium Whole Life

Paid up for life with one large premium payment

Family Income Policy

Same as WL but w/ Decreasing Term rider; upon death, pays monthly income for REMAINING term AFTER which pays full death benefit.

Family Maintenance Policy

Same as WL but w/ Level Term rider; upon death, pays monthly income for FULL term AFTER which pays full death benefit.

Level Term Insurance

Term insurance where the face value of policy remains the same from the date the policy is issued until the date the policy expires.

in a whole life insurance policy

The cash value is greatest at the end of the policy period, and the insurance protection is greatest at the start of the policy

A payor rider is used to keep what type of policy in force?

a juvenile insurance policy

when converting a group life policy to and individual policy, the departing group member's new policy must be

a permanent or whole life policy

whole life insurance

a permanent policy for which you pay a specified premium each year for the rest of your life and have coverage your whole life

the social security program is funded by

a special payroll tax on employers, employees and the self-employeed

Industrial Life Insurance

a type of insurance in which the policies are sold in small amounts and an agent of the company collects the premiums at the insured's home

Variable Universal Life

a universal policy where the premiums are invested in variable rate earning assets

All of the following are examples of insurable interest EXCEPT a. An airline insuring the lives of its passengers b. An individual insuring his or her own life c. A company insuring the life of its president d. A parent insuring his or her child's life

a. An airline insuring the lives of its passengers

which of the following requires that insureds must be advised that reports and/or medical reports on them are being requested? a. medical information act b. fair credit reporting act c. medical disclosure center d. central credit control authority

a. medical information act

Accumulation Units

accounting measure that determines a variable annuity contract owner's interest into the separate account

An accounting measure used to determine a contract owner's interest in the separate account of a variable annuity before payments begin is called

accumulation

an insurance agent's duties include

all:-solicitation-collecting premiums-handling claims

One-year renewable term insurance provides

an increasing premium every year

each of the following statements about policy loans is correct except a. the loan value of a policy cannot exceed the current cash value b. policy loans can be made both permanent and term policies c. if a policy has cash value, the insurance company cannot refuse to lend the policyowner money d. a policy loan cannot be made on a policy until it has been in force long enough to accumulate some cash value

b. policy loans can be made both permanent and term policies

if the policyowner has chosen the reduce premium dividend option, dividends will

be applied to the premium due

An elimination or waiting period in an accident and health insurance policy refers to the period

between the first day of disability and the actual receipt of payment of disability

Which is a correct statement regarding partial disability payments? 1. Partial Disability payments are often made as the result of accident disability 2. the usual partial disability benefit is 50% of the total disability benefit.

both 1 and 2 Partial Disability payments are often made as the result of accident disability and the usual partial disability benefit is 50% of the total disability benefit.

a "simple" retirement plan

can be either a 401(k) plan or an IRA

variable annuity

can provide for payments to the annuitant for life

Withholding of facts that should be included in an application for insurance is called?

concealment

annuity

converting a sum of money into a series of periodic payments guaranteed to last a lifetime or longer can be achieved by this

Which of the following is NOT a circumstance under which a company will pay a death claim for less than the face amount? a. When the age of the insured has been understated at the time the policy was issued, and the face amount must be reduced before payment b. When the premium is past due an in the grace period and therefore must be deducted from the face amount before the proceeds are paid c. When there is an outstanding policy loan, plus interest, which must be deducted from the face amount before payment is made to the beneficiary d. When the age of the insured has been overstated at the time the policy was issued When the age of the insured has been overstated at the time the policy was

d. When the age of the insured has been overstated at the time the policy was issued When the age of the insured has been overstated at the time the policy was

TSAs are tax-sheltered retirement programs for employees of all the following kinds of organizations except: a. charitable b. educational c. religious d. labor

d. labor

each of the following is a source of life insurance policy dividends except a. saving in mortality b. additional interest earnings c. reductions in operating expenses d. more policy owners

d. more policyowners

premiums for which of the following policies are deductible by an individual for income tax purposes? A. universal life policy B. whole life policy C. term policy D. none of the above

d. none of the above

which of the following is taxable as income? a. insurance policy proceeds paid in a lump sum b. interest paid on policy dividends c. policy dividends d. policy loans

d. policy loans???????

Debra funds her annuity over a period of many years, her sister Abby funds hers with a lump sum. they both take distributions many years later. What kind of annuities do they have

deferred

George has named each of his 3 sons as per capita beneficiaries pf a $30,000 life insurance policy. If all 3 sons are living at the time of George's death, which statement best described the amount each will receive?

each son receives $10,000

an application for group coverage is signed by the

employer, who then receives and retains a master policy

the nonforfeiture option that provides the most life insurance is the

extended term option

robert has the option to vary the amount of each annuity premium he pays, what kind of annuity does he have

flexible premium

Universal Life Insurance

flexible premium, adjustable death benefit life insurance policy that accumulates cash value at current rates or interest

The premium that reflects mortality rates, assumed interest, and the policy's shares of the company's operating expenses is called the

gross premium

which statement best describes the provisions of the uniform simultaneous death act?

if the insured and primary beneficiary should die immediately in the same accident, the proceeds are paid as if the primary beneficiary had died first

martha purchases an annuity with a large sum she receives from an inheritance. payouts c an begin one month and one year after funding. what kind of annuity does she have

immediate

Flexible Premium Annuity

is a deferred annuity with annuity payment amounts that cannot be determined in advance

money provided under the automatic premium loan provision

is generally charged interest

life insurance is the most practical means of meeting obligations arising from an individual's premature death because

it creates an immediate estate

joint life annuity vs joint life and survivorship annuity

joint life and survivorship pays until a second annuitant dies joint life annuity pays only until the the death of the first annuitant

factors that determine the amount of each payment under the fixed period settlement option are

length of the fixed period, face amount of the policy, and interest

the type of premium for term insurance that remains the same throughout a policy period for more than 1 year is the

level premium and its used level and decreasing policies

mike owns an annuity guaranteed to make payments to him for 20 years, after two years of making payments he dies, his beneficiary receives the remaining payments, what kind of annuity does mike have

life with period certain

when converting a term policy to a whole life policy at attained age, the cash values at age 65 will be

lower than if ordinary life had been purchased at original age

final expenses

medical, funeral, debts, current bills

can an annuity contract owner have fewer units than he or she originally purchased

no, although the value of the units may be higher or lower

the stork provision of a guaranteed insurability rider provides that the policyowner may purchase insurance

on the policyowner's life in anticipation of the next option date, within 90 days after the birth of a child

an insured can by written request to the insurance company, have benefits under a policy paid to

only the beneficiary whether the insured is living or deceased

Using the policy dividends as a single premium to buy additional life insurance is called the

paid up additions option

what takes place during an annuity's annuity period

payouts begin

straight annuity with installments

pays the annuitant for a specific minimum number of years or the rest of his or her life, whatever is longer

Endowment Policies

policies issued on or after January 1 , 1985 that endow prior to age 95 loses its tax advantages of life insurance

When and to whom are life insurance premiums payable?

premiums are payable in advance to the company or it's authorized representative

annual premium annuity

purchased over the years prior to the date on which the annuity begins

Refund Life Annuity vs life annuity no-refund

refund annuity guarantees that an amount at least equal to the purchase price will be paid, no-refund offers no such guarantee

limited-pay "life" policy

requires premium payments for a specified number of years or until a specified age is reached but have coverage for life

Decreasing Term Insurance

term insurance in which the annual premium remains constant but the face amount of the policy declines each year, used for outstanding debt

if children are born or adopted after a family policy is issued

term insurance will automatically be provided for the child under the same policy

If a policyowner has a $100,000 policy with an accumulated cash value of $6,000, the policyowner can borrow up to...

the entire accumulated cash value of $6,000 less interest for one year

in a variable annuity what is fixed

the number of annuity units used to determine the amount of each payment to the annuitant

When the cash value account of a universal life policy reaches zero, the policyowner must make a premium payment or

the policy goes in the grace period

If an insured's policy includes the waiver of premium rider, what happens when the age is reached where the rider no longer applies?

the premium policy is reduced

Variable Life Insurance

whole life insurance that invests the cash value of the policy in stocks or other high-yielding securities, no guaranteed cash value , death benefit must never be less than the face amount of the policy

When Jonas died, it was discovered that he was actually 6 years older than he had claimed when applying for an insurance policy. As a result of this discovery, the insurance company

will pay the amount of insurance that Jonas's premiums would have purchased at his correct age