Chapter Quizzes

Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years? a. A privacy note b. A buyer's guide c. A policy summary d. A notice regarding replacement

C. A policy summary

Which of the following is the basic source of information used by the company in the risk selection process? a. Warranty b. Consumer report c. Application d. Agent's report

c. Application

The type of policy that can be changed from one that does not accumulate cash value to the one that does is a a. Decreasing Term Policy b. Whole Life Policy c. Convertible Term Policy d. Renewable Term Policy

c. Convertible Term Policy

Insurance is a contract by which one seeks to protect another from a. Uncertainty b. Hazards c. Loss d. Exposure

c. Loss

Which of the following has the right to convert the existing term coverage to permanent insurance? a. Beneficiary b. Producer c. Policyowner d. Insurer

c. Policyowner

What is the purpose of a conditional receipt? a. It is intended to provide coverage on a date prior to the policy issue b. It guarantees that a policy will be issued in the amount applied for c. It serves as proof that the applicant has been determined insurable d. It is given only to applicants who fully prepay the premium

a. It is intended to provide coverage on a date prior to the policy issue

Which of the following best describes annually renewable term insurance? a. It is level term insurance b. It requires proof of insurability at each renewal c. Neither the premium nor the death benefit is affected by the insured's age d. It provides an annually increasing death benefit

a. It is level term insurance

Which of the following is an example of a limited-pay life policy? a. Life Paid-up at Age 65 b. Renewable Term to Age 70 c. Level Term Life d. Straight Life

a. Life Paid-up at Age 65

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will a. Pay the policy proceeds only if it would have issued the policy b. Pay the policy proceeds up to an established limit c. Not pay the policy proceeds under any circumstances d. Automatically pay the policy proceeds

a. Pay the policy proceeds only if it would have issued the policy

Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application? a. Return the application to the applicant for completion b. Issue a policy anyway since the application has been submitted c. Ask the producer who solicited the policy to complete and resign the application d. Fill in the blanks to the best of the insurer's knowledge

a. Return the application to the applicant for completion

Which of the following would provide an underwriter with the information concerning an applicant's health history? a. The Medical Information Bureau (MIB) b. A medical examination c. The agent's report d. The inspection report

a. The Medical Information Bureau (MIB)

An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant dies the following day, which of the following is TRUE? a. The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy b. The premium would be returned to the insured's estate because the policy was not issued c. The death claim will be rejected d. The application will be voided

a. The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy

If an application for a life insurance policy is found to be substandard risk, the insurance company is most likely to a. Require a yearly medical examination b. Lower its insurability standards c. Refuse to issue the policy d. Charge a higher premium

d. Charge a higher premium

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income? a. Annuitization period b. Pay-out period c. Liquidation period d. Depreciation period

d. Depreciation period

Which policy component decreases in decreasing term insurance? a. Cash value b. Dividend c. Premium d. Face amount

d. Face amount

Mortality - Interest + Expense = a. Benefits budget b. Operating expenses c. Net premium d. Gross premium

d. Gross premium

All of the following are true regarding a decreasing term policy EXCEPT a. The payable premium amount steadily declines throughout the duration of the contract b. The death benefit is $0 at the end of the policy term c. The contract pays only in the event of death during the term and there is no cash value d. The face amount steadily declines throughout the duration of the contract

a. The payable premium amount steadily declines throughout the duration of the contract

Which of the following statements is correct regarding a whole life policy? a. The policyowner is entitled to policy loans. b. Cash values are not guaranteed. c. The policy premium is based on the attained age. d. The death benefit may increase or decrease during the policy period.

a. The policyowner is entitled to policy loans.

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have? a. Universal life b. Adjustable life c. Term life d. Limited pay

a. Universal life

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than a. With the policy b. Upon issuance of the policy c. Within 30 days after the first premium payment was collected d. Prior to filling out an application for insurance

a. With the policy

An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n) a. Attending Physician Statement b. Inspection report c. Medical Information Bureau report d. Medical examination

b. Inspection report

An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it? a. Graded Premium Life b. Limited-pay Life c. Variable Life d. Adjustable Life

b. Limited-pay Life

What describes the specific information about a policy? a. Producer's report b. Policy summary c. Illustrations d. Buyer's guide

b. Policy Summary

Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles? a. Standard risk is also known as high exposure risk b. Standard risk is representative of the majority of people c. Standard risk pays a higher premium than a substandard risk d. Standard risk requires extra rating

b. Standard risk is representative of the majority of people

Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT a. Alcohol and tobacco consumption b. Recent surgeries c. Other insurance coverages d. Family health history

c. Other insurance coverages

Who bears all of the investment risk in a fixed annuity? a. The beneficiary b. The annuitant c. The insurance company d. The owner

c. The insurance company

The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as a. The policyowner cannot skip premiums without the policy lapsing b. The next month's premium is sufficient to cover both the current premium amount and the skipped amount c. The policy contains sufficient cash value to cover the cost of insurance d. The previous premium payments were high enough to create an excess of premium

c. The policy contains sufficient cash value to cover the cost of insurance

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? a. The policy will be void b. The insurer may deny coverage later, because of the information missing on the application c. The policy will be interpreted as if the insurer waived its right to have an answer on the application d. The policy will be interpreted as if the insured did not have an answer to the question

c. The policy will be interpreted as if the insurer waived its right to have an answer on the application

Which of the following is TRUE regarding the premium in term policies? a. The premium in term policies is not based on the insured's age b. Decreasing term policy will have a decreasing premium c. The premium is level for he term of policy d. Only level term policy has a level premium

c. The premium is level for he term of policy

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT a. Most term policies contain a convertibility option b. Upon conversion, the premium for the permanent policy will be based upon attained age c. Upon conversion, the death benefit of the permanent policy will be reduced by 50% d. Evidence of insurability is not required

c. Upon conversion, the death benefit of the permanent policy will be reduced by 50%

The insured is also the policyowner of a whole life policy. What age must the insured attained in order to receive the policy's face amount? a. 65 b. 70 1/2 c. 90 d. 100

d. 100

In insurance, an offer is usually made when a. The insurer approves the application and receives the initial premium b. The agent hands the policy to the policyholder c. An agent explains a policy to a potential applicant d. An applicant submits an application to the insurer

d. An applicant submits an application to the insurer

Which is the primary source of information used for insurance underwriting? a. Applicant interviews b. Medical records c. Private investigations d. Application

d. Application

Which of the following is INCORRECT regarding a $100,00 20-year level term policy? a. The policy premiums will remain level for 20 years b. If the insured dies before the policy expired, the beneficiary will receive $100,00 c. The policy will expire at the end of the 20-year period d. At the end of 20 years, the policy's cash value will equal $100,000

d. At the end of 20 years, the policy's cash value will equal $100,000

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. Interest-sensitive whole life b. Life annuity with period certain c. Increasing term d. Limited pay whole life

d. Limited pay whole life

Which of the following will be included in a policy summary? a. Copies of illustrations and application b. Comparisons with similar policies c. Primary and secondary beneficiary designations d. Premium amounts and surrender values

d. Premium amounts and surrender values

Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources? a. Whole Life b. Annuity c. Variable Life d. Term

d. Term

If the annuitant dies during the accumulation period, who will receive the annuity benefits? a. The annuity owner b. The insurance company c. The annuitant's estate d. The beneficiary

d. The beneficiary

Whose responsibility is it to make certain that an application for insurance is filled out completely and correctly? a. The beneficiary of the applicant b. The insurance company c. The applicant d. The producer

d. The producer

What is the purpose of establishing the target premium for a universal life policy? a. To accumulate cash value faster b. To pay up the policy faster c. To cover all policy expenses d. To keep the policy in force

d. To keep the policy in force