Life Insurance Quiz 4 Chs. 14-17
Term insurance is always the least expensive form of insurance regardless of the duration of needed coverage.
False
Level-premium whole life insurance policies allow policyowners to borrow amounts under the policy. Typical loan provisions include which of the following requirements?
If the policy is terminated the cash surrender value is reduced by any outstanding policy loans and unpaid interest.
Advantages of ordinary level-premium whole life include all of the following except
Interest on policy loans is generally non deductible
Which of the following is a characteristic of a level-premium non-participating whole life insurance policy?
There is a schedule of guaranteed cash values.
In which of the following situations would a level-premium whole life insurance policy be appropriate?
To provide funds for the continuation of a business through a "buy-sell" agreement
A term life insurance policy makes no promise to pay anything if the insured lives beyond the specified term.
True
Most insurance companies do not offer renewable term policies to new applicants after a certain age, which is usually between 60 and 70.
True
Term life insurance is ideal for temporary needs, such as paying off funeral, estate, and inheritance taxes.
True
A single premium current-assumption life policy generally guarantees all of the following, except:
a fixed level of dividends will be paid throughout the term of the policy
An increasing premium, level death benefit term policy to age 65 is:
a one-year term policy, renewable to age 65
A single premium life insurance policy issued before June 21, 1988 is "grandfathered," that is not subject to the MEC (Modified Endowment Contract) tax rules. However, it can lose this tax status if there is:
an exchange of the policy for another policy
If a term policy is convertible it means the policy:
gives the policyholder a contractual right to change the term policy for some other type of life insurance policy without evidence of insurability
A survivorship life plan that involves a greater proportion of term insurance than permanent insurance:
is sensitive to changes in yields, or interest rates
Advantages of term life insurance include all of the following, except:
it is the most cost effective when the duration of the needed protection is over 15 years
Which of the following accurately describes a disadvantage of survivorship life insurance?
it provides no benefits at the first death, unless a special rider is added
Disadvantages of term insurance include all of the following except
proceeds are not part of a probated estate unless the estate is a named beneficiary.
A survivorship rider permits
the purchase of increased coverage on the insured if the life designated in the rider dies before the insured
A significant advantage of a split dollar plan using survivorship life instead of a single-life policy is that
very low Table 38 rates are used to measure the pure insurance cost of survivorship life while both insureds are alive, instead of the higher P.S. 58 rates
Advantages of single premium life include all of the following except
As a good short-term tax-deferred investment.
For which of the following is use of single premium whole life insurance least appropriate?
As a good short-term tax-deferred investment.