Question 1

What are the features that distinguish universal life from traditional forms of life insurance?

Accepted Answer

Essay

Question 2

Whole life insurance policy sales have declined in recent years. Which of the following is NOT a reason for this decline?

Accepted Answer

A) term life insurance is typically a better choice for most consumers 
B) term life insurance policies offer very competitive rates and attractive prices 
C) variable life policies have gained popularity 
D) inflation in the late 1970's and early 1980's 
A) term life insurance is typically a better choice for most consumers 
B) term life insurance policies offer very competitive rates and attractive prices 
C) variable life policies have gained popularity 
D) inflation in the late 1970's and early 1980's A

Question 3

If a term life policy is convertible,the insured has the option to convert it to:

Accepted Answer

A) cash 
B) an annuity 
C) a decreasing term policy 
D)  a permanent form of coverage 
A) cash 
B) an annuity 
C) a decreasing term policy 
D)  a permanent form of coverage D

Question 4

Term life insurance has significantly increased in popularity. Why?

Accepted Answer

A) lower rates and greater tax deductions offered to the wealthy 
B) lower rates and tax credit incentives offered to the poor 
C) stable rates with increased benefits for everyone 
D) lower rates and availability of tax-advantaged savings plans 
A) lower rates and greater tax deductions offered to the wealthy 
B) lower rates and tax credit incentives offered to the poor 
C) stable rates with increased benefits for everyone 
D) lower rates and availability of tax-advantaged savings plans

Question 5

Credit life insurance is life insurance sold on credit;the premium payments are borrowed.

Accepted Answer

A) True 
 B)False

Question 6

Choose the item below that is not a characteristic of group life insurance.

Accepted Answer

A)  benefit amounts are usually increased by the employer at 5 year intervals 
B) there usually are no medical exams required 
C) benefits are determined by a predetermined formula 
D) the group must not be formed solely to purchase insurance 
A)  benefit amounts are usually increased by the employer at 5 year intervals 
B) there usually are no medical exams required 
C) benefits are determined by a predetermined formula 
D) the group must not be formed solely to purchase insurance

Question 7

Industrial life insurance is:

Accepted Answer

A) a group life program designed specifically for employees who work in manufacturing 
B) commercial insurance sold in large amounts for key man life insurance 
C)  generally more costly than ordinary life insurance 
D) sold to employees who work in high-risk industrial manufacturing jobs 
A) a group life program designed specifically for employees who work in manufacturing 
B) commercial insurance sold in large amounts for key man life insurance 
C)  generally more costly than ordinary life insurance 
D) sold to employees who work in high-risk industrial manufacturing jobs

Question 8

Which of the following is not a characteristic of universal life insurance?

Accepted Answer

A) mortality costs and minimum investment returns are known 
B) face amounts are fixed and premium payments are fixed 
C) pattern of death benefit is selectable 
D) ability to earn competitive returns 
A) mortality costs and minimum investment returns are known 
B) face amounts are fixed and premium payments are fixed 
C) pattern of death benefit is selectable 
D) ability to earn competitive returns

Question 9

In general,what are the uses for term life insurance? Provide examples.

Accepted Answer

The answer of In general,what are the uses for term...

Question 10

The "difference" in the buy-term-and-invest-the-difference strategy is the difference in ______________ between term life insurance and whole life insurance.

Accepted Answer

A) average insured's life expectancy 
B) expense loads 
C) premiums 
D) dividends 
A) average insured's life expectancy 
B) expense loads 
C) premiums 
D) dividends

Question 11

All of the following statements about term insurance policies are true except:

Accepted Answer

A) Provide protection only for a temporary period of time 
B) Often can be renewed for additional periods without evidence of insurability 
C) Often can be converted to a permanent life insurance policy 
D) Have a cash value that can be taken by the policy owner if she wishes to terminate coverage early 
A) Provide protection only for a temporary period of time 
B) Often can be renewed for additional periods without evidence of insurability 
C) Often can be converted to a permanent life insurance policy 
D) Have a cash value that can be taken by the policy owner if she wishes to terminate coverage early

Question 12

What are the advantages of saving with cash value whole life insurance?

Accepted Answer

The answer of What are the advantages of saving with...

Question 13

After taking an introductory course in insurance,your parents ask you what type of life insurance policy they should purchase to get permanent death protection with a fixed premium amount,a guaranteed rate of return on their cash value,and a level death benefit. Which type of life insurance will you recommend?

Accepted Answer

A) Term life 
B) Whole life 
C) Universal life 
D) Variable life 
A) Term life 
B) Whole life 
C) Universal life 
D) Variable life

Question 14

Mortality tables assume that all people die at age 95.

Accepted Answer

A) True 
 B)False

Question 15

After taking an introductory course in insurance,your parents ask you what type of life insurance policy they should purchase to get permanent death protection with the option to pay more premiums some years,and less in other years. They also want a minimum guaranteed rate of return on their cash value. Which type of life insurance will you recommend?

Accepted Answer

A) Term life 
B) Whole life 
C) Universal life 
D) Variable life 
A) Term life 
B) Whole life 
C) Universal life 
D) Variable life

Question 16

Your best friend discovers you just took an introductory insurance course. He asks you what type of life insurance policy he should buy,given that he is 28 years old. Which type of life insurance should you recommend?

Accepted Answer

A) Term life 
B) Whole life 
C) Universal life 
D) Cannot be determined from the given information 
A) Term life 
B) Whole life 
C) Universal life 
D) Cannot be determined from the given information

Question 17

A disadvantage of using a whole life policy for saving is:

Accepted Answer

A) earnings outside the policy can be greater 
B) federal income tax must be paid on the yearly cash value increases 
C) creditor protection is available if bankruptcy occurs 
D) since premiums must be paid to keep the policy in force, there is the semi compulsory nature of saving 
A) earnings outside the policy can be greater 
B) federal income tax must be paid on the yearly cash value increases 
C) creditor protection is available if bankruptcy occurs 
D) since premiums must be paid to keep the policy in force, there is the semi compulsory nature of saving

Question 18

When an ordinary life insurance policy becomes payable as a death claim,the beneficiary is entitled to the:

Accepted Answer

A) cash surrender value 
B) face amount plus the reserve value 
C) face amount 
D) face amount plus the cash value 
A) cash surrender value 
B) face amount plus the reserve value 
C) face amount 
D) face amount plus the cash value

Question 19

Under a group life insurance plan,in general,individuals do not have to pass an insurer's medical examination.

Accepted Answer

A) True 
 B)False

Question 20

All of the following are true of level premium ordinary whole life insurance except:

Accepted Answer

A) furnished permanent protection over all of one's life 
B) small initial outlay compared to single premium, whole life 
C) combines savings with insurance 
D) premiums end at age 65 
A) furnished permanent protection over all of one's life 
B) small initial outlay compared to single premium, whole life 
C) combines savings with insurance 
D) premiums end at age 65

Exam 13: Life Insurance Policies

What are the features that distinguish universal life from traditional forms of life insurance?

Whole life insurance policy sales have declined in recent years. Which of the following is NOT a reason for this decline?

If a term life policy is convertible,the insured has the option to convert it to:

Term life insurance has significantly increased in popularity. Why?

Credit life insurance is life insurance sold on credit;the premium payments are borrowed.

Choose the item below that is not a characteristic of group life insurance.

Industrial life insurance is:

Which of the following is not a characteristic of universal life insurance?

In general,what are the uses for term life insurance? Provide examples.

The "difference" in the buy-term-and-invest-the-difference strategy is the difference in ______________ between term life insurance and whole life insurance.

All of the following statements about term insurance policies are true except:

What are the advantages of saving with cash value whole life insurance?

Mortality tables assume that all people die at age 95.

Your best friend discovers you just took an introductory insurance course. He asks you what type of life insurance policy he should buy,given that he is 28 years old. Which type of life insurance should you recommend?

A disadvantage of using a whole life policy for saving is:

When an ordinary life insurance policy becomes payable as a death claim,the beneficiary is entitled to the:

Under a group life insurance plan,in general,individuals do not have to pass an insurer's medical examination.

All of the following are true of level premium ordinary whole life insurance except:

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