Question 1

An automatic premium loan provision is designed

Accepted Answer

A)  to pay premiums that are not paid when due to prevent lapse, 
B)  to reduce the amount of administrative time used to approve a policy loan, 
C)  to negate the necessity of loan approval by the insurer's loan committee, 
D)  to allow loans to automatically qualify if supported by superior collateral. 
A)  to pay premiums that are not paid when due to prevent lapse, 
B)  to reduce the amount of administrative time used to approve a policy loan, 
C)  to negate the necessity of loan approval by the insurer's loan committee, 
D)  to allow loans to automatically qualify if supported by superior collateral. A

Question 2

Which of the following statements is true about the federal income taxation of death benefits received by the policy beneficiary?

Accepted Answer

A)  As a general rule, the benefits are taxable, 
B)  The benefits are not taxable under any circumstances, 
C)  As a general rule, the benefits are not taxable, 
D)  The benefits are always taxable. 
A)  As a general rule, the benefits are taxable, 
B)  The benefits are not taxable under any circumstances, 
C)  As a general rule, the benefits are not taxable, 
D)  The benefits are always taxable. C

Question 3

Which of the following is not a commonly available settlement option?

Accepted Answer

A)  lump-sum option, 
B)  convertibility option, 
C)  fixed-period option, 
D)  fixed-amount option. 
A)  lump-sum option, 
B)  convertibility option, 
C)  fixed-period option, 
D)  fixed-amount option. B

Question 4

Match the descriptions with their terms:
-A policy is _________________ if the policyholder is eligible to receive policy dividends.

Accepted Answer

A)  Cash value 
B)  common disaster clause 
C)  contingent beneficiary 
D)  Convertible 
E)  Decreasing term
F) face amount
G) fixed-amount option
H) grace period clause
I) irrevocable beneficiary
J) living benefit option
K) lump-sum option
L) participating
M) reinstatement clause
N) Renewable term
O) suicide clause
P) Term insurance
Q) Universal life
R) Whole life insurance 
A)  Cash value 
B)  common disaster clause 
C)  contingent beneficiary 
D)  Convertible 
E)  Decreasing term
F) face amount
G) fixed-amount option
H) grace period clause
I) irrevocable beneficiary
J) living benefit option
K) lump-sum option
L) participating
M) reinstatement clause
N) Renewable term
O) suicide clause
P) Term insurance
Q) Universal life
R) Whole life insurance

Question 5

Match the descriptions with their terms:
-A/An _________________ specifies that the policy proceeds will be paid to the primary beneficiary after the elapse of a period of time if still living; otherwise, the benefits are paid to the contingent beneficiary.

Accepted Answer

A)  Cash value 
B)  common disaster clause 
C)  contingent beneficiary 
D)  Convertible 
E)  Decreasing term
F) face amount
G) fixed-amount option
H) grace period clause
I) irrevocable beneficiary
J) living benefit option
K) lump-sum option
L) participating
M) reinstatement clause
N) Renewable term
O) suicide clause
P) Term insurance
Q) Universal life
R) Whole life insurance 
A)  Cash value 
B)  common disaster clause 
C)  contingent beneficiary 
D)  Convertible 
E)  Decreasing term
F) face amount
G) fixed-amount option
H) grace period clause
I) irrevocable beneficiary
J) living benefit option
K) lump-sum option
L) participating
M) reinstatement clause
N) Renewable term
O) suicide clause
P) Term insurance
Q) Universal life
R) Whole life insurance

Question 6

Which of the following will generally be deducted from the cash value to determine the amount that a policyholder would receive?

Accepted Answer

A)  the current balance of unpaid loans, 
B)  interest credited to the cash value in excess of the guaranteed minimum, 
C)  a forfeiture penalty, 
D)  unrecovered administrative expenses. 
A)  the current balance of unpaid loans, 
B)  interest credited to the cash value in excess of the guaranteed minimum, 
C)  a forfeiture penalty, 
D)  unrecovered administrative expenses.

Question 7

Match the descriptions with their terms:
-A/An _________________ will only receive the death benefits if the primary beneficiary is not alive at the death of the insured.

Accepted Answer

A)  Cash value 
B)  common disaster clause 
C)  contingent beneficiary 
D)  Convertible 
E)  Decreasing term
F) face amount
G) fixed-amount option
H) grace period clause
I) irrevocable beneficiary
J) living benefit option
K) lump-sum option
L) participating
M) reinstatement clause
N) Renewable term
O) suicide clause
P) Term insurance
Q) Universal life
R) Whole life insurance 
A)  Cash value 
B)  common disaster clause 
C)  contingent beneficiary 
D)  Convertible 
E)  Decreasing term
F) face amount
G) fixed-amount option
H) grace period clause
I) irrevocable beneficiary
J) living benefit option
K) lump-sum option
L) participating
M) reinstatement clause
N) Renewable term
O) suicide clause
P) Term insurance
Q) Universal life
R) Whole life insurance

Question 8

Which of the following statements is true about the paid-up additions options?

Accepted Answer

A)  Policy dividends are used to purchase as much one-year term life as possible, 
B)  The paid-up additions option is sometimes called the "fifth dividend option," 
C)  Earnings on the cash value that are higher than the guaranteed rate are used to purchase as much single premium whole life as possible, 
D)  Policy dividends are used to purchase as much single premium whole life as possible. 
A)  Policy dividends are used to purchase as much one-year term life as possible, 
B)  The paid-up additions option is sometimes called the "fifth dividend option," 
C)  Earnings on the cash value that are higher than the guaranteed rate are used to purchase as much single premium whole life as possible, 
D)  Policy dividends are used to purchase as much single premium whole life as possible.

Question 9

Credit life is a form of decreasing term insurance that is designed to pay the unpaid balance of an installment loan at the death of the insured.

Accepted Answer

A) True 
 B)False

Question 10

Match the descriptions with their terms:
-The _________________ results in the payment of a specified amount over a period of time determined by the size and frequency of the payments as well as the interest rate paid by the insurer.

Accepted Answer

A)  Cash value 
B)  common disaster clause 
C)  contingent beneficiary 
D)  Convertible 
E)  Decreasing term
F) face amount
G) fixed-amount option
H) grace period clause
I) irrevocable beneficiary
J) living benefit option
K) lump-sum option
L) participating
M) reinstatement clause
N) Renewable term
O) suicide clause
P) Term insurance
Q) Universal life
R) Whole life insurance 
A)  Cash value 
B)  common disaster clause 
C)  contingent beneficiary 
D)  Convertible 
E)  Decreasing term
F) face amount
G) fixed-amount option
H) grace period clause
I) irrevocable beneficiary
J) living benefit option
K) lump-sum option
L) participating
M) reinstatement clause
N) Renewable term
O) suicide clause
P) Term insurance
Q) Universal life
R) Whole life insurance

Question 11

Match the descriptions with their terms:
-_________________ is designed to be kept in force throughout the life of the insured and includes a cash value element.

Accepted Answer

A)  Cash value 
B)  common disaster clause 
C)  contingent beneficiary 
D)  Convertible 
E)  Decreasing term
F) face amount
G) fixed-amount option
H) grace period clause
I) irrevocable beneficiary
J) living benefit option
K) lump-sum option
L) participating
M) reinstatement clause
N) Renewable term
O) suicide clause
P) Term insurance
Q) Universal life
R) Whole life insurance 
A)  Cash value 
B)  common disaster clause 
C)  contingent beneficiary 
D)  Convertible 
E)  Decreasing term
F) face amount
G) fixed-amount option
H) grace period clause
I) irrevocable beneficiary
J) living benefit option
K) lump-sum option
L) participating
M) reinstatement clause
N) Renewable term
O) suicide clause
P) Term insurance
Q) Universal life
R) Whole life insurance

Question 12

Modified life generally is a type of whole life insurance with premiums that are higher than usual for an initial period of time in order to provide funds to pay the sales commissions.

Accepted Answer

A) True 
 B)False

Question 13

The life insurance contract that generally offers the greatest amount of death protection per premium dollar is

Accepted Answer

A)  whole life, 
B)  term, 
C)  universal life, 
D)  variable life. 
A)  whole life, 
B)  term, 
C)  universal life, 
D)  variable life.

Question 14

The cash value option allows the insured

Accepted Answer

A)  to receive in cash the present value of the face amount of the policy based on the life expectancy of the insured, 
B)  to surrender the policy for the accumulated cash value, 
C)  to collect the death benefits in a lump sum, 
D)  to be assured that the lump-sum option will be selected by the policy beneficiary. 
A)  to receive in cash the present value of the face amount of the policy based on the life expectancy of the insured, 
B)  to surrender the policy for the accumulated cash value, 
C)  to collect the death benefits in a lump sum, 
D)  to be assured that the lump-sum option will be selected by the policy beneficiary.

Question 15

Term insurance contracts generally do not have

Accepted Answer

A)  a clearly defined termination date, 
B)  lower premiums than other forms of insurance, 
C)  the option to convert the policy to another form of insurance, 
D)  cash values. 
A)  a clearly defined termination date, 
B)  lower premiums than other forms of insurance, 
C)  the option to convert the policy to another form of insurance, 
D)  cash values.

Question 16

Match the descriptions with their terms:
-_________________ is designed to be kept in force throughout the life of the insured, includes a cash value element, and is flexible with respect to the amount of premiums paid.

Accepted Answer

A)  Cash value 
B)  common disaster clause 
C)  contingent beneficiary 
D)  Convertible 
E)  Decreasing term
F) face amount
G) fixed-amount option
H) grace period clause
I) irrevocable beneficiary
J) living benefit option
K) lump-sum option
L) participating
M) reinstatement clause
N) Renewable term
O) suicide clause
P) Term insurance
Q) Universal life
R) Whole life insurance 
A)  Cash value 
B)  common disaster clause 
C)  contingent beneficiary 
D)  Convertible 
E)  Decreasing term
F) face amount
G) fixed-amount option
H) grace period clause
I) irrevocable beneficiary
J) living benefit option
K) lump-sum option
L) participating
M) reinstatement clause
N) Renewable term
O) suicide clause
P) Term insurance
Q) Universal life
R) Whole life insurance

Question 17

An interest settlement option

Accepted Answer

A)  keeps a policy in force until the insured is no longer interested in maintaining the coverage, 
B)  has death benefits paid out in equal installments over a specified time period, based on a projected interest rate, 
C)  relates to the expected level of policy dividends, 
D)  involves the insurer holding the death benefits and paying the beneficiary an income consisting only of interest on those benefits. 
A)  keeps a policy in force until the insured is no longer interested in maintaining the coverage, 
B)  has death benefits paid out in equal installments over a specified time period, based on a projected interest rate, 
C)  relates to the expected level of policy dividends, 
D)  involves the insurer holding the death benefits and paying the beneficiary an income consisting only of interest on those benefits.

Question 18

Match the descriptions with their terms:
-The _________________ results in the insurer paying the entire amount of the death benefits all at once.

Accepted Answer

A)  Cash value 
B)  common disaster clause 
C)  contingent beneficiary 
D)  Convertible 
E)  Decreasing term
F) face amount
G) fixed-amount option
H) grace period clause
I) irrevocable beneficiary
J) living benefit option
K) lump-sum option
L) participating
M) reinstatement clause
N) Renewable term
O) suicide clause
P) Term insurance
Q) Universal life
R) Whole life insurance 
A)  Cash value 
B)  common disaster clause 
C)  contingent beneficiary 
D)  Convertible 
E)  Decreasing term
F) face amount
G) fixed-amount option
H) grace period clause
I) irrevocable beneficiary
J) living benefit option
K) lump-sum option
L) participating
M) reinstatement clause
N) Renewable term
O) suicide clause
P) Term insurance
Q) Universal life
R) Whole life insurance

Question 19

Whole life is often referred to as a permanent form of life insurance.

Accepted Answer

A) True 
 B)False

Question 20

Type A universal policies pay the cash value in addition to the face amount at the death of the insured.

Accepted Answer

A) True 
 B)False

Exam 16: Loss of Life

An automatic premium loan provision is designed

Which of the following statements is true about the federal income taxation of death benefits received by the policy beneficiary?

Which of the following is not a commonly available settlement option?

Match the descriptions with their terms: -A policy is _________________ if the policyholder is eligible to receive policy dividends.

Match the descriptions with their terms: -A/An _________________ specifies that the policy proceeds will be paid to the primary beneficiary after the elapse of a period of time if still living; otherwise, the benefits are paid to the contingent beneficiary.

Which of the following will generally be deducted from the cash value to determine the amount that a policyholder would receive?

Match the descriptions with their terms: -A/An _________________ will only receive the death benefits if the primary beneficiary is not alive at the death of the insured.

Which of the following statements is true about the paid-up additions options?

Credit life is a form of decreasing term insurance that is designed to pay the unpaid balance of an installment loan at the death of the insured.

Match the descriptions with their terms: -The _________________ results in the payment of a specified amount over a period of time determined by the size and frequency of the payments as well as the interest rate paid by the insurer.

Match the descriptions with their terms: -_________________ is designed to be kept in force throughout the life of the insured and includes a cash value element.

Modified life generally is a type of whole life insurance with premiums that are higher than usual for an initial period of time in order to provide funds to pay the sales commissions.

The life insurance contract that generally offers the greatest amount of death protection per premium dollar is

The cash value option allows the insured

Term insurance contracts generally do not have

Match the descriptions with their terms: -_________________ is designed to be kept in force throughout the life of the insured, includes a cash value element, and is flexible with respect to the amount of premiums paid.

An interest settlement option

Match the descriptions with their terms: -The _________________ results in the insurer paying the entire amount of the death benefits all at once.

Whole life is often referred to as a permanent form of life insurance.

Type A universal policies pay the cash value in addition to the face amount at the death of the insured.

Introduction to Risk

Risk Identification and Evaluation

Property and Liability Loss Exposures

Life, Health, and Loss of Income Exposures

Risk Management Techniques: Noninsurance Methods

Insurance As a Risk Management Technique: Principles

Insurance As a Risk Management Technique: Policy Provisions

Selecting and Implementing Risk Management Techniques

Risk Management and Commercial Propertypart I

Risk Management and Commercial Propertypart II

Risk Management and Commercial Liability Risk

Workers Compensation and Alternative Risk Financing

Risk Management for Auto Ownerspart I

Risk Management for Auto Ownerspart II

Risk Management for Homeowners

Loss of Health

Retirement Planning and Annuities

Employee Benefits: Life and Health Benefits

Employee Benefits: Retirement Plans

Financial and Estate Planning

Risk Management and the Insurance Industry

Functions and Organization of Insurers

Government Regulation of Risk Management and Insurance

Filters