Question 1

The accumulation of a reserve consisting of excess payments above the mortality cost in the early years of a policy is necessary for the:

Accepted Answer

A)  deferred annuity plan 
B)  minimum reserve standard 
C)  level-premium plan 
D)  yearly renewable-term plan 
A)  deferred annuity plan 
B)  minimum reserve standard 
C)  level-premium plan 
D)  yearly renewable-term plan C

Question 2

Assume that all of the life insurance policies listed below have a $50,000 face value, are sold by the same insurer, and have identical expense and mortality rates. Which of these, sold to a 27 year old female, should be the least expensive?

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 A

Question 3

MaryJo owns a whole-life insurance policy on her own life. She has accumulated $40,000 of cash value in the policy. Which of the following statements is/are true regarding this policy and the options MaryJo has? I. She can withdraw the entire $40,000 at any time and forfeit her death protection.
II. She can borrow the $40,000, but will lose all her death protection until the loan is paid back.
III. If MaryJo dies tomorrow with no policy loan outstanding, her beneficiary will receive the face value of the insurance policy, while the $40,000 in cash value becomes a survivorship benefit for other insureds.

Accepted Answer

A)  I, II, and III 
B)  I and II 
C)  II and III 
D)  I and III 
A)  I, II, and III 
B)  I and II 
C)  II and III 
D)  I and III D

Question 4

Term insurance is normally purchased by people between the ages of:

Accepted Answer

A)  25 and 65 
B)  45 and 65 
C)  20 and 60 
D)  25 and 75 
A)  25 and 65 
B)  45 and 65 
C)  20 and 60 
D)  25 and 75

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Universal life insurance is an interest sensitive product.

Accepted Answer

A) True 
 B)False

Question 7

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 8

In group life insurance, an insurer might accept an exposure who could not meet the insurer's standards for individual life insurance.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A)  Single-year term 
B)  Flexibility of premium payment 
C)  Ability to benefit from interest rate increases 
D)  Flexibility of death benefits 
A)  Single-year term 
B)  Flexibility of premium payment 
C)  Ability to benefit from interest rate increases 
D)  Flexibility of death benefits

Question 10

Which of the following policies would have the highest premium for a standard risk male age 27?

Accepted Answer

A)  Level term 
B)  Whole life continuous premium 
C)  Whole life paid-up at 65 
D)  10-pay whole life 
A)  Level term 
B)  Whole life continuous premium 
C)  Whole life paid-up at 65 
D)  10-pay whole life

Question 11

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 1970s and early 1980s 
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 1970s and early 1980s

Question 12

Jens is a newly-married man who wants $100,000 of life insurance, but he cannot afford the ordinary level whole life premium until he gets out of graduate school. He would like to pay less for the first few years of coverage until he graduates. He can still obtain the desired amount of insurance for the whole of his life by purchasing:

Accepted Answer

A)  limited-payment whole life 
B)  single premium whole life 
C)  deferred premium annuity life 
D)  convertible term 
A)  limited-payment whole life 
B)  single premium whole life 
C)  deferred premium annuity life 
D)  convertible term

Question 13

A convertible term policy allows the insured to convert a term policy into any other type of policy including a different type of term policy.

Accepted Answer

A) True 
 B)False

Question 14

In group insurance, the conversion privilege allows an insured to convert from a whole life to a term policy.

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 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 16

The excess interest provision in life insurance means that the cash value will increase:

Accepted Answer

A)  faster than the guaranteed rate if the insurer actually earns a greater return than the guaranteed rate 
B)  faster than the guaranteed rate even if the insurer does not earns a greater return than the guaranteed rate 
C)  faster than it would with a universal or variable life policy 
D)  slower than the guaranteed rate 
A)  faster than the guaranteed rate if the insurer actually earns a greater return than the guaranteed rate 
B)  faster than the guaranteed rate even if the insurer does not earns a greater return than the guaranteed rate 
C)  faster than it would with a universal or variable life policy 
D)  slower than the guaranteed rate

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

Which of the following is not a reason to buy cash-life insurance?

Accepted Answer

A)  Forced savings 
B)  Tax savings 
C)  Professional investment management 
D)  Protection against declaration of bankruptcy 
A)  Forced savings 
B)  Tax savings 
C)  Professional investment management 
D)  Protection against declaration of bankruptcy

Question 19

Why have term life insurance rates decreased in recent years?

Accepted Answer

A)  Improved human longevity 
B)  Decrease in percentage of the population infected with HIV/AIDS 
C)  Regulatory intervention 
D)  They have not decreased; this is a trick question. 
A)  Improved human longevity 
B)  Decrease in percentage of the population infected with HIV/AIDS 
C)  Regulatory intervention 
D)  They have not decreased; this is a trick question.

Question 20

All of the following statements about an ordinary (whole) life insurance policy are true, except:

Accepted Answer

A)  Premiums can be level throughout the policy period. 
B)  The face amount is paid if the insured lives to age 65. 
C)  There is a buildup of cash value that can be borrowed by the policyholder. 
D)  It can fulfill the insured's death protection AND saving needs. 
A)  Premiums can be level throughout the policy period. 
B)  The face amount is paid if the insured lives to age 65. 
C)  There is a buildup of cash value that can be borrowed by the policyholder. 
D)  It can fulfill the insured's death protection AND saving needs.

The accumulation of a reserve consisting of excess payments above the mortality cost in the early years of a policy is necessary for the:

Assume that all of the life insurance policies listed below have a $50,000 face value, are sold by the same insurer, and have identical expense and mortality rates. Which of these, sold to a 27 year old female, should be the least expensive?

Term insurance is normally purchased by people between the ages of:

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

Universal life insurance is an interest sensitive product.

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

In group life insurance, an insurer might accept an exposure who could not meet the insurer's standards for individual life insurance.

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

Which of the following policies would have the highest premium for a standard risk male age 27?

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

A convertible term policy allows the insured to convert a term policy into any other type of policy including a different type of term policy.

In group insurance, the conversion privilege allows an insured to convert from a whole life to a term policy.

The excess interest provision in life insurance means that the cash value will increase:

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

Which of the following is not a reason to buy cash-life insurance?

Why have term life insurance rates decreased in recent years?

All of the following statements about an ordinary (whole) life insurance policy are true, except:

Introduction to Enterprise Risk Management and Insurance

Risk Identification

Risk Assessment and Pooling

Risk-Handling Techniques: Loss Control, Risk Transfer, and Loss Financing

Risk-Handling Techniques: Diversification and Hedging

Fundamentals of Insurance

Insurable Perils and Insuring Organizations

Insurance Functions

Insurance Markets: Economics and Issues

Insurance Regulation

Insurance Contracts

The Personal Auto Policy

Homeowners Insurance

Professional Financial Planning

Standard Life Insurance Contract Provisions and Options

Annuities

Health Insurance and Disability Income

Employee Benefits

Social Security

Unemployment and Workers Compensation Insurance

Commercial Property Insurance

Commercial Liability Insurance

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Exam 15: Life Insurance Policies

The accumulation of a reserve consisting of excess payments above the mortality cost in the early years of a policy is necessary for the:

Assume that all of the life insurance policies listed below have a $50,000 face value, are sold by the same insurer, and have identical expense and mortality rates. Which of these, sold to a 27 year old female, should be the least expensive?

Term insurance is normally purchased by people between the ages of:

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

Universal life insurance is an interest sensitive product.

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

In group life insurance, an insurer might accept an exposure who could not meet the insurer's standards for individual life insurance.

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

Which of the following policies would have the highest premium for a standard risk male age 27?

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

A convertible term policy allows the insured to convert a term policy into any other type of policy including a different type of term policy.

In group insurance, the conversion privilege allows an insured to convert from a whole life to a term policy.

The excess interest provision in life insurance means that the cash value will increase:

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

Which of the following is not a reason to buy cash-life insurance?

Why have term life insurance rates decreased in recent years?

All of the following statements about an ordinary (whole) life insurance policy are true, except:

Introduction to Enterprise Risk Management and Insurance

Risk Identification

Risk Assessment and Pooling

Risk-Handling Techniques: Loss Control, Risk Transfer, and Loss Financing

Risk-Handling Techniques: Diversification and Hedging

Fundamentals of Insurance

Insurable Perils and Insuring Organizations

Insurance Functions

Insurance Markets: Economics and Issues

Insurance Regulation

Insurance Contracts

The Personal Auto Policy

Homeowners Insurance

Professional Financial Planning

Standard Life Insurance Contract Provisions and Options

Annuities

Health Insurance and Disability Income

Employee Benefits

Social Security

Unemployment and Workers Compensation Insurance

Commercial Property Insurance

Commercial Liability Insurance

Filters