Question 1

Describe a blended insurance policy.

Accepted Answer

A blended insurance policy is a mixture of term and whole life insurance. That is, a portion of the insurance coverage is whole life and the remainder is term insurance. On the whole life part of a blended insurance policy, the insured pays a level premium for life. That guarantee is possible because the premium is much higher than is really needed to cover the insured in the early years; the excess goes into a side fund that is used to pay for the death benefit later when the premium payments progressively increase. The more term life there is in the mix, the lower would be the annual premium in the early stages and the greater would be the risk of premium escalation at a later stage. Naturally, the total annual premium in a blended policy is not guaranteed for life.
The term/whole life blend would be impractical without mixing with it the third ingredient of dividends. Whole life policies typically pay annual dividends which can be used to purchase additional whole life insurance. As the portion of whole life insurance in the blended policy increases, the portion of term life gradually declines. So in a likely scenario, by using future dividends, in about 20 years a 50-year old might be able to transform a blended policy into a 100 percent whole life insurance plan, thereby insuring a level premium for the rest of his or her life.

Question 2

Universal life insurance:

Accepted Answer

A)  Is basically the same as whole-life 
B)  Pays interest rates lower than passbook savings 
C)  Is comprised of a renewable term policy and a cash accumulated fund 
D)  Pays only if there is "universal death" 
E)  Provides universal premium rates for all applicants 
A)  Is basically the same as whole-life 
B)  Pays interest rates lower than passbook savings 
C)  Is comprised of a renewable term policy and a cash accumulated fund 
D)  Pays only if there is "universal death" 
E)  Provides universal premium rates for all applicants C

Question 3

Your client recently installed fire alarms throughout her home. This is an example of:

Accepted Answer

A)  Risk avoidance 
B)  Risk identification 
C)  Risk transfer 
D)  Risk reduction 
A)  Risk avoidance 
B)  Risk identification 
C)  Risk transfer 
D)  Risk reduction D

Question 4

A whole life insurance policy has an accumulated cash value of $35,000 and a face value of $80,000. Upon death of the insured the beneficiary would receive: Author Query: Please specify if $ means US$ throughout.

Accepted Answer

A)  $35,000 
B)  $45,000 
C)  $80,000 
D)  $115,000 
E)  None of the above 
A)  $35,000 
B)  $45,000 
C)  $80,000 
D)  $115,000 
E)  None of the above

Question 5

In a split dollar plan a key issue relates to the actual ownership of the policy. What are the two common methods of implementing a split dollar plan?

Accepted Answer

A)  The employer/employee split ownership method 
B)  The endorsement method and the collateral assignment method 
C)  Third party ownership and employee trust plan 
D)  IRS Code 503 plan and employee trust plan 
E)  Split Term Life Method 
A)  The employer/employee split ownership method 
B)  The endorsement method and the collateral assignment method 
C)  Third party ownership and employee trust plan 
D)  IRS Code 503 plan and employee trust plan 
E)  Split Term Life Method

Question 6

Describe some of the conditions under which it is advisable to switch policies. Are there disadvantages to policy switches?

Accepted Answer

The key reasons for switching of policie

Question 7

The dividend option clause in a life insurance policy gives the policyholder the right to do all the following except:

Accepted Answer

A)  Apply dividends toward premiums payments 
B)  Purchase stock in the company at rates below that of the market 
C)  Leave the dividend with the company to earn interest 
D)  Purchase additional paid-up insurance 
E)  None of the above 
A)  Apply dividends toward premiums payments 
B)  Purchase stock in the company at rates below that of the market 
C)  Leave the dividend with the company to earn interest 
D)  Purchase additional paid-up insurance 
E)  None of the above

Question 8

All of the following questions need to be answered before making the life insurance buying decision, except:

Accepted Answer

A)  Duration of the need 
B)  Concern about the financial viability of the current insurer 
C)  Capacity of the policyholder to fund premiums 
D)  Cost of the premium compared to alternatives 
E)  All of these questions need to be answered 
A)  Duration of the need 
B)  Concern about the financial viability of the current insurer 
C)  Capacity of the policyholder to fund premiums 
D)  Cost of the premium compared to alternatives 
E)  All of these questions need to be answered

Question 9

Your clients, Jack and Samantha are 28 and 26, respectively. Samantha just gave birth to the couple's first child, a daughter, three months ago. Neither has much investment experience and they are both conservative in respect to risk. They come to you for advice regarding a life insurance policy-one that would help provide financial resources should anything happens to either of them. Which of the following policies would be the least suitable given their situation?

Accepted Answer

A)  10-year renewable term policy 
B)  Whole life policy 
C)  Universal life policy 
D)  Variable life policy 
E)  First-to-die policy 
A)  10-year renewable term policy 
B)  Whole life policy 
C)  Universal life policy 
D)  Variable life policy 
E)  First-to-die policy

Question 10

Essentially, there are two broad categories of life insurance. They are:

Accepted Answer

A)  Cash value and term 
B)  Term and family protection 
C)  Permanent and cash value 
D)  Endowment and cash value 
E)  None of the above 
A)  Cash value and term 
B)  Term and family protection 
C)  Permanent and cash value 
D)  Endowment and cash value 
E)  None of the above

Question 11

Explain the salient features of a single-premium whole life (SPWL) policy.

Accepted Answer

SPWL is a cash value insurance policy wh

Question 12

Which of the following is not consistent with the three basic rules of risk management?

Accepted Answer

A)  Transfer high probability/ low loss exposures 
B)  Transfer low probability/ high loss exposures 
C)  Transfer lows that could be devastating 
D)  Consider the cost of the policy versus the benefit of the coverage before making the decision of whether or not to retain, reduce, or transfer risk 
A)  Transfer high probability/ low loss exposures 
B)  Transfer low probability/ high loss exposures 
C)  Transfer lows that could be devastating 
D)  Consider the cost of the policy versus the benefit of the coverage before making the decision of whether or not to retain, reduce, or transfer risk

Question 13

What riders might you suggest for a permanent policy if your client is concerned about future health problems, including possible disability issues?

Accepted Answer

Three riders that would address the clie

Question 14

What is the main objective for purchasing a survivorship life policy?

Accepted Answer

A survivorship policy can be either a fi

Question 15

Which of the following policies has no savings element in it?

Accepted Answer

A)  Whole life 
B)  Universal life 
C)  Variable universal life 
D)  10-year renewable term 
E)  20-year limited payment life 
A)  Whole life 
B)  Universal life 
C)  Variable universal life 
D)  10-year renewable term 
E)  20-year limited payment life

Question 16

Which of the following is an allowable means of distributing your life insurance benefits upon your death?

Accepted Answer

A)  Fixed period option 
B)  Fixed income option 
C)  Life income option 
D)  Lump sum payment 
E)  All of the above represent allowable means 
A)  Fixed period option 
B)  Fixed income option 
C)  Life income option 
D)  Lump sum payment 
E)  All of the above represent allowable means

Question 17

Distinguish between whole life and limited payment life insurance.

Accepted Answer

A whole life policy has the lowest premi

Question 18

Comment on the following statement: "The best thing about life insurance is that it is completely tax-free."

Accepted Answer

This statement is only partially True. I

Question 19

It is asserted that there are only two kinds of life insurance: term and cash value. Do you agree or disagree with this assertion? Give reasons for your answer.

Accepted Answer

The statement is basically True. A term

Question 20

Compare and contrast variable life and variable universal life.

Accepted Answer

Variable life is whole life insurance in

Describe a blended insurance policy.

Universal life insurance:

Your client recently installed fire alarms throughout her home. This is an example of:

A whole life insurance policy has an accumulated cash value of $35,000 and a face value of $80,000. Upon death of the insured the beneficiary would receive: Author Query: Please specify if $ means US$ throughout.

In a split dollar plan a key issue relates to the actual ownership of the policy. What are the two common methods of implementing a split dollar plan?

Describe some of the conditions under which it is advisable to switch policies. Are there disadvantages to policy switches?

The dividend option clause in a life insurance policy gives the policyholder the right to do all the following except:

All of the following questions need to be answered before making the life insurance buying decision, except:

Essentially, there are two broad categories of life insurance. They are:

Explain the salient features of a single-premium whole life (SPWL) policy.

Which of the following is not consistent with the three basic rules of risk management?

What riders might you suggest for a permanent policy if your client is concerned about future health problems, including possible disability issues?

What is the main objective for purchasing a survivorship life policy?

Which of the following policies has no savings element in it?

Which of the following is an allowable means of distributing your life insurance benefits upon your death?

Distinguish between whole life and limited payment life insurance.

Comment on the following statement: "The best thing about life insurance is that it is completely tax-free."

It is asserted that there are only two kinds of life insurance: term and cash value. Do you agree or disagree with this assertion? Give reasons for your answer.

Compare and contrast variable life and variable universal life.

Emerging Role of the Financial Planner

Personal Financial Planning Process

Time Value of Money: The Universal Tool

Health, Homeowners, Automobile, and Liability Insurance: Structure, Concepts, and Planning

Cash Management, Savings, Credit, and Debt Planning

Educational Planning

Investment Products and Markets: an Introduction

Investment Management: Concepts and Strategies

Investment Planning Strategies

Basic Federal Income Tax Structure

Tax Planning: Concepts and Strategies

Basic Structure of Retirement Income

Retirement Planning: Concepts and Strategies

Basic Structure of Estate Planning

Estate Planning: Concepts and Strategies

Comprehensive Financial Plan

Divorce: Financial Planning Implications

Planning for Widows

Planning for Nontraditional Families

Filters

Exam 4: Life Insurance: Structure, Concepts, and Planning Strategies

Describe a blended insurance policy.

Universal life insurance:

Your client recently installed fire alarms throughout her home. This is an example of:

A whole life insurance policy has an accumulated cash value of $35,000 and a face value of $80,000. Upon death of the insured the beneficiary would receive: Author Query: Please specify if $ means US$ throughout.

In a split dollar plan a key issue relates to the actual ownership of the policy. What are the two common methods of implementing a split dollar plan?

Describe some of the conditions under which it is advisable to switch policies. Are there disadvantages to policy switches?

The dividend option clause in a life insurance policy gives the policyholder the right to do all the following except:

All of the following questions need to be answered before making the life insurance buying decision, except:

Essentially, there are two broad categories of life insurance. They are:

Explain the salient features of a single-premium whole life (SPWL) policy.

Which of the following is not consistent with the three basic rules of risk management?

What riders might you suggest for a permanent policy if your client is concerned about future health problems, including possible disability issues?

What is the main objective for purchasing a survivorship life policy?

Which of the following policies has no savings element in it?

Which of the following is an allowable means of distributing your life insurance benefits upon your death?

Distinguish between whole life and limited payment life insurance.

Comment on the following statement: "The best thing about life insurance is that it is completely tax-free."

It is asserted that there are only two kinds of life insurance: term and cash value. Do you agree or disagree with this assertion? Give reasons for your answer.

Compare and contrast variable life and variable universal life.

Emerging Role of the Financial Planner

Personal Financial Planning Process

Time Value of Money: The Universal Tool

Health, Homeowners, Automobile, and Liability Insurance: Structure, Concepts, and Planning

Cash Management, Savings, Credit, and Debt Planning

Educational Planning

Investment Products and Markets: an Introduction

Investment Management: Concepts and Strategies

Investment Planning Strategies

Basic Federal Income Tax Structure

Tax Planning: Concepts and Strategies

Basic Structure of Retirement Income

Retirement Planning: Concepts and Strategies

Basic Structure of Estate Planning

Estate Planning: Concepts and Strategies

Comprehensive Financial Plan

Divorce: Financial Planning Implications

Planning for Widows

Planning for Nontraditional Families

Filters