Life 1 Flashcards
Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option?
a) Length of income period
b) Amount of interest
c) Size of each installment
d) Predetermined length of time stated in the contract
c) Size of each installment
The size of each installment determines the length of time that benefits are received under the Fixed Amount settlement option. It logically follows that larger installments translate into shorter benefit periods.
Which Universal Life option has a gradually increasing cash value and a level death benefit?
a) Term insurance
b) Option B
c) Option A
d) Juvenile life
Option A
Under Option A, the death benefit remains level while the cash value gradually increases. The death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures.
The primary beneficiary of her husband’s life policy found that no settlement option was stated in the policy on the date of her husband’s death. Who will select the settlement option in this case?
a) The beneficiary
b) The benefit must be paid in a lump sum
c) The insurance company
d) The Court
The beneficiary
If a settlement option is not selected by the policyowner before the insured dies, then the beneficiary can choose the option.
What is another name for interest-sensitive whole life insurance?
a) Current assumption life
b) Variable life
c) Term life
d) Adjustable life
Current assumption life
Interest-sensitive whole life, also referred to as current assumption life, is a whole life policy that provides a guaranteed death benefit to age 100.
All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT
a) The employer pays a bonus to a selected employee to fund the policy.
b) It is considered a nonqualified employee benefit.
c) The policy is owned by the company.
d) Any type of insurance policy may be used.
The policy is owned by the company
The policy is owned by the employee.
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?
a) Interest-sensitive whole life
b) Life annuity with period certain
c) Increasing term
d) Limited pay whole life
Limited pay whole life
Premium payments will cease at her age 65, but coverage will continue to her death or age 100.
An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?
a) The beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time.
b) The beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies.
c) One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies.
d) The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.
The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.
When the reduced option is written as “joint and 2/3 survivor,” the surviving beneficiary receives 2/3 of what was received when both beneficiaries were alive.
If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy?
a) It is taxable only if it exceeds the amounts paid for premiums by 50%.
b) It is automatically taxable.
c) It is only taxable if the cash value exceeds the amount paid for premiums.
d) It is not considered to be taxable.
t is only taxable if the cash value exceeds the amount paid for premiums.
The cash value of a surrendered policy is only considered to be taxable as income if the cash value exceeds the amount of premiums paid for the policy.
Which of the following insurers are owned by stockholders?
a) Stock
b) Mutual
c) Reciprocal
d) Fraternal
Stock
Only stock insurance companies are owned and controlled by stockholders.
Which of the following is NOT a type of whole life insurance?
a) Limited payment
b) Level term
c) Single premium
d) Straight life
Level term
There are several types of whole life policies. The first three, Straight Life, Limited Payment, and Single Premium, are the basic forms of whole life. Level term is a type of term insurance.
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
a) A life insurance license.
b) SEC registration.
c) FINRA registration.
d) A securities license.
Sec registration
Agents selling variable life products must be registered with FINRA, have a securities license, and must be licensed within the state to sell life insurance. SEC registration is for securities, not agents.
If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant’s
a) Ancestry.
b) Credit history.
c) Habits.
d) Prior insurance.
Ancestry
The Fair Credit Reporting Act regulates what information may be collected and how the information may be used. Consumer Reports include written and/or oral information regarding a consumer’s credit, character, reputation, and habits collected by a reporting agency from employment records, credit reports, and other public sources. Ancestry is not a relevant factor assessed in these reports.
The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured’s death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT
a) Face amount of the policy.
b) The insured’s age at death.
c) The beneficiary’s life expectancy.
d) Projected interest rates.
The insured age at death
The insured’s age at death will not be considered, but the longer the life expectancy of the recipient, the lower the payments will be.
