Life Insurance 4

Question 1

Level premium permanent insurance accumulates a reserve that will eventually:
Equal the face amount of the policy
Pay a dividend to the policyowner
Require the policyowner to make periodic withdrawals
Become larger than the face amount

Answer 1

Equal the face amount of the policy

Question 2

People with higher loss exposure have the tendency to purchase insurance more often than those at average risk. This is called?
Risk retention
Preexisting conditions
Law of large numbers
Adverse selection

Answer 2

Adverse selection

Question 3

Which of these would limit a company’s liability to provide insurance?
Waiver
Exclusion
Rider
Provision

Answer 3

Exclusion

Question 4

The term which describes

Question 5

The fact that both parties of a contract may NOT receive the same value is referred to as:
Apparent
Estoppel
Aleatory
Unilateral

Answer 5

Aleatory

Question 6

According to the principle of Utmost Good Faith, the insured will answer questions on the application to the best of their knowledge and pay the required premium, while the insurer will deal fairly with the insured and its:
Underwriting
Issuance of the policy
Promises made
Legal reserve

Answer 6

Promises made

Question 7

What is created after policy proceeds are obtained in a lump sum and then immediately invested:
Viatical settlement
Emergency fund
Lump sum fund
Estate

Answer 7

Estate

Question 8

Which contract element is insurable interest a component of?
Competent parties
Offer and acceptance
Consideration
Legal purpose

Answer 8

Legal purpose

Question 9

Which type of clause describes the following statement, we have issued the policy in consideration of the representations in your applications and payment of the first-term premium?
Premium clause
Consideration clause
Adhesion clause
Contestability clause

Answer 9

Consideration clause

Question 10

Which situation accurately describes a reduced paid-up nonforfeiture option?
Policy has a decreased face amount?
Face amount of the new policy equals that of the original policy
Cash value is surrendered to policyowner
Premium must continue to be paid

Answer 10

Policy has a decreased face amount

Question 11

An error was made on Mary’s life insurance application. Which of the following areas do errors commonly occur on applications and for which the incontestable clause does NOT apply?
Marital status
Age
Address
Income

Answer 11

Age

Question 12

Which of these retirement plans do NOT qualify for a federal tax deduction?
SIMPLE plan
Traditional IRA
Keogh plan
Roth IRA

Answer 12

Roth IRA