Questions to work on Flashcards
Darlene owned a $100,000 whole life policy that had a $75,000 cash value when she died at the age of 75. The amount paid by the insurance company as a death benefit was
A. $75,000
B. $175,000
C. $100,000
D. nothing
C
Which of the following statements regarding limited-pay life insurance is not correct?
A. Limited-pay policies endow when the insured is 100 years old.
B. Cash value grows more quickly in limited-pay life policies than it does in continuous premium whole life policies.
C. Limited-pay policy death benefits remain level for the duration of the policy.
D. Limited-pay policies mature more quickly than do continuous premium whole life policies.
D
Which of the following statements regarding current assumption whole life insurance is not correct?
A. During a period of relatively high interest rates the premiums could be reduced.
B. Premium adjustments are usually made on an annual basis.
C. During a period of relatively high interest rates the premiums could be increased.
D. It is also known as interest-sensitive whole life.
C
Which of the following statements applies to universal life insurance?
A. The policy involves a cash account and increasing term insurance coverage.
B. Premiums generally may be increased or decreased at the policyowners option.
C. A rate of interest higher than that paid on whole life is paid for the term of the policy.
D. It is similar to endowment insurance.
B
Which of the following statements pertaining to modified whole life and graded premium whole life policies is not correct?
A. The premium for graded premium whole life increases each year during the first few years after policy issue.
B. Graded premium whole life policies build cash values and have premium paying periods to age 100.
C. The premium for modified whole life increases each year after the first few years of policy issue.
D. Modified whole life contracts build cash values and have premium paying periods to age 100.
C
Michelle age 31, just purchased a $50,000 variable life insurance policy. Which of the following statements is not correct?
A. The death benefit of $50,000 is not guaranteed.
B. The cash value growth of her policy will depend on how the investments supporting those values perform.
C. She directs the insurer as to how her cash values are to be invested.
D. Her premium payments will be fixed and level for the duration of the contract.
A
Helen has just taken out a modified whole life policy. Which of the following statements is correct?
A. The premium will be lower during the next few years and then be increased to a higher, constant level.
B. The face amount will be lower during the next few years and then be increased to a higher, constant level.
C. The premium will be higher during the next few years and then remain constant at a lower level.
D. The face amount will be higher during the next few years and then remain constant at a lower level.
A
Of the following, which statement best describes a 10 year renewable term life insurance?
A. a 10 year renewable term is a policy in which both the premium and face amount remain level for the term of the policy.
B. a 10 year renewable term is a policy in which the premium and face amount increase at the end of each 10 year period.
C. a 10 year renewable term is a policy with a level premium and a corresponding decreasing face amount.
D. a 10 year renewable term is a policy with a fixed face amount and a premium that increases at each 10 year renewal period.
D
A prospect with a young family needs affordable whole life insurance. As a rising young executive, it is likely that the prospect’s current limited resources will increase substantially over the next 15 years. What type of whole life insurance variation would you recommend?
A. Single pay
B. Straight whole life
C. Modified life
D. 20-pay life
C
The net premium is defined as
A. Mortality minus interest
B. mortality plus expenses
C. mortality minus expenses
D. mortality plus interest
A
Which of the following statements regarding a deferred compensation plan is correct?
A. The employee uses part of his current income to purchase a whole life insurance policy, the cash value of which can be accessed only while he is employed by his current employer.
B. The employer purchases a whole life insurance policy, the cash value of which the employee can access only while working for the employer.
C. The employer purchases a whole life insurance policy on key employees and receives the death benefits if the employee dies before retirement.
D. The employee agrees to forgo part of his current income until a specified future date, typically retirement, and may use life insurance as the funding vehicle for the plan.
D
An insurable interest may be found in which of the following?
A. a shareholder in the life of another shareholder of the same corporation.
B. an employee in the life of another employee of the same company.
C. an employer in the life of a key employee.
D. a partner in the life of a former partner.
C
The concept of agent confidentiality requires all of the following practices except
A. Notifying the applicant of insurer privacy practices.
B. Keeping completed applications from being seen by anyone except the applicant and authorized insurer personnel.
C. Avoiding gossiping about an applicant’s personal information with others.
D. Notifying the applicant of a substandard rating decision by the insurer.
D
When Lisa applied for a life insurance policy, the agent issued a receipt stating that the coverage is effective as of the date of application, if the applicant is found to be insurable under the company’s general underwriting rules. This type of receipt is known as
A. an acceptance receipt
B. a binding receipt
C. a conditional receipt
D. an inspection report
C
Denicia is appointed by an insurance company to transact insurance on its behalf. She collects her clients premiums and has them sign paperwork. By what authority can she do so?
A. Fiduciary
B. Implied
C. Apparent
D. Express
B
