Life and Health

For life insurance purposes, all persons are considered to be statistically dead at age

A. 88
B. 100
C. 96
D. 92

When a policyownder borrows money from a bank, a life insurance policy with some cash value accumulation

A. is rarely used as collateral for a loan
B. cannot be used as collateral because the insured cannot use any cash value until the policy matures
C. can normally be used as collateral for the loan
D. is not taken into consideration by the bank officials when determining the worth of the individual

Al purchases an estate builder (jumping juvenile) policy for his 5 yr old son, Donald. Suppose that when Donald reaches age 21 his father presents him with the policy as a gift. Which of the following stmts is NOT correct?

A. The policy should have accumulated cash value
B. the face value of Donald's policy has increased by 5X
C. Donald has enjoyed protection against the problems of premature death
D. Donald does not have to continue to make the premium payments to keep the policy

Mortality figures are normally developed by studying and interpreting statistics

A. from small groups of people over 10 yr periods of time
B. gathered by interviewing many persons in selected cities across the nations
C. obtained by surveys of insured persons
D. developed from the deaths of milllions of persons over long periods of time

The money paid by the insured to the insurance company for insurance protection is called

A. dividend
B. benefit
C. consideration
D. assignment

A mother purchases an estate builder (jumping juvenile) policy for her child, with face value of $5000. When the child reaches 21, the face value of the policy would be

A. $500
C. $10000
C. $25000
D. $50000

A life insurance policy that continues to provide protection after the premium period has ended is called a

A. whole life policy
B. level term policy
C. decreasing term policy
D. limited pay life policy

Which of the following stmts about the average # of people who will die each yr is true

A. it is the principal factor in risk selection
B. it cannot be used to determine insurance rates
C. it's called the mortality rate
D. it cannot be predicted with any accuracy

Money taken out of a modified endowment contract (MEC)

A. is considered to be a return of premium
B. may be subject to unfavorable tax rules
C. is always received income-tax free
D. will result in the policy being voided

One factor to all estate builder (jumping juvenile) policies is

A. after the purchase of the policy, the child is always permitted to purchase additional insurance at age 21, regardless of the insurability at that time.
B. the original face amount of the policy increases 5X at age 18
C. the cash value automatically increases 3x at age 21
D. it is issued on the application of a parent or legal guardian but insures the life of the child

In exchange for consideration, the insurance company in a life insurance contract agrees to pay a specified sum of money

A. in cash or equivilant income
B. in installments of $100 each
C. in cash or equivalant premiums paid
D. in amounts based on the mortality probability of the beneficiary

A life insurance policy is a unilateral contract because

A. only the insured is bound to live up to his or her side of the agreement
B. only the insurance company is bound to live up to its side of the agreement
C. neither party may default
D. either party may default

To what does the stmt "spreading the result of financial loss created by an individual's death among many ersons, so the cost for each individual is small" refer?

A. the principal of life insurance
B. the principle of indemnity
C. the principle of risk
D. the principle of mortality

In a universal life policy with a guaranteed interest rate of 5% and a current rate of 9%, what would be the dollar amount of the annual policy load generated by not paying excess interest on the first $1000 in the cash value account?

A. $40
B. $90
C. $50
D. no annual load after the first year

In a universal life policy, the two adjustments usually made to the cash value account are

A. guaranteed interest and current interest are creditied
B. guaranteed interest is charged and premium is credited
C. premium and excess interest are charged
D. cost of insurance protection is charged and current interest is credited

Loan values and retirement income are

A. available from all life insurance policies
B. available only as part of the business uses of life insurance
C. available only from term policies
D. called the living benefits of life insurance

Which of the following policies could be expected to have the lowest premium?

A. 20 pay life
B. 15 pay endowment at age 65
C. 30 pay life
D. Whole life

In order to ve valid, a contract must be between individuals considered legally able to enter into an agreement. The principal is known as

A. offer and acceptance
B. legal purpose
C. a contract of utmost good faith
D. competant parties

Which of the following normally compromise a deceased's final expense?

A. education or college fund for the children
B. a home or mtg loan
C. medical and funeral expenses plus debts or current bills
D. the family's future living expense

Life insurance is the most practical means of meeting obligations arising from an individual's premature death because

A. it earns the greatest interest
B. it is more accessible than savings or stocks
C. it always provides the most money
D. it creates an immediate estate

The contract between an insurer and an insured is called a/an

A. contract of the entirety
B. two-soded contract
C. insurance policy
D. bilateral contract

From the standpoint of premium cost, which is the most advantageous age when considering a term policy?

A. original age
B. attained age
C. age next birthday
D. age last birthday

The type of premium for term insurance that remains the same throughout a policy period of more than one year is the

A. level premium and it's used for level and decreasing term policies.
B. step rate premium and it's used for level and decreasing term policies.
C. level premium and it's used for one-year renewable term policies.
D. step rate premium and it's used for one-year renewable term policies.

The cash value accumulation in a life insurance policy

A. can be used for loans or later as retirement income.
B. cannot be used until the policy matures.
C. is taxed as income to the policy owner as it accumulates.
D. is always so smalls that the policyowner can do little with it.

The type of policy that can be changed from one that does not accumulate cash values to one that does is a

A. level term policy.
B. whole life policy.
C. convertible term policy.
D. renewable term policy.

Warren and Wilma have a joint life policy. Warren dies and the policy pays nothing. Later on, Wilma dies and the policy death benefit is paid the the beneficiary. This is called a
A. convertable term policy.
B. limited pay life policy.
C. Variable life policy.
D. survivorship or second-to-die policy.

The number of years excluded from the conversion privilege on a convertible term policy

A. varies among insurance companies.
B. is five years.
C. There is no exclusion.
D. is three years.

The situation below that most likely calls for the purchase of term insurance is

A. Tanya plans to retire at 59 with enough money to travel abroad.
B. Leonard is 42 years old and owns a thriving business. He is married with two teenage children.
C. Marge, widowed, has one married son, age 30
D. George has two years of medical school to complete. He and his wife have one child.

A policy affording pure protection that diminishes to nothing by the time the policy expires is a

A. whole life policy.
B. Limited pay policy.
C. level term policy.
D. decreasing term policy.

In a family plan

A. all family members must have permanent insurance.
B. the husband and wife are usually insured for equal amounts.
C. coverages are customarily a combination of permanent and term insurance.
D. only the spouse and the children are included.

If children are born or adopted after a family policy is issued,

A. term insurance will automatically be provided for the child under the same policy.
B. term insurance will be provided under the same policy, but for an additional premium.
C. coverage will be provided for the child under the same policy, but only after waiting period and proof insurability.
D. a new family policy will have to be purchased.

A renewable term policy

A. may be renewed with proof of insurability.
B. keeps the same premium with each renewal.
C. is available only as a rider on a permanent policy.
D. may be renewed with no proof of insurability.

All of the following are elements of a contract EXCEPT

A. legal purpose.
B. offer and acceptance.
C. consideration.
D. assignment.

A whole life policy

A. requires a single payment after which coverage is afforded for the whole life of the insured.
B. is paid up at some specific time and endows at 65.
C. requires the insured to pay the premium for life and endows at age 100.
D. is paid up at some specific time and endows at 100.

A limited pay life policy

A. is available only for small face amounts.
B. requires level premium payments for the entire lifetime of the insured.
C. connot be purchased any longer due to tax law restrictions against it.
D. requires premium payments for a specified number of years or until a specified age is reached.

A variable life policy

A. cash values are fixed; what varies is the death benefit.
B. death benefit is fixed; what varies is the cash values.
C. death benefit varies to reflect the investment results of the underlying separate account, but never falls below a guaranteed minimum.
D. always offers a variable premium.

"Annuity period" refers to which of the following?

A. The principal factor in determining the annuity premiums.
B. The time during which premiums are paid to fund the annuity.
C. The proccess of determining the amount of the annuity payment.
D. The time during which payments are made to the annuitant.

One of the greatest advantages of a convertible and renewable term policies is that

A. they are considerably less expensive than other term policies.
B. they accumulate cash values.
C. these features are automatically included in all term policies.
D. the insured isn't required to show proof of insurability in order to renew or convert.

At age 35, Kerry purchases a home with a 20 year mortgage that he wants to cover with term insurance. The most practical term policy for his situation is

A. convertable term.
B. decreasing term.
C. level term.
D. one-year renewable term.

When the cash value account of a universal life policy reaches zero, the policyowner must make a premium payment or

A. nothing happens because the cash value account can never reach zero.
B. the policy is indefinitaly suspended.
C. the policy is lapsed.
D. the policy goes into the grace period.

The premium for a yearly renewable term policy is a

A. decreasing premium.
B. step rate premium.
C. variable premium.
D. level premium.

When the cash value accumulation of a policy equals the face amount, we can say the policy

A. is a whole life policy.
B. expires.
C. endows.
D. is a limited pay life policy.

Term insurance differs from permanent insurance in that term

A. builds no cash value, pays a death benefit only.
B. has a higher premium per $1,000 of insurance.
C. insurancer repays money to a living insured.
D. builds cash value but pays no death benefit.

The type of policy that is paid up after a specified period of years and endows at age 100 is a/an

A. single premium policy.
B. whole life policy.
C. endowment policy.
D. limited pay policy.

When converting a term policy to a whole life policy at attained age, the cash values at age 65 will be

A. higher than if ordinary life had been purchased at original age.
B. practically the same as if ordinary life had been purchased at original age.
C. exactly the same as if ordinary life had been purchased at original age.
D. lower than if ordinary life had been purchased at original age.

A level term policy is one on which

A. protection remains constant for the term of the policy while the premium increases.
B. the premium remains the same as the protection is reduced.
C. the premium and the protection remain constant for the term of the policy.
D. protection remains level while the premium is decreased.

A family income rider differs from a decreasing term rider in that the family income rider

A. pays an annual income during a specified number of years from the time of the insured's death.
B. pays a lump sum upon the death of the insured.
C. always costs less.
D. pays monthly income upon the death of the insured.

An annuitant has a temporary annuity certain, and dies shortly after the payments start but before the certain period of 10 years has elapsed.Any mony remaing is

A. paid to the beneficiary in one lump sum.
B. paid to the beneficiary for the rest of the certain period.
C. kept by the company.
D. paid to the annuitant's estate.

A family income policy is comprised of

A. permanent plus decreasing term insurance.
B. permanent insurance only.
C. permanent plus increasing term insurance.
D. term insurance only.

A straight line annuity pays a periodic income

A. guaranteed to be equal to the purchase price of the annuity.
B. with a guaranteed total amount to be paid either to the annuitant or the beneficiary.
C. to two annuitants until one dies, after which all payments are cease.
D. during the annuitant's lifetime with no refund upon his/her death.