Question 1

All of the following statements about employer-provided group life insurance are true EXCEPT

Accepted Answer

A) Individual evidence of insurability,through a medical exam,is usually required. 
B) Group life insurance is a common employee benefit. 
C) A single contact between the employer and the insurer is issued. 
D) Employees are given certificates of insurance as evidence of the coverage. 
A) Individual evidence of insurability,through a medical exam,is usually required. 
B) Group life insurance is a common employee benefit. 
C) A single contact between the employer and the insurer is issued. 
D) Employees are given certificates of insurance as evidence of the coverage.

Question 2

Which of the following statements about indexed universal life insurance is true?

Accepted Answer

A) It is another name for variable life insurance. 
B) Although a minimum interest rate is guaranteed,the rate credited can be higher if a specified stock index performs well. 
C) The cash value is usually credited with 100 percent of the return on the equity index,including dividends paid on the stocks in the index. 
D) The formula used to determine the additional interest credited to the policy places no limit on the additional interest that can be credited. 
A) It is another name for variable life insurance. 
B) Although a minimum interest rate is guaranteed,the rate credited can be higher if a specified stock index performs well. 
C) The cash value is usually credited with 100 percent of the return on the equity index,including dividends paid on the stocks in the index. 
D) The formula used to determine the additional interest credited to the policy places no limit on the additional interest that can be credited.

Question 3

Which of the following statements about a decreasing term insurance policy is true?

Accepted Answer

A) The face amount of the policy decreases during the policy period,and the premium increases. 
B) The face amount of the policy decreases during the policy period,but the premium remains level. 
C) The premium decreases during the policy period,but the face amount remains constant. 
D) Both the premium and the face amount of the policy decrease gradually over the policy period. 
A) The face amount of the policy decreases during the policy period,and the premium increases. 
B) The face amount of the policy decreases during the policy period,but the premium remains level. 
C) The premium decreases during the policy period,but the face amount remains constant. 
D) Both the premium and the face amount of the policy decrease gradually over the policy period.

Question 4

All of the following statements about universal life insurance are true EXCEPT

Accepted Answer

A) Interest is credited to the policy's cash value each month. 
B) Any withdrawal of a policy's cash value reduces the amount of the death benefit. 
C) Interest credited to a policy's cash value is taxable for the policyowner in the year credited. 
D) The policyowner can add to a policy's cash value at any time subject to policy guidelines. 
A) Interest is credited to the policy's cash value each month. 
B) Any withdrawal of a policy's cash value reduces the amount of the death benefit. 
C) Interest credited to a policy's cash value is taxable for the policyowner in the year credited. 
D) The policyowner can add to a policy's cash value at any time subject to policy guidelines.

Question 5

Which statement is true concerning the economic problem of premature death in the United States?
I.The economic impact of premature death of the breadwinner varies for different types of families.
II.Increased life expectancy has increased the economic problem of premature death over time.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 6

The purchase of term insurance is justified by which of the following circumstances?
I.The insured wants to save money through the policy for a specific need.
II.The insured has a temporary need for life insurance protection.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 7

What is the length of the readjustment period which is considered when the needs approach is used to determine the amount of life insurance to own?

Accepted Answer

A) 3 to 6 months 
B) 1 to 2 years 
C) until the youngest child reaches age 18 
D) until the surviving spouse reaches age 65 
A) 3 to 6 months 
B) 1 to 2 years 
C) until the youngest child reaches age 18 
D) until the surviving spouse reaches age 65

Question 8

Which of the following statements about the needs approach for estimating the amount of life insurance to purchase is (are)true?
I.It involves an analysis of various family needs which must be met if a family breadwinner dies.
II.Its use is appropriate only if a person currently has no life insurance protection.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 9

A common use of second-to-die life insurance is

Accepted Answer

A) insuring children. 
B) insuring "double income with kids" families. 
C) estate planning. 
D) insuring key employees of a business. 
A) insuring children. 
B) insuring "double income with kids" families. 
C) estate planning. 
D) insuring key employees of a business.

Question 10

All of the following statements about current assumption whole life insurance are true EXCEPT

Accepted Answer

A) It is a form of participating whole life insurance that pays annual dividends. 
B) An accumulation account is credited with an interest rate based on present market conditions and company experience. 
C) Under the low-premium version,the premium is subject to change after an initial guaranteed period. 
D) Under the high-premium version,the premium may be discontinued after a period of time. 
A) It is a form of participating whole life insurance that pays annual dividends. 
B) An accumulation account is credited with an interest rate based on present market conditions and company experience. 
C) Under the low-premium version,the premium is subject to change after an initial guaranteed period. 
D) Under the high-premium version,the premium may be discontinued after a period of time.

Question 11

Which of the following statements is true concerning return of premium term insurance?
I.The protection provided while the term insurance was in force was free.
II.The premium returned does not include the cost of any riders or loadings if the insured was a substandard risk.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 12

Carl would like to purchase life insurance.He would also like to invest in a mutual fund.An agent told Carl about a form of life insurance in which Carl could select where the saving component is invested.This form of life insurance has fixed premiums and the cash value is not guaranteed.This type of life insurance is called

Accepted Answer

A) universal life insurance. 
B) whole life insurance. 
C) variable life insurance. 
D) current assumption whole life. 
A) universal life insurance. 
B) whole life insurance. 
C) variable life insurance. 
D) current assumption whole life.

Question 13

Which of the following statements is true regarding the conversion of a 5-year term policy after it has been in force for 5 years?
I.The premium will be lower if an original-age conversion is used.
II.The policyowner will have to make a lump-sum adjustment payment if an attained-age conversion is used.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 14

Most family heads need substantial amounts of life insurance.However,with limited income,money spent on life insurance reduces the amount of discretionary income available for other high-priority needs.What an insured person gives up when he or she purchases life insurance instead of using the premium dollars for other purposes is called the

Accepted Answer

A) estimated cost of life insurance. 
B) net cost of life insurance. 
C) real (inflation-adjusted)cost of life insurance. 
D) opportunity cost of buying life insurance. 
A) estimated cost of life insurance. 
B) net cost of life insurance. 
C) real (inflation-adjusted)cost of life insurance. 
D) opportunity cost of buying life insurance.

Question 15

Which of the following statements about yearly renewable term insurance is (are)true?
I.It requires evidence of insurability for renewal.
II.It is most appropriate when an insured needs lifetime protection.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 16

Which of the following statements about a variable universal life insurance policy is (are)true?
I.There is a minimum guaranteed interest rate for the cash value.
II.The policyowner has a variety of investment options for the savings component of the policy.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 17

Which of the following types of families is likely to have the least need for a large amount of life insurance?

Accepted Answer

A) a blended family 
B) a traditional family 
C) a single person family 
D) a sandwiched family 
A) a blended family 
B) a traditional family 
C) a single person family 
D) a sandwiched family

Question 18

Which of the following statements about life insurance cash values is (are)true?
I.Cash values are a result of the level premium method of purchasing life insurance.
II.The cash value of a policy must always exceed the policy's legal reserve.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 19

All of the following statements about ordinary life insurance are true EXCEPT

Accepted Answer

A) Premiums are level throughout the policy period. 
B) The face amount of the policy is paid if the insured lives to age 65. 
C) There is a build-up of cash value that can be borrowed by the policyholder. 
D) It offers the policyholder the flexibility to meet a wide variety of financial objectives. 
A) Premiums are level throughout the policy period. 
B) The face amount of the policy is paid if the insured lives to age 65. 
C) There is a build-up of cash value that can be borrowed by the policyholder. 
D) It offers the policyholder the flexibility to meet a wide variety of financial objectives.

Question 20

Which of the following statements is (are)true regarding the results of the 2016 study by the Life Insurance Market Research Association (LIMRA)on the adequacy of life insurance owned by households in the United States?
I.The average household is adequately insured against the risk of premature death.
II.The average household is significantly underinsured against the risk of premature death.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Exam 11: Life Insurance

All of the following statements about employer-provided group life insurance are true EXCEPT

Which of the following statements about indexed universal life insurance is true?

Which of the following statements about a decreasing term insurance policy is true?

All of the following statements about universal life insurance are true EXCEPT

Which statement is true concerning the economic problem of premature death in the United States? I.The economic impact of premature death of the breadwinner varies for different types of families. II.Increased life expectancy has increased the economic problem of premature death over time.

The purchase of term insurance is justified by which of the following circumstances? I.The insured wants to save money through the policy for a specific need. II.The insured has a temporary need for life insurance protection.

What is the length of the readjustment period which is considered when the needs approach is used to determine the amount of life insurance to own?

A common use of second-to-die life insurance is

All of the following statements about current assumption whole life insurance are true EXCEPT

Which of the following statements is true concerning return of premium term insurance? I.The protection provided while the term insurance was in force was free. II.The premium returned does not include the cost of any riders or loadings if the insured was a substandard risk.

Which of the following statements about yearly renewable term insurance is (are)true? I.It requires evidence of insurability for renewal. II.It is most appropriate when an insured needs lifetime protection.

Which of the following statements about a variable universal life insurance policy is (are)true? I.There is a minimum guaranteed interest rate for the cash value. II.The policyowner has a variety of investment options for the savings component of the policy.

Which of the following types of families is likely to have the least need for a large amount of life insurance?

Which of the following statements about life insurance cash values is (are)true? I.Cash values are a result of the level premium method of purchasing life insurance. II.The cash value of a policy must always exceed the policy's legal reserve.

All of the following statements about ordinary life insurance are true EXCEPT

Risk and Its Treatment

Insurance and Risk

Introduction to Risk Management

Enterprise Risk Management

Types of Insurers and Marketing Systems

Insurance Company Operations

Financial Operations of Insurers

Government Regulation of Insurance

Fundamental Legal Principles

Analysis of Insurance Contracts

Life Insurance and Contractual Provisions

Buying Life Insurance

Annuities and Individual Retirement Accounts

Health-Care Reform;individual Health Insurance Coverages

Employee Benefits: Group Life and Health Insurance

Employee Benefits: Retirement Plans

Social Insurance

The Liability Risk

Auto Insurance

Auto Insurance Continued

Homeowners Insurance,section I

Homeowners Insurance,section II

Other Property and Liability Insurance Coverages

Commercial Property Insurance

Commercial Liability Insurance

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