Question 1

The human life value is defined as the

Accepted Answer

A) present value of a deceased breadwinner's future gross income. 
B) future value of a deceased breadwinner's past earnings. 
C) present value of the family's share of a deceased breadwinner's future earnings. 
D) future value of the family's share of a deceased breadwinner's future earnings.

Question 2

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

Question 3

Which of the following statements about second-to-die life insurance is (are)true?
I.The insurance is a form of endowment coverage.
II. The premium is lower than the combined cost of purchasing a life insurance policy on each insured.

Accepted Answer

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

Question 4

Tamara purchased a term insurance policy when she had high life insurance needs and limited income.Now Tamara can afford whole life insurance.What term life insurance provision will permit Tamara to switch her term insurance to whole life insurance without having to show that she is still insurable?

Accepted Answer

A) renewal provision 
B) tax-free exchange provision 
C) conversion provision 
D) free look provision

Question 5

Jessica is an agent for LMN Life Insurance Company.She met with Brad,who was interested in purchasing life insurance.Jessica explained the various uses of life insurance,including income for Brad's wife during the 1- or 2-year period following Brad's death.This period is known as the

Accepted Answer

A) dependency period. 
B) estate clearance period. 
C) blackout period. 
D) readjustment period.

Question 6

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.

Question 7

Which of the following statements about policies sold to preferred risks is (are)true?
I.Preferred risks are people whose mortality experience (deaths per thousand at a given age)is expected to be more favorable than average.
II.Insurers require preferred risks to purchase at least a minimum amount of life insurance,such as $250,000.

Accepted Answer

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

Question 8

Disadvantages of the capital retention approach include which of the following?
I.Assets are often liquidated too quickly.
II.It underestimates the amount of life insurance needed.

Accepted Answer

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

Question 9

Which of the following $100,000 whole life insurance policies,issued by the same company to a man age 32,would require the highest first-year premium?

Accepted Answer

A) continuous premium (ordinary)life 
B) whole life paid-up at 65 
C) 10-payment whole life 
D) 20-payment whole life

Question 10

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 investment of premiums.

Accepted Answer

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

Question 11

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.

Question 12

Which of the following statements is (are)true regarding the results of studies by LIMRA and New York Life Insurance Company 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

Question 13

The difference between the legal reserve of a whole life policy and the face amount of insurance is the

Accepted Answer

A) cash value. 
B) net amount at risk. 
C) premium. 
D) dividend accumulations.

Question 14

Which of the following is a cost/expense that an estate clearance fund is designed to pay?

Accepted Answer

A) burial expenses 
B) retiring the mortgage 
C) education costs 
D) income to the widow(er)during the readjustment period

Question 15

Under the needs approach,when is the dependency period of a surviving spouse assumed to end?

Accepted Answer

A) 1 or 2 years after the breadwinner's death 
B) when the youngest child reaches age 18 
C) when the surviving spouse reaches age 65 
D) when the surviving spouse dies

Question 16

Bill is attempting to determine how much life insurance to purchase.He has two dependent children and his wife does not work outside of the home.An advisor suggested that Bill should consider Social Security benefits when doing his life insurance planning.One concern in this regard is the period after Social Security benefits to a widow terminate until they resume again.This period is called the

Accepted Answer

A) blackout period. 
B) dependency period. 
C) emergency period. 
D) readjustment period.

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

Question 18

All of the following statements describe the flexibility available to the owner of a universal life insurance policy EXCEPT

Accepted Answer

A) Policy loans are permitted on an interest-free basis. 
B) The frequency of premium payments can be varied. 
C) The death benefit can be increased with evidence of insurability. 
D) Premium payments can be any amount provided there is sufficient cash value to keep the policy in force.

Question 19

Which of the following statements about limited-payment life insurance is true?

Accepted Answer

A) It is a form of term insurance. 
B) It matures at the end of the premium-payment period. 
C) The premium decreases each year during the premium-payment period. 
D) Its use may be appropriate if a person wants paid-up life insurance during retirement.

Question 20

Which of the following statements about industrial life insurance (also called home service life insurance)policies is true?

Accepted Answer

A) Most policies have a face value exceeding $100,000. 
B) Most industrial life insurance policies are cash value coverage. 
C) Industrial life insurance is group term insurance coverage marketed to employers. 
D) This popular product accounts for over 40 percent of the life insurance sold today.

Exam 11: Life Insurance

The human life value is defined as the

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?

Which of the following statements about second-to-die life insurance is (are) true? I.The insurance is a form of endowment coverage. II. The premium is lower than the combined cost of purchasing a life insurance policy on each insured.

Tamara purchased a term insurance policy when she had high life insurance needs and limited income.Now Tamara can afford whole life insurance.What term life insurance provision will permit Tamara to switch her term insurance to whole life insurance without having to show that she is still insurable?

Jessica is an agent for LMN Life Insurance Company.She met with Brad,who was interested in purchasing life insurance.Jessica explained the various uses of life insurance,including income for Brad's wife during the 1- or 2-year period following Brad's death.This period is known as the

Disadvantages of the capital retention approach include which of the following? I.Assets are often liquidated too quickly. II.It underestimates the amount of life insurance needed.

Which of the following $100,000 whole life insurance policies,issued by the same company to a man age 32,would require the highest first-year premium?

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 investment of premiums.

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

The difference between the legal reserve of a whole life policy and the face amount of insurance is the

Which of the following is a cost/expense that an estate clearance fund is designed to pay?

Under the needs approach,when is the dependency period of a surviving spouse assumed to end?

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

All of the following statements describe the flexibility available to the owner of a universal life insurance policy EXCEPT

Which of the following statements about limited-payment life insurance is true?

Which of the following statements about industrial life insurance (also called home service life insurance) policies is true?