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James purchased yearly renewable term insurance. All of the following are common characteristics of this type of coverage EXCEPT:
Cash value accumulation is slow to moderate
Consumer experts typically recommend all of the following rules when buying life insurance EXCEPT:
All of the following statements about variable annuities are true EXCEPT:
1. 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 savings 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
Variable life insurance
1. All of the following statements about traditional and Roth IRAs are true EXCEPT:
a. Traditional IRAS are exempt from the penalty tax on premature distributions
1. Major factors that must be considered in determining the cost of life insurance include all of the following EXCEPT:
a. Settlement options
1. The first step in “shopping for life insurance” is to
Determine if you need life insurance
1. Which of the following statements are true regarding Roth IRA?
a. Roth IRA contributions are tax deductible
b. Roth IRA investment contributions come from tax free income
1. Tamara purchased a term insurance policy when she had high life insurance needs and limited income. Now Tamara can afford whole life insurance. What form of life insurance provision will permit Tamara to switch her term insurance to whole life insurance without having to show that she is still insurable?
1. Cal purchased a whole life insurance policy 4 years ago. The policy requires annual premium payments. Cal forgot to pay the premium that was due 2 weeks ago. He wonders if his life insurance is still in force. Which life insurance policy provision is designed to keep the policy in force even if the premium payment is late?
1. Which of the following statements about life insurance cash values is true?
a. Cash values are a result of the level premium method of life insurance
b. The cash value of a policy usually exceeds the policy’s legal reserve
1. Bruce lied about his health history when he purchased a life insurance policy. He died 3 years after the policy was issued. Which life insurance policy provision will require the life insurer to pay the beneficiary even though Bruce lied on the application?
1. Which of the following statements about a life insurance policy is true?
a. It is a policy of indemnity
b. The insured event is the uncertainty regarding the time of death
1. All the following statements about the tax treatment of individually purchased life insurance are true EXCEPT:
1. The purchase of term insurance is justified by which of the following circumstances
a. The insured want to save money through the policy for a specific need
b. The insured wants to guarantee future insurability
1. Diane is a single parent. She has limited income and significant life insurance needs. Which type of life insurance makes sense for someone in this situation?
1. Which of the following statements about the use of ordinary life insurance is true?
a. Its use is appropriate if a person needs lifetime insurance protection
b. It enables a person to purchase significantly more insurance than if the same premium were used to purchase term insurance
1. Which of the following types of families is likely to have the least need for large amounts of life insurance?
1. Sandy’s family has a history of living to advanced ages. Sandy’s health history is excellent. She doesn’t smoke, she exercises, her blood pressure is low, and according to her physician, her weight is right for her height. Based on this information, what special type of insurance is Sandy qualified to purchase?
1. Which of the following statements are true with respect to annuities?
a. Annuities are the opposite of life insurance
b. The fundamental purchase of annuities is to replace lost income in a case of premature death
Policy loans are permitted on a interest free basis
1. A contingent beneficiary in a life insurance policy has the right to
a. Receive the policy proceeds if the primary beneficiary dies before the insured
1. Margaret paid an insurance company $50,000 when she was 50 years old. At age 62, Margaret plans to receive payments from the insurer. Based on the description provided, this annuity can be described as
1. All of the following statements about ordinary life insurance are true EXCEPT
a. The face amount of the policy is paid if the insured lives to age 65
1. Michael wants to make sure that life insurance proceeds are available to pay his outstanding mortgage if he dies. He purchased a type of life insurance in which the amount coverage gradually declines as the outstanding mortgage balance gradually declines. This type of life insurance is called
Decreasing term insurance
1. All of the following are requirements that must be satisfied before premiums are waived under a waiver of premium provision EXCEPT
a. The insured must satisfy a 2 year waiting period
1. Which of the following statements about yearly renewable term insurance are true?
a. It requires evidence of insurability for renewal
b. It is most appropriate when an insured needs lifetime protection
1. Sources of life insurance dividends include which of the following?
a. Excess interest earned on the assets necessary to maintain legal reserves
b. Favorable mortality experience
1. Rachel needs permanent life insurance protection. Which method of providing life insurance protection makes the most sense for Rachel to employ?
Which of the following statements about the entire contract clause is true?
It specified that the life insurance policy and the attached application constitute the complete agreement between the parties
1. All of the following are common dividend options found in participating whole life insurance policies EXCEPT
Purchase of insurance company stock
1. How do premiums for yearly renewable term insurance change, as the insured gets old?
a. They increase at an increasing rate
1. Which of the following persons can establish a tradition IRA?
a. Persons whose only income received is from investments
b. Employed persons under the age of 70.5 who are not actively participating in an employer sponsored plan
1. Which of the following statements about the use of interest adjusted cost data for comparing life insurance policies is true?
a. Using interest adjusted cost data provides a more accurate measure of the cost of life insurance than is provided if the time value of money is ignored
1. Which of the following statements are true about variable universal life insurance?
a. Variable universal life insurance fixed premium payments
b. Variable universal life insurance permits the policy owner where the premiums are invested
1. Reasons for not purchasing an accidental death benefit rider include which of the following?
a. Most people die as a result of a disease rather than an accident
b. The economic value of a human life is not increased if death occurs because of an accident
1. What major feature distinguishes a participating policy from a non-participating policy?
1. A legal reserve in life insurance is a result of
a. Excess premiums in the early policy years being invested of compounded
1. Which of the following is true concerning premature death and life expectancy?
a. Life expectancy has increased in the US over the last century
b. Surviving family members may experience a reduction in their standard of living if the head of the family dies prematurely
1. Lionel purchased a $200,000 ordinary life insurance policy when he was 25 years old and had significant life insurance needs. Now Lionel is 50. He mortgage is almost paid off and his child is financially independent. Lionel no longer wants to pay premiums, but he still wants to keep his life insurance in force. Which non-forfeiture option could Lionel employ to meet these objectives?
1. All of the following statements about the automatic premium loan provision in life insurance is true EXCEPT
1. All of the following are permissible IRA investments, EXCEPT
1. Which of the following statement are true regarding the taxation distribution of annuities?
a. Individual annuity distributions are never taxable
b. Once the annuitant has recovered the premiums he or she paid for the annuity, distribution is taxable
1. Sarah purchases a personal auto policy with liability limits of 50/100/25. Sarah ran a stop sign and hit a van. The van sustained $15,000 in damages. The following bodily injuries were suffered by passengers in the van: Passenger 1, $15,000; Passenger 2, $60,000, and Passenger 3, $10,000. Sarah sustained $5,000 in medial expenses, and Sarah’s car sustained 10,000 in damages. How much will Sarah’s insurer pay under Part A: Liability Coverage?
1. Which of the following statements is true with respect to the use of credit scores as an auto insurance used as a rating factor?
a. Insurers claim that drivers who have poor credit scores are expected to have relatively more accidents
b. The use of credit scores in personal lines underwriting is controversial
a. It is available even if property has been previously flooded
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