Nevada Life & Health Insurance Exam Questions With Correct Answers
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Course
Nevada Life & Health Insurance
Institution
Nevada Life & Health Insurance
Nevada Life & Health Insurance Exam
Questions With Correct Answers
Term insurance - answertemporary protection because it only provides coverage for a
specific period of time
face amount - answerdeath benefit
3 basic types of term coverage - answerlevel, increasing, decreasing
- based on how ...
Nevada Life & Health Insurance Exam
Questions With Correct Answers
Term insurance - answer✔✔temporary protection because it only provides coverage for a
specific period of time
face amount - answer✔✔death benefit
3 basic types of term coverage - answer✔✔level, increasing, decreasing
- based on how the face amount changes during the policy term
What is the premium in term insurance? - answer✔✔regardless of type of term insurance
purchased, premium is level throughout the term of policy
level term insurance - answer✔✔death benefit does not change throughout the life of the policy
annually renewable term - answer✔✔premium increases annually according to the attained age,
guaranteed to be renewable each year
decreasing term - answer✔✔level premium and death benefit that decreases each year over
duration of the policy term
increasing term - answer✔✔level premium and death benefit that increases each year over the
duration of the policy term
return of premium life insurance - answer✔✔an increasing term policy that pays an additional
death beneficiary equal to the amount of the premiums paid
- return of premium is paid if the death occurs within a specified period of time or if the insured
outlives the policy term
renewable provision - answer✔✔allows the policyowner the right to renew coverage at the
expiration date without evidence of insurability
convertible provision - answer✔✔provides the policyowner the right to convert the policy to a
permanent insurance policy without evidence of insurability
permanent life insurance - answer✔✔general term used to refer to various forms of life insurance
policies that build cash value and remain in effect for the entire life of the insured (or until age
100) as long as premium is paid
nonforteiture value - answer✔✔aka cash value, does not usually accumulate until the third policy
year and it grows tax deferred
key characteristics of whole life insurance - answer✔✔- level premium
- death benefit
- cash value
- living benefits
3 basic forms of whole life insurance - answer✔✔1. straight (ordinary) whole life
2. limited-pay whole life
3. single premium whole life
straight life - answer✔✔basic whole life policy; policy owner pays the premium from the lime
the policy is issued until insured's death or age 100
- has lowest annual premium
limited-pay whole life - answer✔✔designed so that premiums for coverage will be completely
paid-up well before age 100
- cash value builds up faster
single premium whole life - answer✔✔designed to provide a level death benefit to the insured's
age 100 for a one-time, lump-sum payment
- generate immediate cash value
adjustable life - answer✔✔can assume the form of either term insurance or permanent insurance;
insured typically determines how much coverage is needed and the affordable amount of
premium
adjustable life cash value - answer✔✔only develops when the premiums paid are more than the
cost of the policy
universal life (flexible premium adjustable life) - answer✔✔policyowner has the flexibility to
increase/decrease amount of premium paid into policy; policyowner may skip paying a premium
and policy will not lapse as long as there is sufficient cash value at the time to cover monthly
deductions for cost of insurance
universal life premium types - answer✔✔1. minimum premium: amount needed to keep policy
in force for year
2. target premium: recommended amount to keep policy in force for lifetime
2 death benefit options for universal life - answer✔✔1. Option A
2. Option B
Option A (Level Death Benefit option) - answer✔✔death benefit remains level while cash value
gradually increases, lowing the "pure insurance" with insurer in later years
- death benefit increases near the end in order to maintain gap between cash value and death
benefit in life insurance policy
Option B (Increasing Death Benefit option) - answer✔✔death benefit includes annual increase in
cash value so that death benefit gradually increases each year by amount that cash value
increases
- pure insurance remains level for life
variable whole life - answer✔✔level, fixed premium, investment-based product; cash value of
policy is not guaranteed and fluctuates with performance of the portfolio in which premiums
have been invested by insurer
variable universal life - answer✔✔combination of universal life and variable life; provides
policy owner with flexible premiums and adjustable death benefit, policyowner decides where
cash value will be invested (not guaranteed)
interest-sensitive whole life - answer✔✔whole life policy that provides a guaranteed death
benefit to age 100 and for a minimum guaranteed rate of interest
indexed whole life - answer✔✔cash value is dependent upon the performance of the equity index
although there is a guaranteed minimum interest rate
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