NC life and health insurance study questions with certified answers

NC life and health insurance study questions with certified answers Which of the following is NOT a characteristic of universal life insurance? A Flexible death benefit B Cash account C Fixed premium D Unbundled premium - Answer ️️ -C Universal life policies allow the policy owner to increase the amount of premium going into the policy and to later decrease it again. They may even skip a premium payment. The rest of the features apply to universal life policies. Which of the following would help prevent a universal life policy from lapsing? A Corridor of insurance B Target premium C Face amount D Adjustable premium - Answer ️️ -B The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime. A 20-year family income policy was purchased effective April 1, 2001. The insured died four months later, on August 1, 2001. The beneficiary receives monthly income for A10 years. B19 years and 8 months. C9 years and 8 months. D20 years. - Answer ️️ -B Monthly benefits paid for the remainder of the 20 year benefit period. When the breadwinner that is insured by a Family Policy dies, what rights are provided to other family members that are covered under the policy? AThey can convert their coverage to permanent life insurance with evidence of insurability. BFamily members are not provided any rights. CThey can surrender the coverage for its cash value. DThey can convert their coverage to permanent life insurance without evidence of insurability. - Answer ️️ -D Family members may convert their term coverage to permanent insurance if requested within the time stated in the policy. Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources? AVariable life BTerm CWhole Life DAnnuity - Answer ️️ -B Term insurance provides a death benefit only; cost per $1,000 of coverage is less than other types of policies that create cash values. Review Content A Universal Life insurance policy has two types of interest rate that are called AFixed and Variable BMinimum and Target CGuaranteed and Current DOption A and Option B - Answer ️️ -C The insurer credits the cash value in the policy with a current (nonguaranteed) interest rate and backs the cash value with a contract (lower guaranteed) rate of interest. What are the two components of a universal policy? AInsurance and investments BMortality cost and interest CSeparate account and policy loans DInsurance and cash account - Answer ️️ -D A universal policy has two components: an insurance component and a cash account. The insurance component of a universal life policy is always annual renewable term insurance. The cash account accumulates on a tax deferred basis each year and earns either the guaranteed contract rate or the current rate, whichever is higher. What is the purpose of establishing the target premium for a universal life policy? ATo pay up the policy faster BTo cover all policy expenses CTo keep the policy in force DTo accumulate cash value faster - Answer ️️ -C The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime. Which of the following is an example of a limited-pay life policy? ALevel Term Life BStraight Life CLife Paid-up at Age 65 DRenewable Term to Age 70 - Answer ️️ -C Limited Pay Whole Life premiums are all paid by the time the insured reaches age 65. The policy endows when the insured turns 100. It is the premium paying period that is limited, not the maturity. An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term? AThe insured must provide evidence of insurability to renew the policy. BThe insured may only convert the policy to another term policy. CThe insured may renew the policy for another 10 years at the same premium rate. DThe insured may renew the policy for another 10 years, but at a higher premium rate. - Answer ️️ -D Policies that are guaranteed renewable and convertible may be renewed, without evidence of insurability, for another like term, or may be converted to permanent insurance, without evidence of insurability. A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium? AIf the daughter is disabled for more than 3 months BIf the daughter is disabled for any length of time CIf the father is disabled for more than 6 months DIf the father is disabled for at least a year - Answer ️️ -C Payor benefit only pays if the owner, the father in this example, is disabled for at least 6 months. An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it? AGraded Premium Life BLimited-pay Life CVariable Life DAdjustable Life - Answer ️️ -B In limited-pay policies, the premiums for coverage will be completely paid-up well before age 100, usually after a specified number of years. Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? AJumping Juvenile BJuvenile Premium Provision CWaiver of Premium DPayor Benefit - Answer ️️ -D If the payor (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21. All of the following are true regarding a decreasing term policy EXCEPT AThe payable premium amount steadily declines throughout the duration of the contract. BIt has a lower premium than level term. CThe contract pays only in the event of death during the term and there is no cash value. DThe face amount steadily declines throughout the duration of the contract. - Answer ️️ -A Premiums remain level with a decreasing term policy; only the face amount decreases. Which policy component decreases in decreasing term insurance? ACash value BDividend CPremium DFace amount - Answer ️️ -D Decreasing term policies feature a level premium and a death benefit that decreases each year over the duration of the policy term. Which of the following best describes annually renewable term insurance? AIt is level term insurance. BIt requires proof of insurability at each renewal. CNeither the premium nor the death benefit is affected by the insured's age. DIt provides an annually increasing death benefit. - Answer ️️ -A Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost. All other factors being equal, the least expensive first-year premium payment is found in AAnnually Renewable Term. BIncreasing Term. CDecreasing Term. DLevel Term. - Answer ️️ -A