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 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 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. 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. 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 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 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 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 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 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. 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 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 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 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. 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 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. 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. A Annually renewable term is the purest form of term insurance. The death benefit remains level, but the premium increases each year with the insured's attained age. In decreasing policies, while the face amount decreases, the premium remains constant throughout the life of the contracts. In level term and increasing term policies, the premium also remains level for the term of the policy. Therefore, in the other types of level policies, the first-year premium would not be different from any other year. W owns a policy in which she is covered as the bread-winner with permanent insurance and with decreasing term insurance in the form of a rider. What type of policy is this? AFamily Protection Policy BFamily Income Policy CFamily Policy DFamily Maintenance Policy B If the insured dies during the income period of a family income policy, monthly benefits are paid to the survivors for the balance of the income phase. The death benefit is then paid to the beneficiary. During the income phase, the insurer retains the cash value and death benefit to invest and generate interest. Which of the following best defines target premium in a universal life policy? AThe maximum amount the policyowner may pay on a policy BThe minimum amount to make sure the policy is annually renewable CThe corridor of insurance DThe recommended amount to keep the policy in force throughout its lifetime D 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. What type of whole life insurance policy has premiums that are adjusted so that during the first years of the policy, the premiums are lower than those of a straight whole life policy, and in subsequent years the premiums are higher than those of a straight whole life policy? AIndexed life BIndeterminate premium CEnhanced life DModified life D Modified life policies were developed to attract young professionals who have a large financial investment in their education and training, but starting their professional careers, they have limited resources to buy insurance. Modified life is a permanent policy, but in the early years, the premiums are similar to that of a term policy; in later years, the premiums are increased to build cash values and cause the policy to endow. Concerning Juvenile Life insurance, which of the following statements is INCORRECT? AJuvenile Life is classified as any life insurance purchased by a minor. BUsually a parent or guardian is the applicant for insurance on the life of a minor. CIt can be a limited premium payment policy. DJuvenile Life is classified as any life insurance written on the life of a minor. A Juvenile Life insures the life of a minor. It does not need to be purchased by a minor. Graded-Premium Whole Life policy premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will AContinue to increase. BReturn to the initial premium amount. CDecrease again. DBe level thereafter. D When a Graded-Premium Whole Life policy begins, the premium amounts are typically 50% lower than premiums for straight life policies. The premium then gradually increases each year for a period of usually 5 or 10 years and then remains level thereafter. In Modified Life policies, what happens to the premium? AIt is higher during the first policy years. BIt varies at the beginning, but levels out by the end of the third year. CIt is level at the beginning and increases after the first few years. DIt always remains level. C Modified Life policies charge lower premiums (similar to term rates) during the first few policy years, usually the first 3 to 5 years, and then higher level premiums for the remainder of the insured's life. The higher subsequent premiums are typically higher than straight life premiums would be for the same age and amount of coverage. Which of the following policies would be classified as a traditional level premium contract? AUniversal Life BVariable Universal Life CStraight Life DAdjustable Life C Straight whole life policies have a level guaranteed face amount and a level premium for the life of the insured. Both Universal Life and Variable Universal Life have a ADecreasing premium. BIncreasing premium. CFlexible premium. DLevel fixed premium. C Variable universal life, like universal life itself, has a flexible premium that can be increased or decreased as the policyowner chooses, so long as there is enough value in the policy to fund the death benefit. In a survivorship life policy, when does the insurer pay the death benefit? AIf the insured survives to age 100 BUpon the last death CUpon the first death DHalf at the first death, and half at the second death B Survivorship life pays on the last death rather than upon the first death.