um provisions, if an insured becomes disabled:
1. premiums are continued to be paid by the insurance company on behalf of the insured
2. premiums paid by the insured are waived by the insurance company - answer2. only
Ann is considering the purchase of a life insurance policy with these characte...
A contingent beneficiary in a life insurance policy has the right to: - answer✔✔receive the policy
proceeds if the primary beneficiary dies before the insured
A legal reserve in life insurance is a result of: - answer✔✔excess premiums in the early policy
years being invested at compound interest.
All of the following are nonforfeiture options found in cash value life insurance EXCEPT:
Cash Value
Reduced Paid-Up Insurance
Extended Term Insurance
Reduction of Premiums - answer✔✔reduction of premiums
Under the waiver of premium provisions, if an insured becomes disabled:
1. premiums are continued to be paid by the insurance company on behalf of the insured
2. premiums paid by the insured are waived by the insurance company - answer✔✔2. only
Ann is considering the purchase of a life insurance policy with these characteristics: flexible
premium payments, the insurance and savings components are separate, the interest rate credited
to the cash value is tied to a changing market interest rate but a minimum interest rate is
guaranteed, and a monthly administrative fee is charged. Ann is considering buying: -
answer✔✔universal life insurance
Becky is considering the purchase of a whole life policy on her own life. She is concerned that if
she becomes disabled, paying premiums will become a burden. Which provision can Becky
attach to her life insurance policy to address this concern? - answer✔✔waiver-of-premium
provision
All of the following statements about ordinary life insurance are true EXCEPT:
There is a build-up of cash value that can be borrowed by the policyholder.
It offers the policyholder the flexibility to meet a wide variety of financial objectives.
Premiums are level throughout the policy period.
The face amount of the policy is paid if the insured lives to age 65. - answer✔✔The face amount
of the policy is paid if the insured lives to age 65.
All of the following statements about the conversion of a term policy are true EXCEPT:
Under an attained age conversion, the premium is based on the insured's attained age at the time
of conversion.
Under an original age conversion, the policy owner must pay a financial adjustment in addition
to the premium for the new policy.
Evidence of insurability is required before a conversion is permitted.
Most insurers require original age conversion to take place within a specified period (5 years, for
example) of the issue of the term policy. - answer✔✔Evidence of insurability is required before
a conversion is permitted.
All of the following statements about the income tax treatment of individually purchased life
insurance are true EXCEPT:
Policy owner dividends are received tax-free.
Life insurance proceeds paid to a beneficiary in a lump-sum are received tax-free.
The annual increase in cash value is not taxable while the policy remains in force.
Premiums paid for individual life insurance are a tax deductible expense. - answer✔✔Premiums
paid for individual life insurance are a tax deductible expense.
A non-qualified, immediate life time income annuity offers all of the following benefits
EXCEPT:
A) Immediate annuity payments are entirely exempt from federal income tax.
B) Simplicity for the purchaser as he/she does not have to manage investment funds.
C) The principal is safe as the funds are guaranteed by the assets of the insurer.
D) Security for the purchaser as stable lifetime income that cannot be outlived is provided. -
answer✔✔A) Immediate annuity payments are entirely exempt from federal income tax.
Brad owns a cash value life insurance policy. Last year, the cash value increased by $300. Brad
received $100 in policyowner dividends on the policy last year. Brad was the beneficiary named
in his grandmother's $50,000 life insurance policy. When she died this past year, Brad received
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