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Primerica-Life Insurance Questions with Accurate Answers
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Primerica-Life Insurance
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Primerica-Life InsuranceA key person insurance policy can pay for which of the following?
a. workers compensation
b. hospital bills of the key employee
c. costs of training a replacement
d. loss of personal income - answerc. costs of training a replacement- the policy will pay
for costs of running the business and replacing the employee
A man wants to buy a life insurance policy in which he can count on guaranteed
minimum benefits. Which type should he buy?
a. level
b. variable
c. solid
d. fixed - answerd. fixed- life insurance policies offer minimum guaranteed or fixed
benefits stated in the contract. the other type of policy, variable life, varies in its cash
value because its value is based on the stocks that support it
A policyowner fails to pay the premium due on his whole life policy after the grace
period passes, but the policy remains in force. This is due to what provision?
a. assignment
b. automatic premium loans
c. waiver of premium
d. incontestability period - answerb. automatic premium loans- commonly added to
contracts with a cash value at no additional charge. This is a special type of loan that
prevents the unintentional lapse of a policy due to nonpayment of the premium
All of the following statements concerning dividends are true EXCEPT:
a. lower insurance company costs generate higher dividends
b. they stem from favorable underwriting experience
c. Favorable investment results generate higher dividends
d. dividend amounts are guaranteed in the policy - answerd. dividend amounts are
guaranteed in the policy-they cannot be guaranteed
All of the following statements concerning the use of life insurance as an Executive
Bonus are correct EXCEPT:
a. the employer pays a bonus to a selected employee to fund to policy
b. it is considered a non qualified employee benefit.
c. the policy is owned by the company
d. any type of insurance policy may be used. - answerc. the policy is owned by the
company.
,All other factors being equal, the least expensive first-year premium payment is found in
a. level term
b. annually renewable term
c. increasing term
d. decreasing term - answerb. 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.
decreasing policies-the face amount decreases, the premium is constant
level term and increasing term policies- the premium remains level for the term of the
policy
Amy's insurance premium has decreased slightly, despite the fact that her level of
health has remained the same. Which of the following most likely caused the premium
decrease?
a. she has a Steadily Decreasing Premium policy
b. the insurer's customer base is expanding, which allows for lower premiums
c. her insurer used interest earned on premiums to lower premium amounts
d. her increased age allows for lower premiums - answerc. her insurer used interest
earned on premiums to lower premium amounts
An agent and an applicant for a life insurance policy fill out and sign the application.
However, the applicant does not wish to give the agent the initial premium, and no
conditional receipt is issued. When will coverage begin? - answerWhen the agent
delivers the policy, collects the initial premium, and the applicant completes an
acceptable Statement of Good Health
An agent is acting ethically in all the of following situations EXCEPT
a. working within the conditions of his/her contract
b. representing the insurer, not the insured
c. keeping customers' best interests in mind
d. always representing the insured - answerd. always representing the insured-they are
deemed to represent the insurer, not the insured
An applicant is seeking an insurance policy. In the underwriting process, it was
determined that the applicant has some dangerous habits, a risky occupation, and poor
health. Which of the following is TRUE concerning the policy premium?
a. it will likely be higher because the applicant is a substandard risk
b. it will likely be the average premium issued to standard risks
c. the applicant's habits, occupation and health do not affect the premiums
d. it will likely be lower because the applicant is preferred risk - answera. it will likely be
higher because the applicant is a substandard risk
An applicant wants to buy a policy that has cash value element. Which type should she
buy?
a. term
b. permanent
, c. stock
d. investment - answerb. permanent- death protection and savings/cash value option
An employee will be taxed on the cost of group life insurance paid by the employer if the
amount of coverage exceeds
a. $10,000
b. $15,000
c. $25,000
d. $50,000 - answerd. $50,000
An insured has been diagnosed with a life-threatening disease, and is given
approximately six months to live. The insured is in a hard financial situation which will
worsen with the upcoming medical expenses. Which of the following options could he
utilize right now?
a. liquidity
b. surrender
c. change of beneficiary
d. viatical settlement - answerd. viatical settlement
An insured owns a life insurance policy. To be able to pay some of her medical bills, she
withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the
insurer charges a fee. What type of policy does the insured most likely have?
a. term life
b. limited access
c. universal life
d. controlled - answerc. universal life
An insured purchases a policy in 2000 and dies and 2005. The insurance company
discovers at the time that the insured concealed information during the application
process. What can they do?
a. Sue for the right to not pay the death benefit
b. Pay the death benefit
c. Refuse to pay the death benefit because of the fraud
d. Pay a decreased death benefit - answerb. Pay the death benefit- the incontestability
clause prevents an insurer from denying a claim due to statements in an application
after the policy has been in force for 2 years, even on the basis of a material
misstatement of facts or concealment of a material fact.
An insured receives a monthly summary for his life insurance policy. He notices that the
cash value of the policy is significantly lower this month than it was last month. What
type of policy does the insured have?
a. variable
b. term
c. securities
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