Life -pg 40

Which of the following would make a risk uninsurable?

the risk is of a catastrophic nature

All of the following statements are true regarding an actuary, EXCEPT?

selects risk for the insurer

Which type of risk management technique is being used when the insured buys an insurance policy?

transfer

If an individual decides to accept the risk associated with a loss and not purchase insurance, they are using what risk managing method?

retaining

What do insurers use to predict the number of losses in a group of individuals?

Law of large numbers

Speculative risk involves all of the following EXCEPT?

insurance

What type of hazard is an unlocked car parked in a high crime area?

physical

Which of the following is NOT true regarding a "speculative risk"?

insurance can be written on speculative risk

The law of large numbers states that:

the larger the number of units considered, the more predictable are the losses

When a person does not participate in a dangerous activity, what risk management technique are they using?

avoidance

Which of the following is NOT true regarding insurance?

insurance is a device for handling speculative risk

All of the following are risk management techniques, EXCEPT?

indemnify

A belief that intentionally causing a loss is acceptable is what type of hazard?

moral

Dishonest tendencies that increase the probability of a loss describe what type of hazard?

moral

Which risk is insurable?

predictable

Which of the following is not a material fact regarding an applicant for life insurance?

flu

Statements made on an application for life insurance are:

representations

A known right intentionally relinquished in a contract is called?

waiver

What describes an applicant submitting an application for life insurance without premium?

invitation for an offer

A life insurance policy is a legal binding contract. All of the following must be present for the policy to be enforceable in a court of law, EXCEPT?

conditional receipt

All of the following are essential elements of a legal binding contract EXCEPT?

signatures

If an applicant for life insurance lies on the application regarding a material fact, it is called:

fraud

A unique feature in an insurance contract to avoid overpayment is called:

contract of indemnity

All are unique features of an insurance contract, EXCEPT?

bilateral

When one party constructs the contract and the other party has no input, it is known as a(n):

contract of adhesion

A unique feature of an insurance contract where one party can benefit more than the other based on the occurrence of an uncertain event is referred to as:

aleatory contract

In a contract of adhesion, any ambiguity in the contract would be in favor of whom?

insured

Unequal receipt of value best describes what unique feature of an insurance contract?

aleatory contract

Restore best describes what unique feature in an insurance contract?

contract of indemnity

Each party to the contract has a responsibility to the other describes?

conditional contract

Who has an economic interest in the other?

married partners

In lieu of a salary increase, the employer pays the premium on a life insurance policy owned by an executive describes what type of life insurance?

executive bonus

When an employer is the beneficiary of a life policy on an employee it is referred to as?

key person insurance

What type of policy would a business use to buy the stock of a deceased stockholder?

buy-sell

What is human life value used?

calculate the amount of death benefit

Regarding the insurable interest in life insurance all of the following are true, EXCEPT?

must exist at the time of the insured's death

In life insurance, when must the insurable interest exist?

time of the application

What determines the amount of the insurance in credit life insurance?

the amount of the loan

Regarding credit life which of the following statements is true?

debtor pays the premium

All of the following are true regarding credit insurance EXCEPT?

credit accident and health pays off the loan in a lump sum if the insured is disabled

Credit life insurance is?

insurance that covers the death of the debtor on a specific loan

All of the following are true regarding term life insurance EXCEPT?

term insurance premiums are more costly than other types of insurance

Which of the following is TRUE regarding Decreasing Term?

the death benefit decreases

Regarding term life insurance, which of the following is correct?

premium will remain level over the term of the contract

For which person would term life insurance be most appropriate?

person with temporary needs

The option to change to another type of life insurance policy with the same insurer without the insured providing evidence of insurability is called?

convertibility

Term life insurance provides benefits when:

insured dies during policy period

A type of term insurance which can be changed to another type of policy without qualifying medically is called?

convertible term policy

For which of the following situations would you recommend term insurance?

Jay is 26 years old, married with two children, and is starting a new career

Regarding renewable and convertible term provisions in life insurance policies, which of the following is correct?

these provisions allow the insured to renew or convert without qualifying medically

Term insurance is best used for people with a:

need to protect future insurability

Gowen Geter has a term policy that allows him to change to a whole life policy with no need to re-qualify medically. What type of policy does Gowen own?

convertible term

Which best describes Mortgage Life?

decreasing term

Jurassic Park has a $300,000 whole life policy. Current cash value is $90,000 and $70,000 premiums paid. If Jurassic dies today, what amount will the beneficiary receive?

$300,000

A 20-Pay Whole Life policy endows when?

the insured reaches age 100

What non-forfeiture option provides the same type of coverage as the policy being surrendered?

reduced paid up

A Single Premium Whole Life Policy's most significant characteristic is:

entire policy premium is paid at the time of application

When the policy cash value on a Whole Life Policy is used to purchase a lesser amount of the same type of insurance, what is the name of the non-forfeiture option used?

reduced paid up

Which of the following is NOT a characteristic of a Straight Life policy?

increasing death benefit

In a whole life policy which non-forfeiture value is automatic or default?

extended term

On a whole life policy when the insured reaches age 100 what will happen?

policy endows

The cash surrender value on a "Paid Up at 65 Whole Life" policy will equal the face amount of coverage when:

insured reaches age 100

A policy with premiums paid up at age 65 endowing at age 100 describes?

limited pay

Which whole life policy would have the least annual premium outlay for an insured 20-year old?

ordinary whole life

What is the best description of a modified whole life policy?

level death benefit with premiums reduced during the first five years and increasing one time

A whole life policy has non-forfeiture values which begin the third year of the policy. All of the following are non-forfeiture values EXCEPT?

interest only

All of the following are true regarding endowments EXCEPT?

offer a high amount of protection for the premium cost

A person who wants to accumulate a certain amount of dollars by a give age and have life insurance protection would choose which type of policy?

endowment

What policy covers two lives and pays the face amount when the first insured dies?

joint life

Which of the following is true regarding a Joint Life policy?

it pays when the first insured dies

Which is true about Survivor Life?

it is sometimes called a "second to die" policy

Regarding a jumping juvenile policy, at what age does the amount of life insurance increase?

21

In a Universal Life policy, which of the following is NOT flexible?

minimum interest rate

Regarding a Universal Life Policy all of the following are true, EXCEPT?

premiums must be paid monthly

Harley Davidson dies in a motorcycle accident. He has a Universal Life Policy - Option B with a face amount of $200,000 and accumulated cash value of $50,000. His beneficiary will receive what amount?

$250,000

When can a universal life policy be surrendered for the cash value?

at any time upon the policy owner's request

When is a universal life policy in risk of lapsing?

after the cash value drops below the amount required to pay the mortality cost

Regarding Universal Life Insurance, which of the following is TRUE?

mortality costs are deducted monthly by the insurer

Which is NOT an accurate statement regarding Universal Life Insurance?

policy loans are not permitted

All are true regarding Variable Life policies, EXCEPT?

tax free growth

All are advantages of a Variable Life policy, EXCEPT

protection by the Guaranty Association

A securities license is required to sell what type of policy?

variable life

Which type of policy does the policyowner chose the investment options?

variable life

During the sale of a variable insurance policy, a producer is under the authority of all of the following EXCEPT?

IRS

The major difference between Whole Life insurance and Universal Life insurance is:

Whole Life premiums are fixed and Universal Life are flexible

Which of the following life insurance policies places the risk of investment performance upon the insured?

Variable Life

Which of the following statements regarding Universal Life is true?

policy consists of annually renewable term insurance and cash account

The type of life insurance policy where the cash values are invested in securities such as mutual fund products is:

Variable Life

All of the following regulate the sale of variable products EXCEPT?

Internal Revenue Service (IRS)

Lou Zar agrees to pay annual premiums on his life insurance policy for twenty (20) years. His life insurance will remain in effect until he dies. What type of policy does Lou have?

limited pay whole life

What is the interest rate credited to a universal life policy that is guaranteed for a period of time and then may fluctuate?

current interest rate

In a straight life policy which of the following non-forfeiture options has the highest death benefit?

extended term

A life insurance policy that allows the policy owner to change the amount of the premium to be paid while the policy is in effect is called:

universal life policy

What type of policy covers two (2) lives and pays the full amount when the second insured dies?

survivorship life

Regarding a limited pay whole life policy, which is TRUE?

insured has lifetime protection

Crystal has a term life insurance policy that allows her to change to a whole life policy without re-qualifying medically. What type of policy does she have?

convertible term

Which life policy has flexible premiums, flexible face amount, and a guaranteed minimum interest rate paid on cash value?

universal lif