Questions and Answers
Which of the following annuity benefit payment options would generate the highest monthly payments to the contract owner upon annuitization?
All of the following are dividend options on a participating life insurance policy:
The person upon whose life an annuity is based is known as the:
Insured
When a policyowner uses the cash value in their policy to buy a lesser amount of permanent life insurance, they have exercised which nonforfeiture option?
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Which of the following life insurance settlement options enables the beneficiary to conserve the proceeds of a life insurance policy?
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In the case of a variable annuity sold to a senior citizen for which the owner has directed that the premium be invested in mutual funds during the cancellation period, cancellation during that period entitles the owner to a refund of:
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All of the following are true regarding annuities: They are purchased by those who are worried about outliving their savings.
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Which of the following would not be considered to be ordinary life insurance?
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All of the following are true regarding dividends paid by a mutual life insurance company: They are guaranteed.
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Which type of term life insurance has a level face amount but a premium that increases each year as the insured gets older?
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The transfer of risk to an insurance company is an effective risk management technique when:
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The owner of a life insurance policy may do all of the following except:
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All of the following are true regarding key person life insurance: The employer is the policyowner and the beneficiary.
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If a corporation and a shareholder enter into an agreement that requires the corporation to buy the shareholder's shares upon his or her death, they have entered into:
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All of the following are required nonforfeiture options or provisions on a cash value life insurance policy:
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The greater the number of similar exposure units insured, the easier it will be to predict future claims based upon the law of:
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List in order from the lowest annual premium to the highest:
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Group life insurance policies may exclude all of the following:
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Which risk classification will have the highest premium?
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The person upon whose life a life insurance policy is based is known as the:
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A client who wants life insurance protection and cash values that fluctuate in value based upon the performance of a separate account should purchase:
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When making a life settlement, a policyowner will permanently transfer all rights of ownership in the policy to another party by making a(n):
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Which of the following completes the application for life insurance?
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If the beneficiary of a life insurance policy wants $1,000 per month for as long as the money lasts, they should choose the ________ settlement option.
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Study Notes
Annuities and Life Insurance
- Pure or straight life annuity offers the highest monthly benefits upon annuitization.
- Paid-up additions, 1-year term, and cash are dividend options available in participating life insurance policies.
- The insured in an annuity context refers to the individual whose life the annuity payout is based upon.
- A reduced paid-up option allows policyholders to use cash value to purchase a smaller amount of permanent insurance.
Life Insurance Settlement Options
- Interest only settlement option permits beneficiaries to conserve proceeds instead of immediate cash payout.
- Dividends from mutual life insurance companies are not guaranteed, classified as return of premium, and come from the company's surplus.
Term Life Insurance
- Renewable term policy has a level face amount but increasing premiums as the insured ages.
Risk Management
- Transferring risk to an insurance company is effective when future losses are unpredictable.
Life Insurance Policy Ownership Rights
- Policyowners can change beneficiaries, assign ownership, or take loans against policies.
Key Person Life Insurance
- The employer acts as both the policyowner and beneficiary in key person insurance, with death benefits paid tax-free.
Buy/Sell Agreements
- A buy/sell agreement mandates a corporation to purchase a shareholder's stock after their death.
Nonforfeiture Options
- Required nonforfeiture options for cash value life insurance policies include extended term, cash surrender, and reduced paid-up options.
Insurance Principles
- The law of large numbers aids in predicting future claims by increasing the number of similar risks insured.
Life Insurance Premium Classifications
- Risk classification is key, with non-standard classifications incurring the highest premiums.
Miscellaneous
- Group life insurance may exclude coverage for military service, aviation, war, and certain accidents.
- Variable life insurance allows clients to benefit from fluctuating cash values linked to separate account performance.
- Absolute assignment entails the full transfer of ownership rights in a policy during a life settlement process.
- The applicant is responsible for completing the life insurance application, signifying their intent to obtain coverage.
- A fixed amount settlement option pays a specified monthly amount until funds are exhausted.
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Description
Test your knowledge of insurance concepts with these flashcards. This practice exam covers various terms and definitions, including annuity payments and dividend options in life insurance policies. Perfect for anyone preparing for an insurance exam.
