Insurance Policy Concepts

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Questions and Answers

What is a single premium policy?

A policy under which only one premium payment is required (correct)

A policy that is only available to individuals who are single

A policy on which no more than one premium can be paid in advance

A policy that requires a premium payment every year

What is the term for a fixed amount added to the premium of a given policy, regardless of policy size?

Policy reserve

Policy values

Policy fee (correct)

What information must an agent know to calculate the required premiums for a given policy?

Face amount desired and age

Age and choice of plan

Face amount desired, age, and choice of plan (correct)

Only the face amount desired

How is the annual premium adjusted to calculate premiums for other modes of premium payment?

It is multiplied by a conversion factor for the mode of payment desired Signup and view all the answers

In a life insurance contract, who is the applicant-owner?

The father who enters into a life insurance contract on behalf of his child Signup and view all the answers

What is the convertible feature of a term insurance policy?

It can be changed to a permanent insurance policy without evidence of insurability Signup and view all the answers

What happens when a policyholder dies within two years of buying a life insurance policy due to an accident?

The insurance company will pay the face amount Signup and view all the answers

When explaining dividends, what information must be supplied?

The relation to the cost of the policy Signup and view all the answers

Who are the two primary parties involved in a life insurance contract?

Insurance company and insured Signup and view all the answers

What is the fundamental advantage of using insurance as a means of meeting economic losses?

Spreading the loss over a large number of people Signup and view all the answers

How does life insurance contribute to the welfare and progress of a country?

By accumulating capital for investment in commerce and industry Signup and view all the answers

What is the term for the number of years that a person at a given age is expected to live on average?

Life expectancy Signup and view all the answers

Which type of insurance plan offers protection and savings?

Permanent insurance Signup and view all the answers

What type of insurance policy would provide maximum protection possible for a person with moderate means?

Term insurance Signup and view all the answers

What type of insurance policy would entitle the policyholder to receive dividends yearly?

Participating insurance Signup and view all the answers

Which type of insurance policy provides the longest protection?

Ordinary life insurance Signup and view all the answers

Study Notes

Life Insurance Concepts

A single premium policy requires only one premium payment.
A fixed amount added to the premium of a policy, regardless of policy size, is known as a policy fee.
To calculate premiums, an agent must know the applicant's age, choice of plan, and face amount desired.

Policy Features

A convertible feature of a term insurance policy allows the policy to be changed to a permanent insurance policy without evidence of insurability.
A life insurance contract involves the insurance company, insured, and applicant-owner.

Dividends and Premium Computation

When explaining dividends, the anticipated dividends and relation to the cost of the policy must be supplied.
Part of the premium paid by a policyholder is invested by the insurance company, and this factor is known as investment or interest in premium computation.

Parties Involved and Benefits

The parties involved in a life insurance contract are the insurance company, insured, applicant-owner, and beneficiary.
Life Insurance contributes directly to the welfare and progress of the country by accumulating capital, partially relieving the community of the care of dependents, and encouraging provisions for the future.

Insurance Terminology

Life expectancy refers to the number of years that persons at a given age will live on average, as shown by the mortality table.
A participating plan is an insurance plan that offers protection and savings, and is suitable for policyholders who want to receive dividends yearly.
Term insurance provides maximum protection possible for a man with moderate means.

Types of Insurance Plans

A 20-year endowment policy provides protection and savings for a specified period.
Whole life insurance provides protection for the entire life of the policyholder.
Ordinary life insurance and limited pay life insurance are other types of insurance plans available.

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Description

Test your understanding of insurance policy concepts, including single premium policies, premium additions, and required knowledge for calculating premiums.