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Exam 11: Life Insurance

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Question 31

Multiple Choice

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The net amount at risk for an ordinary life insurance policy is the difference between the

A) present value of future benefits and the present value of future premiums.
B) face amount of the policy and the total premiums that have been paid.
C) face amount of the policy and the legal reserve.
D) annual premium and the annual policyholder dividend.

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Question 32

Multiple Choice

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Tom and Nancy Boyle provide financial support for their two children.In addition,they provide financial support for Tom's aged father and Nancy's aged mother.The Boyle family can be described as a

A) blended family.
B) single-parent family.
C) two-income earner family.
D) sandwiched family.

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Question 33

Multiple Choice

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All of the following statements about ordinary life insurance are true EXCEPT

When the capital retention approach is used to determine how much life insurance to purchase,all of the following are subtracted from total assets to calculate the capital available to produce income EXCEPT

Alex,age 26,purchased a 20-payment whole life insurance policy.After Alex has made 20 premium payments,his life insurance policy is considered

Which of the following statements about savings bank life insurance is true?

When using the needs approach,several "special needs" should be considered.One special need is money to cover unexpected events,such as major car repairs,dental bills,or home repairs.Money set aside for this purpose is called a(n)

Which of the following statement is true regarding return of premium term insurance?

All of the following statements about universal life insurance are true EXCEPT

Which of the following statements about variable life insurance is true?

Richard is using the capital retention approach to determine how much life insurance to purchase.Richard would like to provide $35,000 per year to his family,forever,if he dies.The assets that he has today will provide $25,000 in annual income without the liquidation of these assets.If life insurance proceeds can be invested to earn a 5 percent annual return,how much life insurance should Richard purchase to fund the additional income needed to meet the $35,000 annual income goal?

The purchase of term insurance is justified by which of the following circumstances? I.The insured wants to save money through the policy for a specific need. II. The insured has a temporary need for life insurance protection.

Which of the following statements about endowment insurance policies is (are) true? I. The face amount is paid if the insured dies during the policy period or at the end of the policy period if the insured is still alive. II. The use of endowment insurance has increased in recent years because of its favorable tax treatment.

What happens to the premiums for yearly renewable term insurance as an insured gets older?

Most family heads need substantial amounts of life insurance.However,with limited income,money spent on life insurance reduces the amount of discretionary income available for other high-priority needs.What an insured person gives up when he or she purchases life insurance instead of using the premium dollars for other purposes is called the

Dave purchased a life insurance policy.The policy is nonparticipating and the cash values are based on the insurer's present mortality,investment,and expense experience.After 2 years,the insurer will recalculate the premium based on the mortality,investment,and expense experience at that time.Dave purchased

Which of the following statements about life insurance cash values is (are) true? I.Cash values are a result of the level premium method of purchasing life insurance. II.The cash value of a policy must always exceed the policy's legal reserve.

All of the following are defects which limit the usefulness of the human life value approach in determining the correct amount of life insurance to purchase EXCEPT

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