Which of the following statements is (are) true with regard to using interest-adjusted cost data when shopping for life insurance? I. Cost indexes apply to new policies and should not be used to determine whether to replace a policy. II. Cost indexes should only be used to compare similar plans of insurance. A) I only […]
David purchased a $100,000 participating whole life policy. The annual premium is $2,280. Projected dividends for the first 20 years are $15,624. The cash value after 20 years will be $35,260. If the premiums were invested at 5 percent interest for 20 years, the premiums would grow to $79,156. If the dividends were accumulated at […]
Each of the following helps to reduce federal estate taxes EXCEPT A) the marital deduction. B) the applicable unified tax credit amount. C) life insurance policies in which the deceased had an incidents of ownership at the time of death. D) expenses such as the cost of the funeral, estate settlement costs, and probate costs. […]
Which of the following statements describes how the net payment cost index differs from the surrender cost index? A) Dividends are ignored. B) The cash value is ignored. C) Premiums are not accumulated at a specified interest rate. D) Dividends are not accumulated at a specified interest rate. ANSWER Answer: B
Which of the following statements about life insurance policy loans is (are) true? I. Interest is not required on a life insurance policy loan, as the policyholder is borrowing his or her own money. II. If there is an outstanding loan when the insured dies, payment to the beneficiary is reduced by the amount of […]
Which of the following statements is (are) true regarding exclusions in life insurance contracts? I. Life insurance policies are remarkably restrictive, including numerous exclusions. II. A life insurer may exclude death attributable to certain activities or hobbies disclosed on the application. A) I only B) II only C) both I and II D) neither I […]
Life insurance policy proceeds can be paid to a trustee upon the death of the insured. All of the following statements concerning payment of proceeds to a trustee are true EXCEPT A) Use of a trustee provides flexibility with regard to the timing and amount of the payments. B) Trustees are often used when the […]
Which of the following is a standard nonforfeiture option? A) paid-up additions B) life income C) extended term insurance D) reduction of premiums ANSWER Answer: C
Which of the following statements regarding the accidental death benefit rider (also known as double indemnity) is true? A) Adding the accidental death benefit rider doubles the premium for the policy. B) Financial planners agree that adding the accidental death benefit rider is a wise purchase. C) The economic value of a human life is […]
Easy Pay Life Insurance Company allows a term insurance rider to be added to its whole life policies. The result is a policy that offers an increased death benefit with an affordable premium. The general name for such a policy is a(n) A) blended policy. B) indexed policy. C) joint life policy. D) endowment policy. […]
