ABC Life Insurance Company is offering a new product. The product is a two-year term insurance policy funded by a single premium at the start of the first year. Death claims are paid at the end of the year in which death occurs. A portion of the appropriate mortality table is shown below. The first […]
Date: September 19th, 2020
According the 2001 CSO mortality table, the yearly probability of dying for a 40 year-old man is .00165. The present value of $1 one year from today, assuming a 5.5 percent interest rate, is .9479. What is the net single premium per $1,000 for a one-year term insurance policy sold to a man at age […]
Date: September 19th, 2020
The net single premium for a life insurance policy is A) the premium the insurer charges to cover the death benefit and the insurer’s expenses. B) the future value of the future death benefit. C) the present value of the future death benefit. D) the face value of the policy discounted back for the number […]
Date: September 19th, 2020
Which statement is true regarding using interest-adjusted cost data and purchasing life insurance? A) Cost indices can help to determine whether a policy should be replaced. B) The type of policy you purchase should he based solely on a cost index. C) Small variations in cost indices should be ignored. D) Cost indices should be […]
Date: September 19th, 2020
Carl and Carol Williams, a married couple, are doing some estate planning. Upon his death, Carl plans to leave $1,000,000 in property to his wife. This amount will reduce the value of Carl’s gross estate and will be taxed later when Carol dies. This reduction of the gross estate is called the A) unified tax […]
Date: September 19th, 2020
Actuaries at Term Life Insurance Company calculated the net single premium per thousand for a five-year term policy for a man age 32 to be $5.04. To calculate the net level premium for this policy, the net single premium should be A) divided by 5. B) divided by the future value life annuity due factor […]
Date: September 19th, 2020
Paul is shopping for a life insurance policy. An agent asked Paul if he would like to purchase a participating policy. What is a “participating” policy? A) a policy which has a cash value B) a policy which pays dividends C) a policy which invests in common stock D) a policy which provides for an […]
Date: September 19th, 2020
The net premiums collected by a life insurer for a particular block of policies, plus interest income at an assumed rate, less assumed death benefits paid is called the A) cash value. B) retrospective reserve. C) net amount at risk. D) prospective reserve. ANSWER Answer: B
Date: September 19th, 2020
All of the following statements about the income tax treatment of individually-purchased life insurance are true EXCEPT A) policyowner dividends are received tax-free. B) the annual increase in cash value is not taxable while the policy remains in force. C) premiums paid for individual life insurance are a tax deductible expense. D) life insurance proceeds […]
Date: September 19th, 2020
The average annual rate of return on a cash-value policy if it is held a specified number of years is called the policy’s A) net present value. B) interest-adjusted cost. C) benchmark cost. D) Linton yield. ANSWER Answer: D
Date: September 19th, 2020
