The gross premium is defined as A) the net premium plus the loading allowance. B) the terminal reserve plus the commission. C) the net premium minus expenses. D) the sum of all acquisition expenses. ANSWER Answer: A
Date: September 19th, 2020
The difference between the present value of future benefits payable under a life insurance policy and the present value of net premiums for the policy is the policy’s A) retrospective reserve. B) policyholders surplus. C) prospective reserve. D) admitted assets. ANSWER Answer: C
Date: September 19th, 2020
Purposes of life insurance policy reserves include which of the following? I. Legal test of the insurer’s solvency II. Formal recognition of the obligation to pay future claims A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: C
Date: September 19th, 2020
Beth purchased a $50,000 nonparticipating whole life insurance policy. The annual premium was $1,278. The cash value of the policy after 10 years will be $13,740. The future value of $1 deposited at the start of the year for 10 years, assuming 5 percent interest, is $13.207. If the premiums were invested at 5 percent […]
Date: September 19th, 2020
Lisa does not want her life insurance policy included in her gross estate when she dies. Lisa can remove the life insurance policy from her estate if she does which of the following more than 3 years before she dies? A) borrow the cash value of the policy B) make an absolute assignment of the […]
Date: September 19th, 2020
Which of the following statements about the traditional net cost method of measuring the cost of life insurance is (are) true? I. The traditional net cost method does not consider the time value of money. II. The traditional net cost method can show that life insurance has a negative cost. A) I only B) II […]
Date: September 19th, 2020
Brad owns a cash value life insurance policy. Last year, the cash value increased by $300. Brad received $100 in policyowner dividends on the policy last year. Brad was the beneficiary named in his grandmother’s $50,000 life insurance policy. When she died this past year, Brad received $50,000. How much taxable income relating to life […]
Date: September 19th, 2020
Under the traditional net cost method, the net cost of life insurance for a given period (e.g., 20 years) is determined by which of the following formulas? A) the total premiums for the period less the policy reserve at the end of the period B) the total premiums for the period less the sum of […]
Date: September 19th, 2020
The first step in “shopping for life insurance” is to A) estimate the amount of life insurance to purchase. B) decide whether you want a policy which pays dividends. C) determine if you need life insurance. D) decide on the best type of life insurance for you. ANSWER Answer: C
Date: September 19th, 2020
Which of the following statements about the use of interest-adjusted cost data for comparing life insurance policies is (are) true? I. Using interest-adjusted cost data provides a more accurate measure of the cost of life insurance than is provided if the time value of money is ignored. II. Its use is most appropriate in deciding […]
Date: September 19th, 2020
