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Exam 11: Life Insurance

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Question 31

Multiple Choice

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The period during which a surviving spouse is ineligible for Social Security benefits is referred to as the

A) emergency period.
B) readjustment period.
C) dependency period.
D) blackout period.

E) A) and D)
F) A) and C)

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Question 32

Multiple Choice

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Julian,age 45,would like to determine how much life insurance to purchase using the human life value approach.He assumes his average annual earnings over the next 20 years will be $40,000.Of this amount,$20,000 is available annually for the support of his family.Julian will generate this income for 20 more years and he believes that 5 percent is the appropriate interest (discount) rate.The present value of one dollar payable for 20 years at a discount rate of 5 percent is $12.46.What is Julian's human life value?

A) $184,600
B) $249,200
C) $360,800
D) $400,000

E) None of the above
F) B) and C)

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Question 33

Multiple Choice

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A legal reserve in life insurance is a result of

Which of the following statements about the capital retention approach for determining life insurance needs is (are) true? I.It assumes that life insurance proceeds will be liquidated to provide income to survivors. II.It requires the preparation of a personal balance sheet.

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

Which of the following statements about yearly renewable term insurance is (are) true? I.It requires evidence of insurability for renewal. II.It is most appropriate when an insured needs lifetime protection.

Carl would like to purchase life insurance.He would also like to invest in a mutual fund.An agent told Carl about a form of life insurance in which Carl could select where the saving component is invested.This form of life insurance has fixed premiums and the cash value is not guaranteed.This type of life insurance is called

All of the following statements about ordinary life insurance are true 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 savings is tied to a market interest rate but a minimum rate is guaranteed,and a monthly administrative fee is charged.Ann is considering buying

Which of the following statements about an indeterminate-premium whole life insurance policy is (are) true? I.It permits the insurer to adjust premiums based on anticipated future experience. II.It allows policyholder dividends to be used to lower premiums.

Which of the following statements about a decreasing term insurance policy is true?

Which of the following statements about a variable universal life insurance policy is (are) true? I.There is a minimum guaranteed interest rate for the cash value. II.The policyowner has a variety of investment options for the investment of premiums.

Which of the following statements about industrial life insurance (also called home service life insurance) policies is true?

Jessica is an agent for LMN Life Insurance Company.She met with Brad,who was interested in purchasing life insurance.Jessica explained the various uses of life insurance,including income for Brad's wife during the 1- or 2-year period following Brad's death.This period is known as 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