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NC LIFE AND HEALTH INSURANCE
QUESTIONS WITH CORRECT ANSWERS
Which of the following is NOT a characteristic of universal life
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insurance?
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A Flexible death benefit
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B Cash account
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C Fixed premium
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D Unbundled premium - correct answer- C
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Universal life policies allow the policy owner to increase the || || || || || || || || ||
amount of premium going into the policy and to later decrease it
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again. They may even skip a premium payment. The rest of the
|| || || || || || || || || || || ||
features apply to universal life policies.
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Which of the following would help prevent a universal life policy
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from lapsing?
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A Corridor of insurance
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B Target premium
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C Face amount || ||
DAdjustable premium - correct answer- B
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The target premium is a recommended amount that should be
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paid on a policy in order to cover the cost of insurance
|| || || || || || || || || || || ||
protection and to keep the policy in force throughout its lifetime. || || || || || || || || || ||
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A 20-year family income policy was purchased effective April 1,
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2001. The insured died four months later, on August 1, 2001.
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The beneficiary receives monthly income for
|| || || || ||
|| A10 years. ||
B19 years and 8 months. C9
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|| years and 8 months. || || ||
D20 years. - correct answer- B
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Monthly benefits paid for the remainder of the 20 year benefit
|| || || || || || || || || ||
period.
||
When the breadwinner that is insured by a Family Policy dies,
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what rights are provided to other family members that are
|| || || || || || || || || ||
covered under the policy?
|| || || ||
AThey can convert their coverage to permanent life insurance
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with evidence of insurability.
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BFamily members are not provided any rights. || || || || || ||
|| CThey can surrender the coverage for its cash value.
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DThey can convert their coverage to permanent life insurance
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without evidence of insurability. - correct answer- D
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Family members may convert their term coverage to permanent
|| || || || || || || ||
insurance if requested within the time stated in the policy.
|| || || || || || || || || ||
Which of the following types of insurance policies would provide
|| || || || || || || || ||
the greatest amount of protection for a temporary period during
|| || || || || || || || || ||
which an insured will have limited financial resources?
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AVariable life ||
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BTerm
CWhole Life ||
DAnnuity - correct answer- B || || || ||
Term insurance provides a death benefit only; cost per $1,000
|| || || || || || || || ||
of coverage is less than other types of policies that create cash
|| || || || || || || || || || || ||
values.
||
Review Content ||
A Universal Life insurance policy has two types of interest rate
| || || || || || || || || ||
that are called
|| || ||
AFixed and Variable || ||
|| BMinimum and Target | |
CGuaranteed and Current | ||
DOption A and Option B - correct answer- C | | || || || || || ||
The insurer credits the cash value in the policy with a current
|| || || || || || || || || || ||
(nonguaranteed) interest rate and backs the cash value with a
|| || || || || || || || || ||
contract (lower guaranteed) rate of interest.
|| || || || || ||
What are the two components of a universal policy?
|| || || || || || || ||
|| AInsurance and investments || ||
BMortality cost and interest || || ||
|| CSeparate account and policy loans || || || ||
DInsurance and cash account - correct answer- D || || || || || || ||
A universal policy has two components: an insurance
| || || || || || ||
component and a cash account. The insurance component of a || || || || || || || || ||
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universal life policy is always annual renewable term insurance.
|| || || || || || || ||
The cash account accumulates on a tax deferred basis each
|| || || || || || || || || ||
year and earns either the guaranteed contract rate or the
|| || || || || || || || || ||
current rate, whichever is higher. || || || ||
What is the purpose of establishing the target premium for a
|| || || || || || || || || ||
universal life policy?
|| || ||
ATo pay up the policy faster
|| || || || ||
|| BTo cover all policy expenses
| | | |
|| CTo keep the policy in force
|| || || || ||
DTo accumulate cash value faster - correct answer- C
|| || || || || || || ||
The target premium is a recommended amount that should be
|| || || || || || || || ||
paid on a policy in order to cover the cost of insurance
|| || || || || || || || || || || ||
protection and to keep the policy in force throughout its lifetime. || || || || || || || || || ||
Which of the following is an example of a limited-pay life policy?
|| || || || || || || || || || ||
|| ALevel Term Life || ||
BStraight Life ||
CLife Paid-up at Age 65 || || | ||
DRenewable Term to Age 70 - correct answer- C | || | || || || || ||
Limited Pay Whole Life premiums are all paid by the time the
|| || || || || || || || || || ||
insured reaches age 65. The policy endows when the insured
|| || || || || || || || || ||
turns 100. It is the premium paying period that is limited, not the
|| || || || || || || || || || || || ||
maturity.
||
| || || | | |
NC LIFE AND HEALTH INSURANCE
QUESTIONS WITH CORRECT ANSWERS
Which of the following is NOT a characteristic of universal life
|| || || || || || || || || ||
insurance?
||
A Flexible death benefit
| || ||
B Cash account
|| ||
C Fixed premium
|| ||
D Unbundled premium - correct answer- C
|| || || || || ||
Universal life policies allow the policy owner to increase the || || || || || || || || ||
amount of premium going into the policy and to later decrease it
|| || || || || || || || || || || ||
again. They may even skip a premium payment. The rest of the
|| || || || || || || || || || || ||
features apply to universal life policies.
|| || || || || ||
Which of the following would help prevent a universal life policy
|| || || || || || || || || ||
from lapsing?
|| ||
A Corridor of insurance
| || ||
B Target premium
| |
C Face amount || ||
DAdjustable premium - correct answer- B
| || || || || ||
The target premium is a recommended amount that should be
|| || || || || || || || ||
paid on a policy in order to cover the cost of insurance
|| || || || || || || || || || || ||
protection and to keep the policy in force throughout its lifetime. || || || || || || || || || ||
,2 | Page
| || || | | |
A 20-year family income policy was purchased effective April 1,
| || || || || || || | ||
2001. The insured died four months later, on August 1, 2001.
|| || || || || || || || || || ||
The beneficiary receives monthly income for
|| || || || ||
|| A10 years. ||
B19 years and 8 months. C9
|| || || || ||
|| years and 8 months. || || ||
D20 years. - correct answer- B
|| || || || ||
Monthly benefits paid for the remainder of the 20 year benefit
|| || || || || || || || || ||
period.
||
When the breadwinner that is insured by a Family Policy dies,
|| || || || || || || || || ||
what rights are provided to other family members that are
|| || || || || || || || || ||
covered under the policy?
|| || || ||
AThey can convert their coverage to permanent life insurance
|| || || || || || || ||
with evidence of insurability.
|| || || ||
BFamily members are not provided any rights. || || || || || ||
|| CThey can surrender the coverage for its cash value.
|| || || || || || || ||
DThey can convert their coverage to permanent life insurance
|| || || || || || || ||
without evidence of insurability. - correct answer- D
|| || || || || || || ||
Family members may convert their term coverage to permanent
|| || || || || || || ||
insurance if requested within the time stated in the policy.
|| || || || || || || || || ||
Which of the following types of insurance policies would provide
|| || || || || || || || ||
the greatest amount of protection for a temporary period during
|| || || || || || || || || ||
which an insured will have limited financial resources?
|| || || || || || || ||
AVariable life ||
,3 | Page
| || || | | |
BTerm
CWhole Life ||
DAnnuity - correct answer- B || || || ||
Term insurance provides a death benefit only; cost per $1,000
|| || || || || || || || ||
of coverage is less than other types of policies that create cash
|| || || || || || || || || || || ||
values.
||
Review Content ||
A Universal Life insurance policy has two types of interest rate
| || || || || || || || || ||
that are called
|| || ||
AFixed and Variable || ||
|| BMinimum and Target | |
CGuaranteed and Current | ||
DOption A and Option B - correct answer- C | | || || || || || ||
The insurer credits the cash value in the policy with a current
|| || || || || || || || || || ||
(nonguaranteed) interest rate and backs the cash value with a
|| || || || || || || || || ||
contract (lower guaranteed) rate of interest.
|| || || || || ||
What are the two components of a universal policy?
|| || || || || || || ||
|| AInsurance and investments || ||
BMortality cost and interest || || ||
|| CSeparate account and policy loans || || || ||
DInsurance and cash account - correct answer- D || || || || || || ||
A universal policy has two components: an insurance
| || || || || || ||
component and a cash account. The insurance component of a || || || || || || || || ||
, 4 | Page
| || || | | |
universal life policy is always annual renewable term insurance.
|| || || || || || || ||
The cash account accumulates on a tax deferred basis each
|| || || || || || || || || ||
year and earns either the guaranteed contract rate or the
|| || || || || || || || || ||
current rate, whichever is higher. || || || ||
What is the purpose of establishing the target premium for a
|| || || || || || || || || ||
universal life policy?
|| || ||
ATo pay up the policy faster
|| || || || ||
|| BTo cover all policy expenses
| | | |
|| CTo keep the policy in force
|| || || || ||
DTo accumulate cash value faster - correct answer- C
|| || || || || || || ||
The target premium is a recommended amount that should be
|| || || || || || || || ||
paid on a policy in order to cover the cost of insurance
|| || || || || || || || || || || ||
protection and to keep the policy in force throughout its lifetime. || || || || || || || || || ||
Which of the following is an example of a limited-pay life policy?
|| || || || || || || || || || ||
|| ALevel Term Life || ||
BStraight Life ||
CLife Paid-up at Age 65 || || | ||
DRenewable Term to Age 70 - correct answer- C | || | || || || || ||
Limited Pay Whole Life premiums are all paid by the time the
|| || || || || || || || || || ||
insured reaches age 65. The policy endows when the insured
|| || || || || || || || || ||
turns 100. It is the premium paying period that is limited, not the
|| || || || || || || || || || || || ||
maturity.
||
