Risk Management and Insurance – Exam 3, 2026 – Study Material and
Practice Questions
Convertible Policy - ANS✔✔ Can be exchanged for a cash-value policy without evidence of
insurability
Reentry term - ANS✔✔ Term insurance policy in which renewal premiums are based on select
(lower) mortality rates if the insured can periodically demonstrate acceptable evidence of
insurability
Return on premium term insurance - ANS✔✔ Product that returns the premiums at the end of
the term period, provided that the insurance is still in force
Term insurance - ANS✔✔ Protection period is temporary, renewable for additional periods
without evidence of insurability, premium is increased at each renewal date based on insured's
attained age
Whole life insurance - ANS✔✔ Generic name for a cash value policy that provides lifetime
protection
Ordinary life insurance - ANS✔✔ Level-premium policy that accumulates cash values and
provides lifetime protection to age 121, level premiums throughout the premium-payment
period
Net amount at risk - ANS✔✔ Difference between the legal reserve and the face amount of
insurance
Cash surrender value - ANS✔✔ Amount paid to a policyholder who surrenders the policy
, Limited-payment life insurance policy - ANS✔✔ Permanent, insured has a lifetime protection,
premiums are level but only paid for a certain period
Single premium whole life insurance - ANS✔✔ Provides lifetime protection with a single
premuim
Endowment insurance - ANS✔✔ Pays the face amount of insurance if the insured died within a
specified period; if the insured survives to the end of the endowment period, the face amount is
paid to the beneficiary at the time
Variable life isurance - ANS✔✔ Fixed-premium policy in which the death benefit and cash values
vary according to investment experience of a separate account, which is similar to a mutual
fund maintained by the insurer
Universal life insurance - ANS✔✔ Flexible premium policy that provides protection under a
contract that separates the protection and savings components
Indexed universal life insurance - ANS✔✔ Variation of life insurance where there is minimum
interest rate guarantee and additional interest may be credited based on investment gains of a
certain index
Variable universal life insurance - ANS✔✔ Important variation of whole life insurance, policies
are often sold as investments or tax shelters
Joint Life Insurance - ANS✔✔ Written on the lives of two or more people and is payable at the
time of the death of the first person to diewritten on the lives of two or more people and is
payable at the time of the death of the first person to die
Second to die life insurance - ANS✔✔ Insures two or more lives and pays the death benefit at
the time of the second or last insured
Practice Questions
Convertible Policy - ANS✔✔ Can be exchanged for a cash-value policy without evidence of
insurability
Reentry term - ANS✔✔ Term insurance policy in which renewal premiums are based on select
(lower) mortality rates if the insured can periodically demonstrate acceptable evidence of
insurability
Return on premium term insurance - ANS✔✔ Product that returns the premiums at the end of
the term period, provided that the insurance is still in force
Term insurance - ANS✔✔ Protection period is temporary, renewable for additional periods
without evidence of insurability, premium is increased at each renewal date based on insured's
attained age
Whole life insurance - ANS✔✔ Generic name for a cash value policy that provides lifetime
protection
Ordinary life insurance - ANS✔✔ Level-premium policy that accumulates cash values and
provides lifetime protection to age 121, level premiums throughout the premium-payment
period
Net amount at risk - ANS✔✔ Difference between the legal reserve and the face amount of
insurance
Cash surrender value - ANS✔✔ Amount paid to a policyholder who surrenders the policy
, Limited-payment life insurance policy - ANS✔✔ Permanent, insured has a lifetime protection,
premiums are level but only paid for a certain period
Single premium whole life insurance - ANS✔✔ Provides lifetime protection with a single
premuim
Endowment insurance - ANS✔✔ Pays the face amount of insurance if the insured died within a
specified period; if the insured survives to the end of the endowment period, the face amount is
paid to the beneficiary at the time
Variable life isurance - ANS✔✔ Fixed-premium policy in which the death benefit and cash values
vary according to investment experience of a separate account, which is similar to a mutual
fund maintained by the insurer
Universal life insurance - ANS✔✔ Flexible premium policy that provides protection under a
contract that separates the protection and savings components
Indexed universal life insurance - ANS✔✔ Variation of life insurance where there is minimum
interest rate guarantee and additional interest may be credited based on investment gains of a
certain index
Variable universal life insurance - ANS✔✔ Important variation of whole life insurance, policies
are often sold as investments or tax shelters
Joint Life Insurance - ANS✔✔ Written on the lives of two or more people and is payable at the
time of the death of the first person to diewritten on the lives of two or more people and is
payable at the time of the death of the first person to die
Second to die life insurance - ANS✔✔ Insures two or more lives and pays the death benefit at
the time of the second or last insured
