Primerica Life Insurance Study Questions and Answers
2023 (Verified Answers)
Stranger-oriented life insurance policies are in direct opposition to the principle of
a. law of large numbers
b. good faith
c. indemnity
d. insurable interest
d. insurable interest-STOLI purchaser doesn't know the insured, or have any interest in
the insured's longevity, so it violates the principle of insurable interest
Which is generally true regarding insureds who have earned preferred status?
a. they keep a higher percentage of any interest earned on their policies
b. their premiums are lower
c. they can barrow higher amounts off of their policies
d. they can decide when to pay their monthly premiums
b. their premiums are lower- the insured is in excellent physical condition and employs
healthy lifestyles and habits
All of the following statements concerning the use of life insurance as an Executive
Bonus are correct EXCEPT:
a. the employer pays a bonus to a selected employee to fund to policy
b. it is considered a non qualified employee benefit.
c. the policy is owned by the company
d. any type of insurance policy may be used.
c. the policy is owned by the company.
An insured receives a monthly summary for his life insurance policy. He notices that the
cash value of the policy is significantly lower this month than it was last month. What
type of policy does the insured have?
a. variable
b. term
c. securities
d. stock
a. variable- life policies vary in value, as the name suggests, because the value is
based on the stocks that support the policy. If a policyholder wants a more stable,
reliable value, he/she should invest in a fixed policy.
When an employer offers to give an employee a wage increase in the amount of the
premium on a new life insurance policy, this is called
a. aleatory contract
b. executive bonus
c. key person
d. a fraternal association
b. executive bonus
In terms of Social Security, what is the interval spanning between the day when the
youngest child of a family turns 16 and before the surviving spouse may receive
retirement benefits?
,Blackout period- begins when the youngest child reaches the age of 16, and ends when
the surviving spouse qualifies for retirement benefits, as early as age 60. No benefits
are paid during this time.
Life insurance may be used to pay state inheritance taxes and federal estate taxes so
that it is not necessary to sell off assets from the estate to pay these costs. This is
called
a. estate conservation
b. estate creation
c. survivor protection
d. survivorship insurnce
a. estate conservation- life insurance may be used to pay state inheritance taxes and
federal estate taxes so that it is not necessary to sell off assets from the estate to pay
these costs. This is called estate conservation.
Which of the following applicants could the insurer charge a higher rate and not be
charge with unfair discrimination?
a. an applicant that was born in another country
b. an applicant who is legally blind
c. an applicant who has been a victim of domestic abuse
d. an applicant that smokes cigarettes as opposed to one that does not
d. an applicant that smokes cigarettes as opposed to one that does not
Partner A in a business buys a life insurance policy on Partner B to protect herself
against a financial loss if he should die. Two years after the partnership is dissolved
Partner B dies. Who will receive the death benefit?
Partner A
Which of the following is NOT a type of information that needs to be gathered in order to
determine the value of someone's life when using the needs approach?
a. mortgages
b. expenses
c. estimated longevity
d. outstanding debt
c. estimated longevity
An employee will be taxed on the cost of group life insurance paid by the employer if the
amount of coverage exceeds
a. $10,000
b. $15,000
c. $25,000
d. $50,000
d. $50,000
Which of the following would NOT fall into the category of costs associated with death?
a. final medical expenses of the insured
b. day to day expenses of maintaining the family
c. the expense of a vacation for surviving family members
d. funeral expenses
c. the expense of a vacation for surviving family members
Based on Human Life Value Approach, which of the following is NOT used to calculate
an individual's life value?
, a. effect of inflation on income over time
b. predicted needs of the family after the insured's death
c. insured's current and future income
d. insured's annual expenses.
b. predicted needs of the family after the insured's death- are used in the needs
approach. The Human Life Value Approach requires the calculation of probable future
earnings of the insured, which involves wages, expenses, inflation, amount of time until
retirement, and the time value of money.
Who makes up the Medical Information Bureau?
Insurers
Upon policy delivery, the agent may be required to obtain any of the following EXCEPT
a. payment of premium
b. corrected and resigned application
c. signed waiver of premium
d. statement of good health
c. signed waiver of premium
Amy's insurance premium has decreased slightly, despite the fact that her level of
health has remained the same. Which of the following most likely caused the premium
decrease?
a. she has a Steadily Decreasing Premium policy
b. the insurer's customer base is expanding, which allows for lower premiums
c. her insurer used interest earned on premiums to lower premium amounts
d. her increased age allows for lower premiums
c. her insurer used interest earned on premiums to lower premium amounts
Who is the owner of the policy and who pays the premium in and Executive Bonus
plan?
a. company is the owner, but the executive pays the premium
b. board of directors is the owner, and the board of directors pays the premium
c. company is the owner, and the company pays the premium
d. executive is the owner, and the executive pays the premium
d. executive is the owner, and the executive pays the premium- the employer
reimburses the executive for cost (or pays a bonus in the amount of the premium).
Since the executive is receiving compensation, the amount paid by the employer would
be considered taxable income.
What is the major difference between a Stock Redemption Plan and a Cross Purchase
Plan?
In a Stock Redemption Plan, the policies are owned by an entity, and in a Cross
Purchase Plan, the policies are owned by individuals- If the business owns the policies,
pays the premiums, and is the beneficiary, the agreement is called Stock Redemption
Plan. If the policies are owned by individual business partners who pay the premiums
and are the beneficiaries, the plan is called a Cross Purchase Plan
What is the purpose of the buyer's guide?
To allow the consumer to compare the costs of different policies
An insured has been diagnosed with a life-threatening disease, and is given
approximately six months to live. The insured is in a hard financial situation which will
worsen with the upcoming medical expenses. Which of the following options could he
2023 (Verified Answers)
Stranger-oriented life insurance policies are in direct opposition to the principle of
a. law of large numbers
b. good faith
c. indemnity
d. insurable interest
d. insurable interest-STOLI purchaser doesn't know the insured, or have any interest in
the insured's longevity, so it violates the principle of insurable interest
Which is generally true regarding insureds who have earned preferred status?
a. they keep a higher percentage of any interest earned on their policies
b. their premiums are lower
c. they can barrow higher amounts off of their policies
d. they can decide when to pay their monthly premiums
b. their premiums are lower- the insured is in excellent physical condition and employs
healthy lifestyles and habits
All of the following statements concerning the use of life insurance as an Executive
Bonus are correct EXCEPT:
a. the employer pays a bonus to a selected employee to fund to policy
b. it is considered a non qualified employee benefit.
c. the policy is owned by the company
d. any type of insurance policy may be used.
c. the policy is owned by the company.
An insured receives a monthly summary for his life insurance policy. He notices that the
cash value of the policy is significantly lower this month than it was last month. What
type of policy does the insured have?
a. variable
b. term
c. securities
d. stock
a. variable- life policies vary in value, as the name suggests, because the value is
based on the stocks that support the policy. If a policyholder wants a more stable,
reliable value, he/she should invest in a fixed policy.
When an employer offers to give an employee a wage increase in the amount of the
premium on a new life insurance policy, this is called
a. aleatory contract
b. executive bonus
c. key person
d. a fraternal association
b. executive bonus
In terms of Social Security, what is the interval spanning between the day when the
youngest child of a family turns 16 and before the surviving spouse may receive
retirement benefits?
,Blackout period- begins when the youngest child reaches the age of 16, and ends when
the surviving spouse qualifies for retirement benefits, as early as age 60. No benefits
are paid during this time.
Life insurance may be used to pay state inheritance taxes and federal estate taxes so
that it is not necessary to sell off assets from the estate to pay these costs. This is
called
a. estate conservation
b. estate creation
c. survivor protection
d. survivorship insurnce
a. estate conservation- life insurance may be used to pay state inheritance taxes and
federal estate taxes so that it is not necessary to sell off assets from the estate to pay
these costs. This is called estate conservation.
Which of the following applicants could the insurer charge a higher rate and not be
charge with unfair discrimination?
a. an applicant that was born in another country
b. an applicant who is legally blind
c. an applicant who has been a victim of domestic abuse
d. an applicant that smokes cigarettes as opposed to one that does not
d. an applicant that smokes cigarettes as opposed to one that does not
Partner A in a business buys a life insurance policy on Partner B to protect herself
against a financial loss if he should die. Two years after the partnership is dissolved
Partner B dies. Who will receive the death benefit?
Partner A
Which of the following is NOT a type of information that needs to be gathered in order to
determine the value of someone's life when using the needs approach?
a. mortgages
b. expenses
c. estimated longevity
d. outstanding debt
c. estimated longevity
An employee will be taxed on the cost of group life insurance paid by the employer if the
amount of coverage exceeds
a. $10,000
b. $15,000
c. $25,000
d. $50,000
d. $50,000
Which of the following would NOT fall into the category of costs associated with death?
a. final medical expenses of the insured
b. day to day expenses of maintaining the family
c. the expense of a vacation for surviving family members
d. funeral expenses
c. the expense of a vacation for surviving family members
Based on Human Life Value Approach, which of the following is NOT used to calculate
an individual's life value?
, a. effect of inflation on income over time
b. predicted needs of the family after the insured's death
c. insured's current and future income
d. insured's annual expenses.
b. predicted needs of the family after the insured's death- are used in the needs
approach. The Human Life Value Approach requires the calculation of probable future
earnings of the insured, which involves wages, expenses, inflation, amount of time until
retirement, and the time value of money.
Who makes up the Medical Information Bureau?
Insurers
Upon policy delivery, the agent may be required to obtain any of the following EXCEPT
a. payment of premium
b. corrected and resigned application
c. signed waiver of premium
d. statement of good health
c. signed waiver of premium
Amy's insurance premium has decreased slightly, despite the fact that her level of
health has remained the same. Which of the following most likely caused the premium
decrease?
a. she has a Steadily Decreasing Premium policy
b. the insurer's customer base is expanding, which allows for lower premiums
c. her insurer used interest earned on premiums to lower premium amounts
d. her increased age allows for lower premiums
c. her insurer used interest earned on premiums to lower premium amounts
Who is the owner of the policy and who pays the premium in and Executive Bonus
plan?
a. company is the owner, but the executive pays the premium
b. board of directors is the owner, and the board of directors pays the premium
c. company is the owner, and the company pays the premium
d. executive is the owner, and the executive pays the premium
d. executive is the owner, and the executive pays the premium- the employer
reimburses the executive for cost (or pays a bonus in the amount of the premium).
Since the executive is receiving compensation, the amount paid by the employer would
be considered taxable income.
What is the major difference between a Stock Redemption Plan and a Cross Purchase
Plan?
In a Stock Redemption Plan, the policies are owned by an entity, and in a Cross
Purchase Plan, the policies are owned by individuals- If the business owns the policies,
pays the premiums, and is the beneficiary, the agreement is called Stock Redemption
Plan. If the policies are owned by individual business partners who pay the premiums
and are the beneficiaries, the plan is called a Cross Purchase Plan
What is the purpose of the buyer's guide?
To allow the consumer to compare the costs of different policies
An insured has been diagnosed with a life-threatening disease, and is given
approximately six months to live. The insured is in a hard financial situation which will
worsen with the upcoming medical expenses. Which of the following options could he
