Kentucky Life Insurance
Exam Questions With All
Correct Answers
Elements of a Contract - CORRECT ANSWERS Competent parties, legal
purpose, offer and acceptance, consideration
Waiver - CORRECT ANSWERS Voluntary giving up of a known right or
privilege, can be express or implied
Estoppel - CORRECT ANSWERS A person is prohibited by virtue of his own
past actions from claiming a right that would work to the detriment of another who relied
on the past conduct
Aleatory Contract - CORRECT ANSWERS a contract where the values
exchanged may not be equal but depend on an uncertain event
Contracts of Adhesion - CORRECT ANSWERS One-sided in regards to
preparation (prepared by the insurer)
Contract of Utmost Good Faith - CORRECT ANSWERS Both parties bargain
in good faith when forming and entering into the contract. The two parties rely upon the
statements and promises of the other and assume no attempt to conceal or deceive has
been made.
Executory Contract - CORRECT ANSWERS A contract that has not yet been
fully performed.
Mortality Rate - CORRECT ANSWERS Determined by dividing the average
number of people who will die each year at each age by the entire population of people
that age (1980 CSO table)
Functions of Life Insurance - CORRECT ANSWERS Create an immediate
estate, requires no management or physical upkeep, paid in installments, can be used
as collateral
Final Expenses - CORRECT ANSWERS Medical and funeral expenses,
outstanding debts
Total Needs Approach - CORRECT ANSWERS Totaling the amount required
to pay for current and future expenses
Living Benefits of Life Insurance - CORRECT ANSWERS Loan value (can be
used as collateral,) retirement benefits
Human Life Value - CORRECT ANSWERS The monetary value of an
individual's life
Tax Advantages of Life Insurance - CORRECT ANSWERS Cash value
earnings accumulate tax free, proceeds at death pass income tax free
4 Types of Life Insurance - CORRECT ANSWERS Permanent, Term,
Industrial, Group
Permanent Life Insurance - CORRECT ANSWERS Accumulates cash value,
insurance protection decreases as cash value increases
Term Life Insurance - CORRECT ANSWERS Accumulates no cash value,
only provides death benefits
,Kentucky Life Insurance
Exam Questions With All
Correct Answers
Whole Life Insurance - CORRECT ANSWERS A permanent policy for which
you pay a specified premium each year for the rest of your life, cash value accumulates,
endows at age 100
Limited-Pay Life Policies - CORRECT ANSWERS Premiums are paid to a
specified age or for a specified number of years and then stop. Protection remains for
the rest of the insured's life.
Endowment Policies - CORRECT ANSWERS As of 1984, no policy can
endow before age 95 because the CV and DB would be taxed
Single Premium Whole Life - CORRECT ANSWERS Policy is completely
paid up after one premium, policyholder pays less than if premiums stretched out over
several years
Modified Endowment Contract (MEC) - CORRECT ANSWERS TAMRA: All
single premium policies, any policy that does not satisfy the 7-pay test // money taken
from the policy is taxed as ordinary income // if policy owner is younger than 59 1/2 and
not disabled 10% penalty is assigned
Joint Life Policies - CORRECT ANSWERS First-to-die, contract comes to an
end at the first death, no further insurance protection for the other person or persons
covered by the policy
Survivorship Policies - CORRECT ANSWERS Second-to-die, covers 2 lives
and guarantees payment only when second insured dies
Adjustable Life Policies - CORRECT ANSWERS Policyholder can adjust face
amount of policy, amount/frequency of premium payments, period of insurance
protection
Universal Life Insurance - CORRECT ANSWERS Flexible premium,
adjustable death benefits, accumulates cash values: earlier models have front-end load,
later models have back end load. Insurance costs are debited and guaranteed and
excess interest are credited.
Universal Life Death Benefit Option A - CORRECT ANSWERS Level death
benefit throughout life of policy (can be increased with proof of insurability, can also be
reduced.)
Universal Life Death Benefit Option B - CORRECT ANSWERS Increasing
death benefit made up of the policy face value plus cash value account
Risk Corridor - CORRECT ANSWERS The minimum separation between the
cash value and death benefit.
Partial Withdrawal - CORRECT ANSWERS Permanent deduction of the cash
value and cannot be reversed, no interest credited or paid, repayment treated as
premium payment
Cash Value of ULP $0 - CORRECT ANSWERS Contract expires, policy goes
into grace period,
, Kentucky Life Insurance
Exam Questions With All
Correct Answers
Variable Life - CORRECT ANSWERS Securities based, whole life, NASD
registration required, separate account holds assets, fluctuating death benefit but never
below a guaranteed minimum (face amount of policy,) but no guaranteed CV,
traditionally a fixed premium
Variable Universal Life - CORRECT ANSWERS Flexible premiums, choice of
death benefits (A or B,) NASD registration required, separate account holds assets,
fluctuating death benefit but never below a guaranteed minimum (face amount of
policy,) but no guaranteed CV
Indeterminate Premium Policies - CORRECT ANSWERS Low current
premium for first 3 years, premium is adjusted at end of 3 year duration based on
investment return, mortality, and expenses, which can result in increase or decrease of
premium (within a stated maximum)
Level Term Insurance - CORRECT ANSWERS Term insurance where the
face value of policy remains the same from the date the policy is issued until the date
the policy expires.
Decreasing Term - CORRECT ANSWERS A type of life insurance that
features a level premium and a death benefit that decreases each year over the
duration of the policy.
Convertible Term Insurance - CORRECT ANSWERS Term to Permanent, no
requirement of proof of insurability, most people convert at attained age to avoid paying
back premiums, time-limit varies by policy
Renewable Term - CORRECT ANSWERS Insurance which can, at the
election of the policyowner, be renewed at the end of a term attained age without
evidence of insurability within a time limit (commonly 30 days)
Interim Term - CORRECT ANSWERS Interim term coverage provides
instantaneous coverage and is intended for people who plan on purchasing permanent
life insurance coverage within one year, no proof of insurability, at attained age, built in
time limit
Family Income Policies - CORRECT ANSWERS Income is paid upon death
of family breadwinner, combination of permanent and decreasing term coverage,
children are added without additional premium and can convert at specified age without
proof of insurability. Benefit duration lasts not starting from death but from when policy
was purchased.
Family Maintenance Policies - CORRECT ANSWERS Combination of level
term and permanent policies, income provided starting from insured's death
Jumping Juvenile Policy - CORRECT ANSWERS Purchased by parent, the
child reaches age 21, coverage increases to five times the face amount, premiums
remain the same and no evidence of insurability is required.
Exam Questions With All
Correct Answers
Elements of a Contract - CORRECT ANSWERS Competent parties, legal
purpose, offer and acceptance, consideration
Waiver - CORRECT ANSWERS Voluntary giving up of a known right or
privilege, can be express or implied
Estoppel - CORRECT ANSWERS A person is prohibited by virtue of his own
past actions from claiming a right that would work to the detriment of another who relied
on the past conduct
Aleatory Contract - CORRECT ANSWERS a contract where the values
exchanged may not be equal but depend on an uncertain event
Contracts of Adhesion - CORRECT ANSWERS One-sided in regards to
preparation (prepared by the insurer)
Contract of Utmost Good Faith - CORRECT ANSWERS Both parties bargain
in good faith when forming and entering into the contract. The two parties rely upon the
statements and promises of the other and assume no attempt to conceal or deceive has
been made.
Executory Contract - CORRECT ANSWERS A contract that has not yet been
fully performed.
Mortality Rate - CORRECT ANSWERS Determined by dividing the average
number of people who will die each year at each age by the entire population of people
that age (1980 CSO table)
Functions of Life Insurance - CORRECT ANSWERS Create an immediate
estate, requires no management or physical upkeep, paid in installments, can be used
as collateral
Final Expenses - CORRECT ANSWERS Medical and funeral expenses,
outstanding debts
Total Needs Approach - CORRECT ANSWERS Totaling the amount required
to pay for current and future expenses
Living Benefits of Life Insurance - CORRECT ANSWERS Loan value (can be
used as collateral,) retirement benefits
Human Life Value - CORRECT ANSWERS The monetary value of an
individual's life
Tax Advantages of Life Insurance - CORRECT ANSWERS Cash value
earnings accumulate tax free, proceeds at death pass income tax free
4 Types of Life Insurance - CORRECT ANSWERS Permanent, Term,
Industrial, Group
Permanent Life Insurance - CORRECT ANSWERS Accumulates cash value,
insurance protection decreases as cash value increases
Term Life Insurance - CORRECT ANSWERS Accumulates no cash value,
only provides death benefits
,Kentucky Life Insurance
Exam Questions With All
Correct Answers
Whole Life Insurance - CORRECT ANSWERS A permanent policy for which
you pay a specified premium each year for the rest of your life, cash value accumulates,
endows at age 100
Limited-Pay Life Policies - CORRECT ANSWERS Premiums are paid to a
specified age or for a specified number of years and then stop. Protection remains for
the rest of the insured's life.
Endowment Policies - CORRECT ANSWERS As of 1984, no policy can
endow before age 95 because the CV and DB would be taxed
Single Premium Whole Life - CORRECT ANSWERS Policy is completely
paid up after one premium, policyholder pays less than if premiums stretched out over
several years
Modified Endowment Contract (MEC) - CORRECT ANSWERS TAMRA: All
single premium policies, any policy that does not satisfy the 7-pay test // money taken
from the policy is taxed as ordinary income // if policy owner is younger than 59 1/2 and
not disabled 10% penalty is assigned
Joint Life Policies - CORRECT ANSWERS First-to-die, contract comes to an
end at the first death, no further insurance protection for the other person or persons
covered by the policy
Survivorship Policies - CORRECT ANSWERS Second-to-die, covers 2 lives
and guarantees payment only when second insured dies
Adjustable Life Policies - CORRECT ANSWERS Policyholder can adjust face
amount of policy, amount/frequency of premium payments, period of insurance
protection
Universal Life Insurance - CORRECT ANSWERS Flexible premium,
adjustable death benefits, accumulates cash values: earlier models have front-end load,
later models have back end load. Insurance costs are debited and guaranteed and
excess interest are credited.
Universal Life Death Benefit Option A - CORRECT ANSWERS Level death
benefit throughout life of policy (can be increased with proof of insurability, can also be
reduced.)
Universal Life Death Benefit Option B - CORRECT ANSWERS Increasing
death benefit made up of the policy face value plus cash value account
Risk Corridor - CORRECT ANSWERS The minimum separation between the
cash value and death benefit.
Partial Withdrawal - CORRECT ANSWERS Permanent deduction of the cash
value and cannot be reversed, no interest credited or paid, repayment treated as
premium payment
Cash Value of ULP $0 - CORRECT ANSWERS Contract expires, policy goes
into grace period,
, Kentucky Life Insurance
Exam Questions With All
Correct Answers
Variable Life - CORRECT ANSWERS Securities based, whole life, NASD
registration required, separate account holds assets, fluctuating death benefit but never
below a guaranteed minimum (face amount of policy,) but no guaranteed CV,
traditionally a fixed premium
Variable Universal Life - CORRECT ANSWERS Flexible premiums, choice of
death benefits (A or B,) NASD registration required, separate account holds assets,
fluctuating death benefit but never below a guaranteed minimum (face amount of
policy,) but no guaranteed CV
Indeterminate Premium Policies - CORRECT ANSWERS Low current
premium for first 3 years, premium is adjusted at end of 3 year duration based on
investment return, mortality, and expenses, which can result in increase or decrease of
premium (within a stated maximum)
Level Term Insurance - CORRECT ANSWERS Term insurance where the
face value of policy remains the same from the date the policy is issued until the date
the policy expires.
Decreasing Term - CORRECT ANSWERS A type of life insurance that
features a level premium and a death benefit that decreases each year over the
duration of the policy.
Convertible Term Insurance - CORRECT ANSWERS Term to Permanent, no
requirement of proof of insurability, most people convert at attained age to avoid paying
back premiums, time-limit varies by policy
Renewable Term - CORRECT ANSWERS Insurance which can, at the
election of the policyowner, be renewed at the end of a term attained age without
evidence of insurability within a time limit (commonly 30 days)
Interim Term - CORRECT ANSWERS Interim term coverage provides
instantaneous coverage and is intended for people who plan on purchasing permanent
life insurance coverage within one year, no proof of insurability, at attained age, built in
time limit
Family Income Policies - CORRECT ANSWERS Income is paid upon death
of family breadwinner, combination of permanent and decreasing term coverage,
children are added without additional premium and can convert at specified age without
proof of insurability. Benefit duration lasts not starting from death but from when policy
was purchased.
Family Maintenance Policies - CORRECT ANSWERS Combination of level
term and permanent policies, income provided starting from insured's death
Jumping Juvenile Policy - CORRECT ANSWERS Purchased by parent, the
child reaches age 21, coverage increases to five times the face amount, premiums
remain the same and no evidence of insurability is required.
