Life Insurance 101 Questions With 100%
Correct Answers!!
increasing - ANSWER- A Return of Premium term life policy is written as what type of
term coverage?
It insures the life of a debtor. - ANSWER- Which of the following is correct regarding
credit life insurance?
$100,000 - ANSWER- The insured under a $100,000 life insurance policy with a triple
indemnity rider for accidental death was killed in a car accident. It was determined that
the accident was his fault. The triple indemnity rider in the policy specifies that the death
must not be contributed to by the insured in any manner. In this case, what will the
policy beneficiary receive?
2.5% - ANSWER- An insurance company forwards fixed annuity premiums to their
general account, where the money is invested. The guaranteed minimum interest is set
at 2.5%. During an economic downswing, the investments only drew 2%. What interest
rate will the insurer pay to its policyholders?
Tax deductible. - ANSWER- Taxation rules for Traditional IRA contributions
one-year term - ANSWER- The dividend option in which the policyowner uses dividends
to purchase a term policy for one year is referred to as the
Owner's Rights - ANSWER- Which of the following explains the policyowner's right to
change beneficiaries, choose options, and receive proceeds of a policy?
$250 - ANSWER- What is the fine for using an unapproved assumed name by a
producer?
,The same face amount as in the whole life policy; Under this option the insurer uses the
policy cash value to convert to term insurance for the same face amount as the former
permanent policy. - ANSWER- Under an extended term nonforfeiture option, the policy
cash value is converted to
The rider is usually level term insurance. (The spouse term rider allows a spouse to be
added for coverage. It is available for a limited amount of time, typically expiring at age
65. A spouse term rider (just like any other insured rider) is usually level term
insurance.) - ANSWER- Which is true about a spouse term rider?
Policyowner; The policyowner must have an insurable interest in the insured (his/her
own life if the policyowner and the insured is the same person), or in the life of a family
member or a business partner. - ANSWER- Individuals that must have insurable interest
in the insured?
Any form of Life insurance may be used to fund a buy-sell agreement. - ANSWER-
Partners in a business enter into a buy-sell agreement to purchase life insurance, which
states that should one of them die prematurely, the other would be financially able to
buy the interest of the deceased partner. What type of insurance policy may be used to
fund this agreement?
If an insurance company decides to transact insurance illegally, it still will be responsible
for paying any claims that are filed under its fraudulent policies. - ANSWER- An insurer
conducts business in Louisiana without a certificate of authority. Hundreds of policies
are sold, and claims start rolling in. Which of the following is true?
Apparent authority (also known as perceived authority) is the appearance or the
assumption of authority based on the actions, words, or deeds of the principal or
because of circumstances the principal created. - ANSWER- Because an agent is using
stationery with the logo of an insurance company, applicants for insurance assume that
, the agent is authorized to transact on behalf of that insurer. What type of agent authority
does this describe?
Risk, or the chance of loss occurring, is the basic reason for buying insurance. -
ANSWER- For the purpose of insurance, risk is defined as
Under Option B the death benefit includes the annual increase in cash value so that the
death benefit gradually increases each year by the amount that the cash value
increases. At any point in time, the total death benefit will always be equal to the face
amount of the policy plus the current amount of cash value. - ANSWER- Which option
for Universal life allows the beneficiary to collect both the death benefit and cash value
upon the death of the insured?
Among other factors, the annuity income amount is based upon the annuitant's age and
gender. An annuitant whose life expectancy is shorter will have the largest income
installments. In this example, an older man will have the shortest life expectancy. -
ANSWER- All other factors being equal, which of the following individuals would receive
the largest monthly check from a single premium straight life immediate annuity?
An applicant submits an application to the insurer. - ANSWER- In insurance, an offer is
usually made when:
Promote public welfare; The purpose of the State Insurance Department is to protect
the public's interest in matters concerning insurance. - ANSWER- The purpose of
insurance regulation is to:
Predicted needs of the family after the insured's death; The Human Life Value Approach
to determining the value of an individual's life 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. Predicted needs of the family after the
insured's death are used in the needs approach. - ANSWER- Based on Human Life
Correct Answers!!
increasing - ANSWER- A Return of Premium term life policy is written as what type of
term coverage?
It insures the life of a debtor. - ANSWER- Which of the following is correct regarding
credit life insurance?
$100,000 - ANSWER- The insured under a $100,000 life insurance policy with a triple
indemnity rider for accidental death was killed in a car accident. It was determined that
the accident was his fault. The triple indemnity rider in the policy specifies that the death
must not be contributed to by the insured in any manner. In this case, what will the
policy beneficiary receive?
2.5% - ANSWER- An insurance company forwards fixed annuity premiums to their
general account, where the money is invested. The guaranteed minimum interest is set
at 2.5%. During an economic downswing, the investments only drew 2%. What interest
rate will the insurer pay to its policyholders?
Tax deductible. - ANSWER- Taxation rules for Traditional IRA contributions
one-year term - ANSWER- The dividend option in which the policyowner uses dividends
to purchase a term policy for one year is referred to as the
Owner's Rights - ANSWER- Which of the following explains the policyowner's right to
change beneficiaries, choose options, and receive proceeds of a policy?
$250 - ANSWER- What is the fine for using an unapproved assumed name by a
producer?
,The same face amount as in the whole life policy; Under this option the insurer uses the
policy cash value to convert to term insurance for the same face amount as the former
permanent policy. - ANSWER- Under an extended term nonforfeiture option, the policy
cash value is converted to
The rider is usually level term insurance. (The spouse term rider allows a spouse to be
added for coverage. It is available for a limited amount of time, typically expiring at age
65. A spouse term rider (just like any other insured rider) is usually level term
insurance.) - ANSWER- Which is true about a spouse term rider?
Policyowner; The policyowner must have an insurable interest in the insured (his/her
own life if the policyowner and the insured is the same person), or in the life of a family
member or a business partner. - ANSWER- Individuals that must have insurable interest
in the insured?
Any form of Life insurance may be used to fund a buy-sell agreement. - ANSWER-
Partners in a business enter into a buy-sell agreement to purchase life insurance, which
states that should one of them die prematurely, the other would be financially able to
buy the interest of the deceased partner. What type of insurance policy may be used to
fund this agreement?
If an insurance company decides to transact insurance illegally, it still will be responsible
for paying any claims that are filed under its fraudulent policies. - ANSWER- An insurer
conducts business in Louisiana without a certificate of authority. Hundreds of policies
are sold, and claims start rolling in. Which of the following is true?
Apparent authority (also known as perceived authority) is the appearance or the
assumption of authority based on the actions, words, or deeds of the principal or
because of circumstances the principal created. - ANSWER- Because an agent is using
stationery with the logo of an insurance company, applicants for insurance assume that
, the agent is authorized to transact on behalf of that insurer. What type of agent authority
does this describe?
Risk, or the chance of loss occurring, is the basic reason for buying insurance. -
ANSWER- For the purpose of insurance, risk is defined as
Under Option B the death benefit includes the annual increase in cash value so that the
death benefit gradually increases each year by the amount that the cash value
increases. At any point in time, the total death benefit will always be equal to the face
amount of the policy plus the current amount of cash value. - ANSWER- Which option
for Universal life allows the beneficiary to collect both the death benefit and cash value
upon the death of the insured?
Among other factors, the annuity income amount is based upon the annuitant's age and
gender. An annuitant whose life expectancy is shorter will have the largest income
installments. In this example, an older man will have the shortest life expectancy. -
ANSWER- All other factors being equal, which of the following individuals would receive
the largest monthly check from a single premium straight life immediate annuity?
An applicant submits an application to the insurer. - ANSWER- In insurance, an offer is
usually made when:
Promote public welfare; The purpose of the State Insurance Department is to protect
the public's interest in matters concerning insurance. - ANSWER- The purpose of
insurance regulation is to:
Predicted needs of the family after the insured's death; The Human Life Value Approach
to determining the value of an individual's life 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. Predicted needs of the family after the
insured's death are used in the needs approach. - ANSWER- Based on Human Life
