1|Page
UNIT 4 LIFE INSURANCE FINA 4352 EXAM
QUESTIONS AND ANSWERS WITH COMPLETE
SOLUTIONS VERIFIED
life insurance policies - .....ANSWER ...✔✔ -divided
into 2 basic classes: term & permanent policies
-All life insurance policies pay a benefit upon the death
of the insured
-the amount of the death benefit is called the face
amount because it's usually found on the first (face)
page of the policy
-Depending upon the type policy, the actual death
benefit payable after the initial purchase of the policy
can be equal to, less than or greater than the face
amount.
-Certain types of life insurance policies also offer living
benefits - that is, financial benefits that are available
while the insured is still alive
-The differences between the types of life insurance
policies arise from variations in how living and death
benefits are provided
,2|Page
term insurance - .....ANSWER ...✔✔ -Term life
insurance is the simplest type of life insurance
-Term life insurance policies only offer a death benefit
and remain in force for a specified period of time, or
term
-No death benefit is payable if the insured dies after
the term expires.
-types: level term, decreasing term, increasing term
level term - .....ANSWER ...✔✔ -The death benefit of
a level term policy equals the face amount throughout
the term of coverage
-The premium also remains level during the term
-the policy's term of coverage may be expressed in
reference to either:
*a number of years, such as 1-year term, 5-year term,
10-year term; 20 year term and 30 year term; or
*a specified age, such as term to age 65 or term to age
70.
***
-death benefit is level
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-premium is level for the term
decreasing term - .....ANSWER ...✔✔ -The death
benefit of a decreasing term policy declines over the
coverage period until it reaches zero at the end of the
term
-Decreasing term is appropriate coverage for financial
obligations that decrease steadily over time, like home
mortgages, bank loans, or financial obligations that
require regular periodic payments.
***
-death benefit decreases
-premium remains level
increasing term - .....ANSWER ...✔✔ -The death
benefit of an increasing term policy begins near zero
and grows over the term of coverage.
-Increasing term insurance is appropriate to cover
financial obligations that increase steadily over time.
-Increasing term coverage also helps keep life insurance
death benefits current with inflation and keep pace with
rising cost of living expenses.
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***
-death benefit increases
-premium increases
return of premium term - .....ANSWER ...✔✔ -Return
of Premium term policies will return all or a part of the
premium paid for the policy if the insured is still alive at
the end of the term
-the premium for this policy will be higher than a regular
term insurance policy, and the premium will also be
dependent upon the percentage of premium that will be
returned
-A 100% return of premium policy would have a higher
premium than a 50% return of premium policy, and a
return of premium policy would be more expensive than
a comparable level term policy.
***
-premium higher than regular term policy
-premium paid by insured is paid back if insured alive
at the end of the term
renewability - .....ANSWER ...✔✔ -with term life
insurance, guarantees that the policy will renew (extend)
at the end of its term
UNIT 4 LIFE INSURANCE FINA 4352 EXAM
QUESTIONS AND ANSWERS WITH COMPLETE
SOLUTIONS VERIFIED
life insurance policies - .....ANSWER ...✔✔ -divided
into 2 basic classes: term & permanent policies
-All life insurance policies pay a benefit upon the death
of the insured
-the amount of the death benefit is called the face
amount because it's usually found on the first (face)
page of the policy
-Depending upon the type policy, the actual death
benefit payable after the initial purchase of the policy
can be equal to, less than or greater than the face
amount.
-Certain types of life insurance policies also offer living
benefits - that is, financial benefits that are available
while the insured is still alive
-The differences between the types of life insurance
policies arise from variations in how living and death
benefits are provided
,2|Page
term insurance - .....ANSWER ...✔✔ -Term life
insurance is the simplest type of life insurance
-Term life insurance policies only offer a death benefit
and remain in force for a specified period of time, or
term
-No death benefit is payable if the insured dies after
the term expires.
-types: level term, decreasing term, increasing term
level term - .....ANSWER ...✔✔ -The death benefit of
a level term policy equals the face amount throughout
the term of coverage
-The premium also remains level during the term
-the policy's term of coverage may be expressed in
reference to either:
*a number of years, such as 1-year term, 5-year term,
10-year term; 20 year term and 30 year term; or
*a specified age, such as term to age 65 or term to age
70.
***
-death benefit is level
,3|Page
-premium is level for the term
decreasing term - .....ANSWER ...✔✔ -The death
benefit of a decreasing term policy declines over the
coverage period until it reaches zero at the end of the
term
-Decreasing term is appropriate coverage for financial
obligations that decrease steadily over time, like home
mortgages, bank loans, or financial obligations that
require regular periodic payments.
***
-death benefit decreases
-premium remains level
increasing term - .....ANSWER ...✔✔ -The death
benefit of an increasing term policy begins near zero
and grows over the term of coverage.
-Increasing term insurance is appropriate to cover
financial obligations that increase steadily over time.
-Increasing term coverage also helps keep life insurance
death benefits current with inflation and keep pace with
rising cost of living expenses.
, 4|Page
***
-death benefit increases
-premium increases
return of premium term - .....ANSWER ...✔✔ -Return
of Premium term policies will return all or a part of the
premium paid for the policy if the insured is still alive at
the end of the term
-the premium for this policy will be higher than a regular
term insurance policy, and the premium will also be
dependent upon the percentage of premium that will be
returned
-A 100% return of premium policy would have a higher
premium than a 50% return of premium policy, and a
return of premium policy would be more expensive than
a comparable level term policy.
***
-premium higher than regular term policy
-premium paid by insured is paid back if insured alive
at the end of the term
renewability - .....ANSWER ...✔✔ -with term life
insurance, guarantees that the policy will renew (extend)
at the end of its term
