Exam (elaborations) INS 3303 Life Insurance Exam 2 Ch 9 11-19 22

A policy that originally is not a modified endowment contract will be subject to re-testing if there is a "material change" in the contract. Which of the following would likely be a material change? Answer Selected Answer: Increases in death benefits because of premiums paid for the policy to support the first seven contract years of benefits. Correct Answer: An exchange of one policy for another policy in a 1035 exchange. • Question 2 0 out of 5 points A policy that automatically increases the death benefit without evidence of insurability will typically violate the MEC rules. Answer Selected Answer: True Correct Answer: False • Question 3 5 out of 5 points A modified endowment contract is a life insurance policy that has failed Answer Selected Answer: the seven-pay test Correct Answer: the seven-pay test • Question 4 5 out of 5 points Which item is not a key factor to be weighed in choosing the best variable life or variable universal life policy? Answer Selected Answer: the amount of the cash value guarantees Correct Answer: the amount of the cash value guarantees • Question 5 5 out of 5 points Which of the following could never be treated as a modified endowment contract? INS 3303 Life Insurance Exam 2 Ch 9 11-19 22 Answer Selected Answer: A single-premium policy that was entered into on June 1, 1988. Correct Answer: A single-premium policy that was entered into on June 1, 1988. • Question 6 0 out of 5 points All universal life policies have a guaranteed minimum interest rate, generally ranging from four to six percent. Answer Selected Answer: False Correct Answer: True • Question 7 0 out of 5 points Once a policy is classified as a modified endowment contract, with certain corrections, it can be later treated as not a modified endowment contract. Answer Selected Answer: True Correct Answer: False • Question 8 0 out of 5 points Variable life or variable universal life insurance is well-suited to individuals desiring a minimum basic level of coverage. Answer Selected Answer: True Correct Answer: False • Question 9 5 out of 5 points Variable life is a whole life policy where the policyowners bear all investment risk. Answer Selected Answer: True Correct Answer: True • Question 10 5 out of 5 points One disadvantage of universal life is that policy owners bear more risk of adverse trends in mortality or expenses than if they owned traditional whole