Fundamentals of Insurance Planning Practice Exam | 167 Questions with 100% Correct Answers | Verified | Latest Update 2024 | 52 Pages

A loss exposure is defined as: (A) a loss that might occur (B) an undesirable end result of a risk (C) the largest possible loss (D) the probability of a loss - The answer is (A) by definition Which of the following statements concerning the beneficiary provisions in a life insurance policy is correct? (A) Only one person may be named as a primary beneficiary, but several may be named as contingent beneficiaries. (B) The primary beneficiary's share of policy proceeds is generally reduced if the contingent beneficiary outlives the insured. (C) The estate of the insured is commonly named as beneficiary to avoid transfer taxes. (D) The contingent beneficiary will receive policy proceeds - The answer is(D). (A) is incorrect because one or more people or entities may be named as either primary or contingent beneficiaries. (B) is incorrect because the contingent beneficiary receives nothing and all proceeds go the primary beneficiary when the insured dies unless the primary beneficiary predeceases the insured or loses entitlement to the benefits for some other reason. (C) is incorrect because transfer taxes may be incurred when the estate is the beneficiary. Which of the following types of insurance is often sold by mortgage lenders to provide the funds necessary to pay off a 10-year mortgage loan if the insured dies? (A) decreasing term (B) increasing term (C) modified whole life (D) 10-year renewable term - The answer is (A)