LOMA 281 Module 2 Exam with correct Answers
Which type of whole life insurance policy will best be able to give Arabella lifetime protection without straining her retirement income?
Single-premium whole life policy
Limited-payment whole life policy
Continuous-premium whole life policy - Answer -B
Financial needs life insurance can meet - Answer -- paying household expenses
- covering outstanding debts
- Paying outstanding medical, hospital, and funeral expenses, - providing financial support for the family
- funding a child's education
Term Life Insurance - Answer -Life insurance that provides a death benefit only if the insured dies during the period specified in the policy.
level term life insurance - Answer -Term life insurance that provides a policy benefit that
remains the same over the term of the policy.
Decreasing Term Life Insurance - Answer -Term life insurance that provides a policy benefit that decreases in amount over the term of coverage
Mortgage Insurance - Answer -A plan of decreasing term insurance designed to provide
a benefit amount that corresponds to the decreasing amount owed on a mortgage loan.
When Michael bought a house, he obtained a mortgage loan from the Archway Bank. He also bought a mortgage insurance policy from Able Life.
Is Archway Bank a party to Michael's mortgage insurance contract with Able Life?
a. yes
b. no - Answer -B.
Who can Michael name as the beneficiary of his mortgage insurance policy?
a. His Wife Only b. Archway Bank Only
c. His Wife, Archway Bank, or Someone Else - Answer -C.
If Michael names his wife as the policy beneficiary, does she have to use the policy proceeds to repay the mortgage loan?
a. yes
b. no - Answer -B.
Credit Life Insurance - Answer -A type of term life insurance designed to pay the balance due on a loan if the borrower dies before the loan is repaid.
Family Income Coverage - Answer -A plan of decreasing term life insurance that provides a stated monthly income benefit amount if the insured dies during the term of coverage.
Increasing Term Life Insurance - Answer -Term life insurance that provides a death benefit that starts at one amount and increases by some specified amount or percentage at stated intervals over the policy term.
Decide whether the statements below describe increasing term insurance, level term insurance, or decreasing term insurance.
A 5-year term life insurance policy that offers a death benefit of $50,000 for the first year
of the policy term, $40,000 for the second year, and so on. The benefit for the fifth year is $10,000.
a. Increasing Term Insurance
b. Level Term Insurance
c. Decreasing Term Insurance - Answer -C.
A 5-year term life insurance policy that provides a $100,000 death benefit if the insured dies at any time during the 5-year policy term.
a. increasing term insurance
b. level term insurance
c. decreasing term insurance - Answer -B.
A 5-year term life insurance policy that pays a $100,000 benefit during the policy's first year, a $105,000 benefit during the second year, and so on. The benefit during the fifth year is $120,000.
Increasing term insurance
Level term insurance
Decreasing term insurance
a. increasing term insurance
b. level term insurance c. decreasing term insurance - Answer -A.
Return of Premium (ROP) - Answer -A form of term life insurance that provides a death benefit if the insured dies during the term of coverage and promises a return of premiums if the insured does not die during the term of coverage.
Renewable Term Insurance - Answer -Term life insurance that gives the policyowner the option to continue the policy's coverage at the end of the specified term without presenting evidence of insurability.
Evidence of insurability - Answer -Proof that a given person is an insurable risk.
Suppose Carter buys a renewable term insurance policy. Do you think he can renew the
policy as many times as he wants?
a. Yes
b. No
c. Can't tell. Need more information. - Answer -B.
Suppose Blythe renews her $100,000 20-year renewable policy at the end of the policy term. Do you think the amount of coverage is automatically cut in half to $50,000?
a. Yes
b. No
c. Can't tell. Need more information. - Answer -B.
Attained Age - Answer -The age an insured has reached (attained) on a specified date.
Convertible Term Insurance - Answer -Term life insurance that gives the policyowner the right to convert the term policy to a cash value life insurance policy without providing
evidence of insurability.
Conversion Period - Answer -The specified period of time following policy issue during which the owner of a convertible term life insurance policy can convert the coverage to cash value life insurance.
Assume Blythe Owens purchased a convertible term insurance policy instead of a renewable term policy. During the conversion period, Blythe's health declined to the point where she would no longer be considered insurable. Can Blythe convert her term policy to a cash value policy?
a. Yes
b. No
c. Can't tell. Need more information. - Answer -A.
attained age conversion - Answer -A conversion of a term life insurance policy to a cash
value life insurance policy in which the premium rate for the cash value policy is based on the insured's age at the time the policy is converted. Contrast with original age conversion. Original age conversion - Answer -A conversion of a term life insurance policy to a cash value life insurance policy in which the premium rate for the cash value policy is based on the insured's age when the original term life insurance policy was issued. Contrast with attained age conversion.
antiselection - Answer -
When a term life insurance policy is RENEWED, the amount of coverage under the policy can ...
a. increase
b. decrease
c. remain the same - Answer -B & C
When a term life insurance policy is RENEWED, the coverage period can ...
a. increase
b. decrease
c. remain the same - Answer -B & C
When a term life insurance policy is RENEWED, the premium rate (for the same amount of coverage) can ...
a. increase
b. decrease
c. remain the same - Answer -A.
When a term life insurance policy is RENEWED, the type of coverage ...
a. changes
b. remains the same - Answer -B.
When a term life insurance policy is CONVERTED, the amount of coverage can ...
a. increase
b. decrease
c. remain the same - Answer -B & C
When a term life insurance policy is CONVERTED,the coverage period can ..
a. increase
b. decrease
c. remain the same - Answer -A.
When a term life insurance policy is CONVERTED, the premium rate can ...
a. increase
b. decrease
c. remain the same - Answer -A.
When a term life insurance policy is CONVERTED, the type of coverage ....
a. changes
Which type of whole life insurance policy will best be able to give Arabella lifetime protection without straining her retirement income?
Single-premium whole life policy
Limited-payment whole life policy
Continuous-premium whole life policy - Answer -B
Financial needs life insurance can meet - Answer -- paying household expenses
- covering outstanding debts
- Paying outstanding medical, hospital, and funeral expenses, - providing financial support for the family
- funding a child's education
Term Life Insurance - Answer -Life insurance that provides a death benefit only if the insured dies during the period specified in the policy.
level term life insurance - Answer -Term life insurance that provides a policy benefit that
remains the same over the term of the policy.
Decreasing Term Life Insurance - Answer -Term life insurance that provides a policy benefit that decreases in amount over the term of coverage
Mortgage Insurance - Answer -A plan of decreasing term insurance designed to provide
a benefit amount that corresponds to the decreasing amount owed on a mortgage loan.
When Michael bought a house, he obtained a mortgage loan from the Archway Bank. He also bought a mortgage insurance policy from Able Life.
Is Archway Bank a party to Michael's mortgage insurance contract with Able Life?
a. yes
b. no - Answer -B.
Who can Michael name as the beneficiary of his mortgage insurance policy?
a. His Wife Only b. Archway Bank Only
c. His Wife, Archway Bank, or Someone Else - Answer -C.
If Michael names his wife as the policy beneficiary, does she have to use the policy proceeds to repay the mortgage loan?
a. yes
b. no - Answer -B.
Credit Life Insurance - Answer -A type of term life insurance designed to pay the balance due on a loan if the borrower dies before the loan is repaid.
Family Income Coverage - Answer -A plan of decreasing term life insurance that provides a stated monthly income benefit amount if the insured dies during the term of coverage.
Increasing Term Life Insurance - Answer -Term life insurance that provides a death benefit that starts at one amount and increases by some specified amount or percentage at stated intervals over the policy term.
Decide whether the statements below describe increasing term insurance, level term insurance, or decreasing term insurance.
A 5-year term life insurance policy that offers a death benefit of $50,000 for the first year
of the policy term, $40,000 for the second year, and so on. The benefit for the fifth year is $10,000.
a. Increasing Term Insurance
b. Level Term Insurance
c. Decreasing Term Insurance - Answer -C.
A 5-year term life insurance policy that provides a $100,000 death benefit if the insured dies at any time during the 5-year policy term.
a. increasing term insurance
b. level term insurance
c. decreasing term insurance - Answer -B.
A 5-year term life insurance policy that pays a $100,000 benefit during the policy's first year, a $105,000 benefit during the second year, and so on. The benefit during the fifth year is $120,000.
Increasing term insurance
Level term insurance
Decreasing term insurance
a. increasing term insurance
b. level term insurance c. decreasing term insurance - Answer -A.
Return of Premium (ROP) - Answer -A form of term life insurance that provides a death benefit if the insured dies during the term of coverage and promises a return of premiums if the insured does not die during the term of coverage.
Renewable Term Insurance - Answer -Term life insurance that gives the policyowner the option to continue the policy's coverage at the end of the specified term without presenting evidence of insurability.
Evidence of insurability - Answer -Proof that a given person is an insurable risk.
Suppose Carter buys a renewable term insurance policy. Do you think he can renew the
policy as many times as he wants?
a. Yes
b. No
c. Can't tell. Need more information. - Answer -B.
Suppose Blythe renews her $100,000 20-year renewable policy at the end of the policy term. Do you think the amount of coverage is automatically cut in half to $50,000?
a. Yes
b. No
c. Can't tell. Need more information. - Answer -B.
Attained Age - Answer -The age an insured has reached (attained) on a specified date.
Convertible Term Insurance - Answer -Term life insurance that gives the policyowner the right to convert the term policy to a cash value life insurance policy without providing
evidence of insurability.
Conversion Period - Answer -The specified period of time following policy issue during which the owner of a convertible term life insurance policy can convert the coverage to cash value life insurance.
Assume Blythe Owens purchased a convertible term insurance policy instead of a renewable term policy. During the conversion period, Blythe's health declined to the point where she would no longer be considered insurable. Can Blythe convert her term policy to a cash value policy?
a. Yes
b. No
c. Can't tell. Need more information. - Answer -A.
attained age conversion - Answer -A conversion of a term life insurance policy to a cash
value life insurance policy in which the premium rate for the cash value policy is based on the insured's age at the time the policy is converted. Contrast with original age conversion. Original age conversion - Answer -A conversion of a term life insurance policy to a cash value life insurance policy in which the premium rate for the cash value policy is based on the insured's age when the original term life insurance policy was issued. Contrast with attained age conversion.
antiselection - Answer -
When a term life insurance policy is RENEWED, the amount of coverage under the policy can ...
a. increase
b. decrease
c. remain the same - Answer -B & C
When a term life insurance policy is RENEWED, the coverage period can ...
a. increase
b. decrease
c. remain the same - Answer -B & C
When a term life insurance policy is RENEWED, the premium rate (for the same amount of coverage) can ...
a. increase
b. decrease
c. remain the same - Answer -A.
When a term life insurance policy is RENEWED, the type of coverage ...
a. changes
b. remains the same - Answer -B.
When a term life insurance policy is CONVERTED, the amount of coverage can ...
a. increase
b. decrease
c. remain the same - Answer -B & C
When a term life insurance policy is CONVERTED,the coverage period can ..
a. increase
b. decrease
c. remain the same - Answer -A.
When a term life insurance policy is CONVERTED, the premium rate can ...
a. increase
b. decrease
c. remain the same - Answer -A.
When a term life insurance policy is CONVERTED, the type of coverage ....
a. changes
