L&H UNITS 1-6 QUESTIONS AND ANSWERS
Which of the following would be considered a moral hazard in underwriting a health insurance risk?
A. A family History of diabetes
B. A serious Aliment
C. A Hazardous occupation
D. Excessive dieting - CORRECT ANSWER✅✅✅D. Excessive dieting
Leo purchases a $50,000 5-year level term policy. Which of the following statements about Leo's
coverage is
CORRECT?
A. The Policy provides a straight,level $50,000 of coverage for 5 years.
B. If Leo dies after the specified 5 years, only the policy's cash will be paid.
C. If Leo lives beyond the 5 years, the premium for the existing policy will increase.
D. If Leo dies at any time during the 5 years, his beneficiary will receive the policies value plus the
policy's cash value. - CORRECT ANSWER✅✅✅A. The Policy provides a straight,level $50,000 of
coverage for 5 years.
Wendy has a $100,000 whole life participating policy. She recently married and is planning to have a
family. She wants to increase her life insurance coverage but at minimal additional cost. Which of the
following dividend options would be most suitable for her needs?
A. Use dividends to buy paid-up additions
B. Apply dividends against premium payments
C. Allow dividends to accumulate at interest
D. Use dividends to buy 1-year term insurance - CORRECT ANSWER✅✅✅A. Use dividends to buy
paid-up additions
Anna applied for a $2 million life insurance policy and paid the first premium but was later found to be
uninsurable. The agent gave her a receipt that guarantees coverage until the insurer formally rejects her
application. Which type of receipt did Anna receive?
A. Conditional
B. Approval
, C. Binding
D. Insurability - CORRECT ANSWER✅✅✅A.Conditional
Leland elects to surrender his whole life policy for a reduced paid-up policy. The cash value of his new
policy will
A. continue to increase
B. decrease gradually
C. remain the same as in the old policy
D. decrease by 50% immediately - CORRECT ANSWER✅✅✅A. continue to increase
David has a $300,000 nonrenewable 5-year term policy. The premium he pays for this policy would be
A. More than for a $300,00, 5-year renewable term policy
B. increased each year during the 5 year period
C. less than for a $300,000, 5-year renewable term policy
D. the same as for a $300,000, 5-year renewable term policy - CORRECT ANSWER✅✅✅C. less than
for a $300,000, 5-year renewable term policy
Which of the following statements about a modified whole life policy is NOT correct?
A. Premiums are unifr=ormly lower during the early years of the contract.
B. Cash value builds until the insured reached age 100 so long as the policy is in force.
C. The premium-paying period continues to age 100
D. It is basically an endowment policy. - CORRECT ANSWER✅✅✅D. It is basically an endowment
policy.
ERISA requires that certain benefit and insurance plan information be made available to all of the
following EXCEPT
A. participants
B. the Internal Revenue Service
C. the state legislature
Which of the following would be considered a moral hazard in underwriting a health insurance risk?
A. A family History of diabetes
B. A serious Aliment
C. A Hazardous occupation
D. Excessive dieting - CORRECT ANSWER✅✅✅D. Excessive dieting
Leo purchases a $50,000 5-year level term policy. Which of the following statements about Leo's
coverage is
CORRECT?
A. The Policy provides a straight,level $50,000 of coverage for 5 years.
B. If Leo dies after the specified 5 years, only the policy's cash will be paid.
C. If Leo lives beyond the 5 years, the premium for the existing policy will increase.
D. If Leo dies at any time during the 5 years, his beneficiary will receive the policies value plus the
policy's cash value. - CORRECT ANSWER✅✅✅A. The Policy provides a straight,level $50,000 of
coverage for 5 years.
Wendy has a $100,000 whole life participating policy. She recently married and is planning to have a
family. She wants to increase her life insurance coverage but at minimal additional cost. Which of the
following dividend options would be most suitable for her needs?
A. Use dividends to buy paid-up additions
B. Apply dividends against premium payments
C. Allow dividends to accumulate at interest
D. Use dividends to buy 1-year term insurance - CORRECT ANSWER✅✅✅A. Use dividends to buy
paid-up additions
Anna applied for a $2 million life insurance policy and paid the first premium but was later found to be
uninsurable. The agent gave her a receipt that guarantees coverage until the insurer formally rejects her
application. Which type of receipt did Anna receive?
A. Conditional
B. Approval
, C. Binding
D. Insurability - CORRECT ANSWER✅✅✅A.Conditional
Leland elects to surrender his whole life policy for a reduced paid-up policy. The cash value of his new
policy will
A. continue to increase
B. decrease gradually
C. remain the same as in the old policy
D. decrease by 50% immediately - CORRECT ANSWER✅✅✅A. continue to increase
David has a $300,000 nonrenewable 5-year term policy. The premium he pays for this policy would be
A. More than for a $300,00, 5-year renewable term policy
B. increased each year during the 5 year period
C. less than for a $300,000, 5-year renewable term policy
D. the same as for a $300,000, 5-year renewable term policy - CORRECT ANSWER✅✅✅C. less than
for a $300,000, 5-year renewable term policy
Which of the following statements about a modified whole life policy is NOT correct?
A. Premiums are unifr=ormly lower during the early years of the contract.
B. Cash value builds until the insured reached age 100 so long as the policy is in force.
C. The premium-paying period continues to age 100
D. It is basically an endowment policy. - CORRECT ANSWER✅✅✅D. It is basically an endowment
policy.
ERISA requires that certain benefit and insurance plan information be made available to all of the
following EXCEPT
A. participants
B. the Internal Revenue Service
C. the state legislature
