Life Insurance and Annuities Exam Questions With Accurate
Answers.
Two types of life insurance - accurate answers-- Term life insurance
- Permanent life insurance
Term Life insurance - accurate answers-- lasts for a term (temporary)
- individual or group
Permanent Life insurance - accurate answers--Whole Life
- Universal Life
- Variable Life
Annuities - accurate answers-- investment contract that often provides
insurance against outliving one's assets
- individual or group
- immediate or deferred
Separate account assets include the assets of what types of policies and
contracts ? - accurate answers-- variable annuity
- variable life insurance policies
Separate account assets - accurate answers-- the investments held by
customers in variable annuity and variable life insurance policies
- legally separate from the general account in the case of
Describe Deferred Acquisition Costs - accurate answers-- capitalized costs
that are directly related to the successful acquisition of new or renewed
insurance contracts
- include agent & broker commissions and bonuses
What happens if life insurance contracts are cancelled earlier than expected? -
accurate answers-- when policy is cancelled prematurely, the deferred acq.
costs must be written off at that time
Are deferred acquisition costs an asset or an expense? - accurate answers--
expensed but is an ASSET
, Two largest liabilities on banks balance sheet - accurate answers-- future
policy benefits
- policyholders account balances
Three leading revenue sources for bank - accurate answers-- mortgage loans
- separate acct. assets
- deferred acq. costs
How do higher market interest rates affect the PV of a life insurance
company's assets? - accurate answers-
How do higher market interest rates affect the PV of a life insurance
company's liabilities? - accurate answers-
How do mortality rates affect the PV of life insurance company's liabilities? -
accurate answers-
What is a reinsurance contract? - accurate answers-- purchased by primary
insurer to protect against exclusively high claims
- insurance on insurance
If a life insurer fails, are all policyholders in the same position as an uninsured
bank depositor? - accurate answers-No, each state has a guarantee association
which protects : 300k on death benefit, and 100k on cash value
What factors affect a life insurer's AM Best or Standard & Poor's financial
strength rating? - accurate answers-- high asset to equity ratio
- size of company (bigger companies has a more diverse base, more stable,
etc.)
-use of reinsurance
-conservative investment portfolio
Which life insurance customers should care the most about the financial
strength rating? - accurate answers-- high net worth individuals
Immediate Annuity - accurate answers-- Single life
- Joint and survivor
- Period certain
- Single life or joint and survivor combined with period certain
Answers.
Two types of life insurance - accurate answers-- Term life insurance
- Permanent life insurance
Term Life insurance - accurate answers-- lasts for a term (temporary)
- individual or group
Permanent Life insurance - accurate answers--Whole Life
- Universal Life
- Variable Life
Annuities - accurate answers-- investment contract that often provides
insurance against outliving one's assets
- individual or group
- immediate or deferred
Separate account assets include the assets of what types of policies and
contracts ? - accurate answers-- variable annuity
- variable life insurance policies
Separate account assets - accurate answers-- the investments held by
customers in variable annuity and variable life insurance policies
- legally separate from the general account in the case of
Describe Deferred Acquisition Costs - accurate answers-- capitalized costs
that are directly related to the successful acquisition of new or renewed
insurance contracts
- include agent & broker commissions and bonuses
What happens if life insurance contracts are cancelled earlier than expected? -
accurate answers-- when policy is cancelled prematurely, the deferred acq.
costs must be written off at that time
Are deferred acquisition costs an asset or an expense? - accurate answers--
expensed but is an ASSET
, Two largest liabilities on banks balance sheet - accurate answers-- future
policy benefits
- policyholders account balances
Three leading revenue sources for bank - accurate answers-- mortgage loans
- separate acct. assets
- deferred acq. costs
How do higher market interest rates affect the PV of a life insurance
company's assets? - accurate answers-
How do higher market interest rates affect the PV of a life insurance
company's liabilities? - accurate answers-
How do mortality rates affect the PV of life insurance company's liabilities? -
accurate answers-
What is a reinsurance contract? - accurate answers-- purchased by primary
insurer to protect against exclusively high claims
- insurance on insurance
If a life insurer fails, are all policyholders in the same position as an uninsured
bank depositor? - accurate answers-No, each state has a guarantee association
which protects : 300k on death benefit, and 100k on cash value
What factors affect a life insurer's AM Best or Standard & Poor's financial
strength rating? - accurate answers-- high asset to equity ratio
- size of company (bigger companies has a more diverse base, more stable,
etc.)
-use of reinsurance
-conservative investment portfolio
Which life insurance customers should care the most about the financial
strength rating? - accurate answers-- high net worth individuals
Immediate Annuity - accurate answers-- Single life
- Joint and survivor
- Period certain
- Single life or joint and survivor combined with period certain
