1|Page
Massachusetts Life And Health
Insurance Exam| Comprehensive Q&A
For Certification Success
US Patriot Act -correct-answer-A U.S. federal act that broadens the surveillance of
law enforcement agencies to enhance the detection and suppression of terrorism
ERISA -correct-answer-Act that allows employers to set up insurance plans. Also
allows funding for Medicaid
Insurable Interest -correct-answer-Any financial interest in life or property such
that, if the life or property were lost or harmed, the insured would suffer
financially.- must be proven before policy can be purchased
Personal Uses of Life Insurance -correct-answer--survivor protection
-mortgage payoff
-estate creation
-estate conservation
-liquidity
,2|Page
-cash accumulation
Determining Amount of Life Insurance needed -correct-answer-*human life value
(current income) *needs approach (money for specific needs
Business Uses of Life Insurance -correct-answer-*buy sell funding (cross purchase,
entity purchase) *key person *executive bonus *deferred compensation
Classes of Life Insurance Policies -correct-answer-- Individual vs. Group
- Term vs. Permanent
- Participating vs. Non-participating
- Fixed vs. Variable
- Industrial & Home Service
premium elements -correct-answer-Mortality
Interest
Expenses
Net Premium (Mortality minus interest) = Net Single
,3|Page
Gross Premium -correct-answer-Net Premium plus expenses, gross annual
Premium Mode -correct-answer-Annual, semi - annual, quarterly, monthly
-annual is the lowest
Level Term Insurance -correct-answer-Death benefit is level, premium level for the
term
Decreasing Term -correct-answer-Death benefit decreases, premium remains level
Increasing Term -correct-answer--death benefit increases
-premium increases
Term features -correct-answer-renewable (No new application required, new
preium based upon attained age
Term- Convertible -correct-answer-Can be changed to permanent insurance, no
new application required
, 4|Page
Traditional Whole Life -correct-answer-Fixed Premium, Fixed & level death
benefit, Cash Values *Guaranteed interest, may be surrendered, may be
borrowed, endows at 100
*Death Benefit- Amount at risk to the company, plus cash values
Continuous Premium Whole Life -correct-answer-most common type of whole life
insurance; stretch premium payments over the whole life of the insured up to age
100
limited-payment life insurance -correct-answer-requires the payment of
premiums for a limited time for a lifetime protection// at the end of the term does
not pay any more premiums, but has lifetime protection
Single Premium Whole Life -correct-answer-Paid up for life with one large
premium payment
Modified Premium Whole Life policy -correct-answer-Same as WL but premium
low for 1st 3-5 yrs., THEN has one-time premium increase- levels off afterwards
Massachusetts Life And Health
Insurance Exam| Comprehensive Q&A
For Certification Success
US Patriot Act -correct-answer-A U.S. federal act that broadens the surveillance of
law enforcement agencies to enhance the detection and suppression of terrorism
ERISA -correct-answer-Act that allows employers to set up insurance plans. Also
allows funding for Medicaid
Insurable Interest -correct-answer-Any financial interest in life or property such
that, if the life or property were lost or harmed, the insured would suffer
financially.- must be proven before policy can be purchased
Personal Uses of Life Insurance -correct-answer--survivor protection
-mortgage payoff
-estate creation
-estate conservation
-liquidity
,2|Page
-cash accumulation
Determining Amount of Life Insurance needed -correct-answer-*human life value
(current income) *needs approach (money for specific needs
Business Uses of Life Insurance -correct-answer-*buy sell funding (cross purchase,
entity purchase) *key person *executive bonus *deferred compensation
Classes of Life Insurance Policies -correct-answer-- Individual vs. Group
- Term vs. Permanent
- Participating vs. Non-participating
- Fixed vs. Variable
- Industrial & Home Service
premium elements -correct-answer-Mortality
Interest
Expenses
Net Premium (Mortality minus interest) = Net Single
,3|Page
Gross Premium -correct-answer-Net Premium plus expenses, gross annual
Premium Mode -correct-answer-Annual, semi - annual, quarterly, monthly
-annual is the lowest
Level Term Insurance -correct-answer-Death benefit is level, premium level for the
term
Decreasing Term -correct-answer-Death benefit decreases, premium remains level
Increasing Term -correct-answer--death benefit increases
-premium increases
Term features -correct-answer-renewable (No new application required, new
preium based upon attained age
Term- Convertible -correct-answer-Can be changed to permanent insurance, no
new application required
, 4|Page
Traditional Whole Life -correct-answer-Fixed Premium, Fixed & level death
benefit, Cash Values *Guaranteed interest, may be surrendered, may be
borrowed, endows at 100
*Death Benefit- Amount at risk to the company, plus cash values
Continuous Premium Whole Life -correct-answer-most common type of whole life
insurance; stretch premium payments over the whole life of the insured up to age
100
limited-payment life insurance -correct-answer-requires the payment of
premiums for a limited time for a lifetime protection// at the end of the term does
not pay any more premiums, but has lifetime protection
Single Premium Whole Life -correct-answer-Paid up for life with one large
premium payment
Modified Premium Whole Life policy -correct-answer-Same as WL but premium
low for 1st 3-5 yrs., THEN has one-time premium increase- levels off afterwards
