SOA EXAM FAM-L QUESTIONS AND
ANSWERS
insurable interest - Correct Answers -exists if the death of the insured would cause the
policyholder to suffer a financial loss
term insurance - Correct Answers -pays a lump sum benefit on the death of the insured
if the death occurs within a fixed term. Typical contract terms range from 10-30 years
Key Person Insurance / COLI (company owned life insurance) - Correct Answers -
Protects businesses against losses arising from the deaths of key employees
Level term insurance - Correct Answers -The death benefit remains level and the
premiums remain level during the policy term.
Decreasing term insurance - Correct Answers -Death benefit and (usually) premiums
decrease over the term of the contract
Multiple life insurance - Correct Answers -Benefit is payable on the first death or on
each death of a specified group of individuals
Guaranteed cash values - Correct Answers -Can be locked in by paying addtl premium;
required by law in some jurisdictions
Policy loans - Correct Answers -Policyholders borrow money from insurer, using cash
value of policy as collateral
Renewable term insurance - Correct Answers -Policyholders have the option to renew
the policy at the end of the original term without further evidence on their state of health,
normally at increased rates of premium upon renewal
Yearly Renewable Term (YRT) insurance - Correct Answers -A common renewable
term insurance in North American under which the contract is written for one year at a
time, but the policyholder is guaranteed to be able to renew the contract for some fixed
period
Convertible term insurance - Correct Answers -Policyholders have the option to convert
the term insurance policy to a WL insurance policy at the end of the original term
without further evidence on their state of health
ANSWERS
insurable interest - Correct Answers -exists if the death of the insured would cause the
policyholder to suffer a financial loss
term insurance - Correct Answers -pays a lump sum benefit on the death of the insured
if the death occurs within a fixed term. Typical contract terms range from 10-30 years
Key Person Insurance / COLI (company owned life insurance) - Correct Answers -
Protects businesses against losses arising from the deaths of key employees
Level term insurance - Correct Answers -The death benefit remains level and the
premiums remain level during the policy term.
Decreasing term insurance - Correct Answers -Death benefit and (usually) premiums
decrease over the term of the contract
Multiple life insurance - Correct Answers -Benefit is payable on the first death or on
each death of a specified group of individuals
Guaranteed cash values - Correct Answers -Can be locked in by paying addtl premium;
required by law in some jurisdictions
Policy loans - Correct Answers -Policyholders borrow money from insurer, using cash
value of policy as collateral
Renewable term insurance - Correct Answers -Policyholders have the option to renew
the policy at the end of the original term without further evidence on their state of health,
normally at increased rates of premium upon renewal
Yearly Renewable Term (YRT) insurance - Correct Answers -A common renewable
term insurance in North American under which the contract is written for one year at a
time, but the policyholder is guaranteed to be able to renew the contract for some fixed
period
Convertible term insurance - Correct Answers -Policyholders have the option to convert
the term insurance policy to a WL insurance policy at the end of the original term
without further evidence on their state of health
