LIFE INSURANCE EXAM 7 FINAL PAPER 2026
QUESTIONS WITH FULL ANSWERS
◉ Master policy. Answer: The policy contract issued to the employer
under a Group insurance plan. Remember, the employees covered by
a group plan are considered to be insureds, but they only receive
certificates.
◉ Noncontributory plan. Answer: Employee benefit plan under
which the employer bears the full cost of the employees' benefits;
must insure 100% of eligible employees.
◉ Persistancy. Answer: As it pertains to insurance, persistency is the
percentage of policies an insurer has in force after a specified period
of time. Persistency is negatively impacted by policies replaced by
other insurers, canceled by the policy owner, or laps due to
nonpayment. Companies with higher persistency are more stable
and profitable than those with lower persistency. Generally
speaking, companies aim for 80% persistency after three-years and
60% after five years. Meaning, 60% of the policies written five years
ago should still be active.
◉ Accelerated benefit rider. Answer: The accelerated benefit rider
allows the insured to receive a portion of the death benefit prior to
,death if the insured has a terminal illness and is certified by a
physician as expected to die within 1-2 years.
◉ Class Designation. Answer: A class designation is a beneficiary
group designation (for example, all of my children), opposed to
specifying one or more beneficiaries by name.
◉ Common Disaster Provision. Answer: Sometimes added to a
policy and designed to provide an alternative beneficiary in the
event that the insured as well as the original beneficiary dies as the
result of a common accident.
◉ Contingent (Secondary) Beneficiary. Answer: The beneficiary
second in line to receive death benefit proceeds if the primary
beneficiary dies before the insured.
◉ Earned Premium. Answer: The amount of the premium for which
the policy protection has been given.
◉ Expense Factor. Answer: The expense factor, also known as the
loading charge, is a measure of what it costs an insurance company
to operate.
◉ Excess intrest. Answer: The excess interest provision in life
insurance means that the cash value will increase faster than the
, guaranteed rate if the insurer earns a greater return than the
guaranteed rate.
◉ Fixed amount installment options. Answer: A fixed amount
installment option pays a fixed death benefit in specified installment
amounts until the principal and interest are exhausted.
◉ Fixed/level premium. Answer: Fixed or level premium is a
concept of averaging what would be the total single premium for a
policy over periodic payments. More periodic payments = higher
total premium.
◉ Fixed period. Answer: A fixed period or period certain settlement
option pays the death benefit proceeds in equal installments over a
set period of years. The dollar amount of each installment depends
upon the total number of installments.
◉ Graded premium. Answer: A premium funding option
characterized by a lower premium in the early years of the contract
with premiums increasing annually for an introductory period. After
the introductory period, the premium jumps to an amount higher
than what the initial level premium would have been, and then
remains fixed or constant for the life of the policy.
QUESTIONS WITH FULL ANSWERS
◉ Master policy. Answer: The policy contract issued to the employer
under a Group insurance plan. Remember, the employees covered by
a group plan are considered to be insureds, but they only receive
certificates.
◉ Noncontributory plan. Answer: Employee benefit plan under
which the employer bears the full cost of the employees' benefits;
must insure 100% of eligible employees.
◉ Persistancy. Answer: As it pertains to insurance, persistency is the
percentage of policies an insurer has in force after a specified period
of time. Persistency is negatively impacted by policies replaced by
other insurers, canceled by the policy owner, or laps due to
nonpayment. Companies with higher persistency are more stable
and profitable than those with lower persistency. Generally
speaking, companies aim for 80% persistency after three-years and
60% after five years. Meaning, 60% of the policies written five years
ago should still be active.
◉ Accelerated benefit rider. Answer: The accelerated benefit rider
allows the insured to receive a portion of the death benefit prior to
,death if the insured has a terminal illness and is certified by a
physician as expected to die within 1-2 years.
◉ Class Designation. Answer: A class designation is a beneficiary
group designation (for example, all of my children), opposed to
specifying one or more beneficiaries by name.
◉ Common Disaster Provision. Answer: Sometimes added to a
policy and designed to provide an alternative beneficiary in the
event that the insured as well as the original beneficiary dies as the
result of a common accident.
◉ Contingent (Secondary) Beneficiary. Answer: The beneficiary
second in line to receive death benefit proceeds if the primary
beneficiary dies before the insured.
◉ Earned Premium. Answer: The amount of the premium for which
the policy protection has been given.
◉ Expense Factor. Answer: The expense factor, also known as the
loading charge, is a measure of what it costs an insurance company
to operate.
◉ Excess intrest. Answer: The excess interest provision in life
insurance means that the cash value will increase faster than the
, guaranteed rate if the insurer earns a greater return than the
guaranteed rate.
◉ Fixed amount installment options. Answer: A fixed amount
installment option pays a fixed death benefit in specified installment
amounts until the principal and interest are exhausted.
◉ Fixed/level premium. Answer: Fixed or level premium is a
concept of averaging what would be the total single premium for a
policy over periodic payments. More periodic payments = higher
total premium.
◉ Fixed period. Answer: A fixed period or period certain settlement
option pays the death benefit proceeds in equal installments over a
set period of years. The dollar amount of each installment depends
upon the total number of installments.
◉ Graded premium. Answer: A premium funding option
characterized by a lower premium in the early years of the contract
with premiums increasing annually for an introductory period. After
the introductory period, the premium jumps to an amount higher
than what the initial level premium would have been, and then
remains fixed or constant for the life of the policy.
