INSR 310 TEST 2 TERMS QUESTIONS AND ANSWERS | INSR 310 TEST 2
STUDY GUIDE & PRACTICE TEST 2026/2027
premature death - ANS ✔✔death of a family head with outstanding unfulfilled financial obligations
human life value - ANS ✔✔present value of the family's share of the deceased breadwinner's future
earnings
estate clearance fund - ANS ✔✔immediate cash is needed for burial expenses, uninsured medical bills,
installment debts, estate administration expenses, and estate, inheritance, and income taxes
blackout period - ANS ✔✔period from the time that Social Security survivor benefits terminate to the
time the benefits are resumed
terminal needs (clean up fund) - ANS ✔✔medical expenses, funeral costs, personal obligations - debts,
unpaid pledges, taxes, estate administration costs
other needs - ANS ✔✔readjustment: income(spouse/dependents/parents), special needs, mortgage,
education, emergencies, charity/gifts, retirement supplement, home health/nursing care
capitalization of income apporach - ANS ✔✔preserves capital needed to provide income to the family
income taxes - ANS ✔✔pay on income/earnings - virtually all sources of "income" taxed on current (as
earned) basis. once income is taxed, it is usually not taxed again
estate (death) taxes - ANS ✔✔protection of life insurance also given preferential treatment
term insurance - ANS ✔✔provides temporary protection
cash-value life insurance - ANS ✔✔savings component and builds cash values
most term insurance policies are renewable - ANS ✔✔the policy can be renewed for additional periods
without the evidence of insurability
most term insurance policies are convertible - ANS ✔✔term policy can be exchanged for a cash-value
policy without evidence of insurability
attained-age method - ANS ✔✔the premium charged is based on the insured's attained age at the time
of conversion
original-age method - ANS ✔✔the premium charged is based on the insured's original age premium
charged is based on the insured's original age when the term insurance was first purchased
reentry term - ANS ✔✔renewal premiums are based in select mortality rates if the insured can
periodically demonstrate acceptable evidence of insurability
, Whole life insurance - ANS ✔✔cahs value policy that provides lifetime protection
ordinary life insurance - ANS ✔✔level-premium policy that provides lifetime protection to age 100
characteristics of ordinary life insurance - ANS ✔✔1) premiums are level throughout the premium-
paying period
2) accumulation of cash surrender values
cash-surrender values - ANS ✔✔amount paid to a policyowner who surrenders the policy
limitations of ordinary life insurance - ANS ✔✔some people are still under-insured after the policy is
purchased
limited payment life insurance - ANS ✔✔the insurance is permanent, and the insured has lifetime
protection. The premiums are level, but they are paid only for a certain period
single-premium whole life insurance - ANS ✔✔provides lifetime protection with a single premium
endowment insurance - ANS ✔✔pays the face amount of insurance if the insured dies within a specified
period; if the insured survives to the end of the endowment period, the face amount is paid to the
policyowner at that time.
variable life insurance - ANS ✔✔fixed-premium policy in which the death benefit and cash values vary
according to the investment experience of a separate account maintained by the insurer
universal life insurance - ANS ✔✔a flexible premium policy that provides protection under a contract
that unbundles the protection and saving components
variable universal life insurance - ANS ✔✔most variable universal life policies are sold as investments or
tax shelters
current assumption whole life insurance - ANS ✔✔nonparticipating whole life policy in which the cash
values are based on the insurers current mortality, investment, and expense expierence
redetermination provision - ANS ✔✔allows the insurer to recalculate the premium based on the same or
different actuarial assumptions with respect to mortality, interest and expenses
vanishing premium provision - ANS ✔✔premiums vanish after a certain period, such as ten years
indeterminate-premium whole life policy - ANS ✔✔generic name for a nonparticipating policy that
permits the insurer to adjust premiums based on anticipated future expierence
modified life policy - ANS ✔✔premiums are lower for the first three to five years and higher thereafter
preferred risks - ANS ✔✔insurers selling policies at lower rates to individuals
STUDY GUIDE & PRACTICE TEST 2026/2027
premature death - ANS ✔✔death of a family head with outstanding unfulfilled financial obligations
human life value - ANS ✔✔present value of the family's share of the deceased breadwinner's future
earnings
estate clearance fund - ANS ✔✔immediate cash is needed for burial expenses, uninsured medical bills,
installment debts, estate administration expenses, and estate, inheritance, and income taxes
blackout period - ANS ✔✔period from the time that Social Security survivor benefits terminate to the
time the benefits are resumed
terminal needs (clean up fund) - ANS ✔✔medical expenses, funeral costs, personal obligations - debts,
unpaid pledges, taxes, estate administration costs
other needs - ANS ✔✔readjustment: income(spouse/dependents/parents), special needs, mortgage,
education, emergencies, charity/gifts, retirement supplement, home health/nursing care
capitalization of income apporach - ANS ✔✔preserves capital needed to provide income to the family
income taxes - ANS ✔✔pay on income/earnings - virtually all sources of "income" taxed on current (as
earned) basis. once income is taxed, it is usually not taxed again
estate (death) taxes - ANS ✔✔protection of life insurance also given preferential treatment
term insurance - ANS ✔✔provides temporary protection
cash-value life insurance - ANS ✔✔savings component and builds cash values
most term insurance policies are renewable - ANS ✔✔the policy can be renewed for additional periods
without the evidence of insurability
most term insurance policies are convertible - ANS ✔✔term policy can be exchanged for a cash-value
policy without evidence of insurability
attained-age method - ANS ✔✔the premium charged is based on the insured's attained age at the time
of conversion
original-age method - ANS ✔✔the premium charged is based on the insured's original age premium
charged is based on the insured's original age when the term insurance was first purchased
reentry term - ANS ✔✔renewal premiums are based in select mortality rates if the insured can
periodically demonstrate acceptable evidence of insurability
, Whole life insurance - ANS ✔✔cahs value policy that provides lifetime protection
ordinary life insurance - ANS ✔✔level-premium policy that provides lifetime protection to age 100
characteristics of ordinary life insurance - ANS ✔✔1) premiums are level throughout the premium-
paying period
2) accumulation of cash surrender values
cash-surrender values - ANS ✔✔amount paid to a policyowner who surrenders the policy
limitations of ordinary life insurance - ANS ✔✔some people are still under-insured after the policy is
purchased
limited payment life insurance - ANS ✔✔the insurance is permanent, and the insured has lifetime
protection. The premiums are level, but they are paid only for a certain period
single-premium whole life insurance - ANS ✔✔provides lifetime protection with a single premium
endowment insurance - ANS ✔✔pays the face amount of insurance if the insured dies within a specified
period; if the insured survives to the end of the endowment period, the face amount is paid to the
policyowner at that time.
variable life insurance - ANS ✔✔fixed-premium policy in which the death benefit and cash values vary
according to the investment experience of a separate account maintained by the insurer
universal life insurance - ANS ✔✔a flexible premium policy that provides protection under a contract
that unbundles the protection and saving components
variable universal life insurance - ANS ✔✔most variable universal life policies are sold as investments or
tax shelters
current assumption whole life insurance - ANS ✔✔nonparticipating whole life policy in which the cash
values are based on the insurers current mortality, investment, and expense expierence
redetermination provision - ANS ✔✔allows the insurer to recalculate the premium based on the same or
different actuarial assumptions with respect to mortality, interest and expenses
vanishing premium provision - ANS ✔✔premiums vanish after a certain period, such as ten years
indeterminate-premium whole life policy - ANS ✔✔generic name for a nonparticipating policy that
permits the insurer to adjust premiums based on anticipated future expierence
modified life policy - ANS ✔✔premiums are lower for the first three to five years and higher thereafter
preferred risks - ANS ✔✔insurers selling policies at lower rates to individuals
