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1. All of the following are eligible to purchase a group life insurance policy EXCEPT:
the Wonderful Widget Company, which employs more than 200 people the State Electrical Workers Union
the Retailers Multiple Employer Trust, formed by two retailers to purchase insurance for their employees
Stan and his neighbors, who form their own group to buy group coverage at a lower cost than their individual
coverages: Stan and his neighbors are not eligible to purchase group life insurance because a group cannot be formed
solely to obtain life insurance
2. With respect to the difference between variable life insurance (VLI) and variable universal life insurance (VUL),
which of the following statements is correct?
Variable life policies require a fixed premium payable for the life of the policy while variable universal life permits
premium flexibility.
Only variable life policies allow the policyowner to put funds in investment subaccounts.
Only variable universal life policies offer a minimum death benefit.
Only variable universal life is a securities product.: Variable life policies require a fixed premium payable for the life of
the policy while variable universal life permits premium flexibility
3. Jessica, age 25, buys a $100,00 life insurance policy. The initial premium is lower than straight whole life rates
and increases each year for the first ten years of the policy period. After that, the premium levels off and remains at
that amount for the life of the policy. What type of policy does Jessica own?
indeterminate premium whole life single premium life
graded premium whole life
20-pay life: graded premium whole life
4. Which statement about modified premium whole life insurance is NOT correct?
It does not build cash value.
It charges lower premiums in the early policy years.
At the end of the initial period, the premium increases and stays at the new level for the life of the policy.
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,It is good for people who want the guarantees of whole life insurance and lower early premiums.: It does not build a
cash value
5. A life insurance policy matures or endows when its guaranteed cash value equals its face amount. With an
endowment contract, when does the policy endow?
when the insured dies at age 120
after age 120
well before age 120, usually at age 65: well before age 120, usually at age 65
6. A type of permanent life insurance that lets the policyowner increase, reduce or even skip premium payments at
will without the policy lapsing best describes:
variable life insurance universal life insurance
adjustable life insurance
modified premium whole life insurance: universal life insurance
7. Variable universal life combines features of variable life and universal life. Variable universal life and universal
life are alike in all the following ways EXCEPT:
The premium payments for both are flexible.
Both types of policies let the policyowner choose a death benefit from two (or sometimes three) options.
For both policies, the insurer deducts insurance and expenses monthly from the cash value.
Both are considered securities products as well as life insurance.: both are considered securities products as well ass
life insurance
8. All the following statements about term life insurance are correct EXCEPT:
It offers protection for a specified, limited period.
A small cash value gradually accumulates while the policy is in force.
Upon issue, it is generally less expensive than permanent insurance of com- parable face amount.
It pays a benefit only if the insured dies during the specified period.: a small cash value gradually accumulates while
the policy is in force
9. A type of life insurance that covers two people and pays the death benefit only upon the second insured's death
is called
2/
85
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survivorship life family
life spousal life
joint life: survivorship life
10. Under a joint life insurance policy, when does the insurer pay the death benefit?
when the first insured dies
only when the surviving insured dies only when the
older insured dies
only when the younger insured dies: when the first insured dies
11. Which of the following types of whole life insurance is paid with one premium at the time the policy is
bought?
modified premium whole life limited pay life
graded premium whole life
single-premium life: single-premium life
12. Which of the following life insurance products is best suited for insuring a mortgage or other long-term loan
with the least premium possible?
increasing term life insurance level term life
insurance decreasing term life insurance
whole life insurance: decreasing term life insurance
13. A married couple is insured under a joint life policy. The first spouse dies. What can the surviving spouse do
with the policy?
The surviving spouse can renew the policy.
The surviving spouse can convert the policy if he or she proves insurability. The surviving spouse may convert the
policy without proving insurability.
The surviving spouse cannot convert the policy.: the surviving spouse can convert the policy if he or she proves
insurability
14. Alan and his wife are expecting their first child. Alan wants the most death protection that he can get for the
smallest amount of premium, at least while he's starting his family. Ideally, he would like to be able to upgrade his
coverage to a whole life policy at some point. Which of the following products would you recommend?
3/
85
, WebCE Exam Tutor
Study online at
https://quizlet.com/_gw49d9
whole life insurance policy variable life
insurance policy universal life policy
ten-year convertible term life policy: ten-tear convertible term life policy
15. Michael and his friends and family, who are tired of paying high premiums for their individual policies, decide
to get together and buy a group life insur- ance policy. Why will their approach not work?
Group policies are only available to employers.
Family members cannot be covered under the same group policy.
A group cannot be formed just for the purpose of obtaining insurance.
None of the members in the group is a licensed agent.: a group cannot be formed just for the purpose of obtaining
insurance
16. While completing an application for a life insurance policy, Dan discloses his partial blindness. The insurer will
treat this blindness as a:
peril
moral hazard morale
hazard
physical hazard: physical hazard
17. Peril vs Hazard: Peril is the CAUSE of loss
Hazard is a characteristic that increases the chance of a peril occurring
18. Which of the following best illustrates risk transfer?
Anita buys health insurance to protect herself in case of serious illness. Abigail continues to rent her home because
she thinks homeowners insur- ance is too expensive. Refusing to buy a home and insure it is an example of risk
avoidance.
Anne does not venture out after dark because she is afraid of being assaulted. Arlene decides not to purchase life
insurance because she has no dependents and plenty of cash in her savings accounts to cover any final expenses.:
Anita buys health insurance to protect herself in case of a serious illness
19. When classifying insurance risks, insurance underwriters most often use the:
numerical rating system judgment method
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85
1. All of the following are eligible to purchase a group life insurance policy EXCEPT:
the Wonderful Widget Company, which employs more than 200 people the State Electrical Workers Union
the Retailers Multiple Employer Trust, formed by two retailers to purchase insurance for their employees
Stan and his neighbors, who form their own group to buy group coverage at a lower cost than their individual
coverages: Stan and his neighbors are not eligible to purchase group life insurance because a group cannot be formed
solely to obtain life insurance
2. With respect to the difference between variable life insurance (VLI) and variable universal life insurance (VUL),
which of the following statements is correct?
Variable life policies require a fixed premium payable for the life of the policy while variable universal life permits
premium flexibility.
Only variable life policies allow the policyowner to put funds in investment subaccounts.
Only variable universal life policies offer a minimum death benefit.
Only variable universal life is a securities product.: Variable life policies require a fixed premium payable for the life of
the policy while variable universal life permits premium flexibility
3. Jessica, age 25, buys a $100,00 life insurance policy. The initial premium is lower than straight whole life rates
and increases each year for the first ten years of the policy period. After that, the premium levels off and remains at
that amount for the life of the policy. What type of policy does Jessica own?
indeterminate premium whole life single premium life
graded premium whole life
20-pay life: graded premium whole life
4. Which statement about modified premium whole life insurance is NOT correct?
It does not build cash value.
It charges lower premiums in the early policy years.
At the end of the initial period, the premium increases and stays at the new level for the life of the policy.
1/
85
,It is good for people who want the guarantees of whole life insurance and lower early premiums.: It does not build a
cash value
5. A life insurance policy matures or endows when its guaranteed cash value equals its face amount. With an
endowment contract, when does the policy endow?
when the insured dies at age 120
after age 120
well before age 120, usually at age 65: well before age 120, usually at age 65
6. A type of permanent life insurance that lets the policyowner increase, reduce or even skip premium payments at
will without the policy lapsing best describes:
variable life insurance universal life insurance
adjustable life insurance
modified premium whole life insurance: universal life insurance
7. Variable universal life combines features of variable life and universal life. Variable universal life and universal
life are alike in all the following ways EXCEPT:
The premium payments for both are flexible.
Both types of policies let the policyowner choose a death benefit from two (or sometimes three) options.
For both policies, the insurer deducts insurance and expenses monthly from the cash value.
Both are considered securities products as well as life insurance.: both are considered securities products as well ass
life insurance
8. All the following statements about term life insurance are correct EXCEPT:
It offers protection for a specified, limited period.
A small cash value gradually accumulates while the policy is in force.
Upon issue, it is generally less expensive than permanent insurance of com- parable face amount.
It pays a benefit only if the insured dies during the specified period.: a small cash value gradually accumulates while
the policy is in force
9. A type of life insurance that covers two people and pays the death benefit only upon the second insured's death
is called
2/
85
, WebCE Exam Tutor
Study online at
https://quizlet.com/_gw49d9
survivorship life family
life spousal life
joint life: survivorship life
10. Under a joint life insurance policy, when does the insurer pay the death benefit?
when the first insured dies
only when the surviving insured dies only when the
older insured dies
only when the younger insured dies: when the first insured dies
11. Which of the following types of whole life insurance is paid with one premium at the time the policy is
bought?
modified premium whole life limited pay life
graded premium whole life
single-premium life: single-premium life
12. Which of the following life insurance products is best suited for insuring a mortgage or other long-term loan
with the least premium possible?
increasing term life insurance level term life
insurance decreasing term life insurance
whole life insurance: decreasing term life insurance
13. A married couple is insured under a joint life policy. The first spouse dies. What can the surviving spouse do
with the policy?
The surviving spouse can renew the policy.
The surviving spouse can convert the policy if he or she proves insurability. The surviving spouse may convert the
policy without proving insurability.
The surviving spouse cannot convert the policy.: the surviving spouse can convert the policy if he or she proves
insurability
14. Alan and his wife are expecting their first child. Alan wants the most death protection that he can get for the
smallest amount of premium, at least while he's starting his family. Ideally, he would like to be able to upgrade his
coverage to a whole life policy at some point. Which of the following products would you recommend?
3/
85
, WebCE Exam Tutor
Study online at
https://quizlet.com/_gw49d9
whole life insurance policy variable life
insurance policy universal life policy
ten-year convertible term life policy: ten-tear convertible term life policy
15. Michael and his friends and family, who are tired of paying high premiums for their individual policies, decide
to get together and buy a group life insur- ance policy. Why will their approach not work?
Group policies are only available to employers.
Family members cannot be covered under the same group policy.
A group cannot be formed just for the purpose of obtaining insurance.
None of the members in the group is a licensed agent.: a group cannot be formed just for the purpose of obtaining
insurance
16. While completing an application for a life insurance policy, Dan discloses his partial blindness. The insurer will
treat this blindness as a:
peril
moral hazard morale
hazard
physical hazard: physical hazard
17. Peril vs Hazard: Peril is the CAUSE of loss
Hazard is a characteristic that increases the chance of a peril occurring
18. Which of the following best illustrates risk transfer?
Anita buys health insurance to protect herself in case of serious illness. Abigail continues to rent her home because
she thinks homeowners insur- ance is too expensive. Refusing to buy a home and insure it is an example of risk
avoidance.
Anne does not venture out after dark because she is afraid of being assaulted. Arlene decides not to purchase life
insurance because she has no dependents and plenty of cash in her savings accounts to cover any final expenses.:
Anita buys health insurance to protect herself in case of a serious illness
19. When classifying insurance risks, insurance underwriters most often use the:
numerical rating system judgment method
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85
