NM Life Insurance Exam Ch. 3
Comprehensive Questions with
Verified Answers Graded A+
d - Answer: All of the following are true regarding the insurable interest creditors have in the
lives of their debtors, EXCEPT:
Select one:
a. Creditors may take out life insurance on the lives of debtors.
b. Creditors may take out life insurance on the lives of debtors in an amount equal to the unpaid
debt.
c. Creditors must have debtors, consent to take out life insurance policies on them.
d. The face amount of life insurance on debtors stays constant throughout the policy term.
a - Answer: The Social Security blackout period begins when the youngest child reaches the age
of:
Select one:
a. 16
b. 18
c. 19
d. 21
c - Answer: All of the following are drawbacks of buying a viatical settlement, EXCEPT:
Select one:
a. Viatical settlement payouts may be subject to creditors claims if the insured has debt.
,b. Viators may be unable to receive benefits through Medicaid or Supplemental Social Security
Income.
c. The insured's life insurance protection ends.
d. The portion of the death benefit the viator receives in a viatical settlement ranges from 50 to
80 percent of the death benefit.
a - Answer: Viatical brokers represent _______; viatical producers represent _________.
Select one:
a. viators; viatical settlement providers
b. viatical settlement providers; viators
c. insurers; insureds
d. insureds; insurers
d - Answer: Insurance agent Jessica evaluates Ben's life insurance needs. In calculating the
amount of life insurance needed, Jessica uses the cost for funeral and burial, mortgage
payments, cost of education for Ben's children, and the amount of income Ben's dependents
would need to maintain their standard of living. Which method did Jessica use?
Select one:
a. Survivor method
b. Estate method
c. Human life value approach
d. Needs approach
c - Answer: What is the term attributed to the third party that buys the death benefit from a life
insurance policy?
Select one:
a. Beneficiary
b. Annuitant
, c. Viatical settlement provider
d. Viator
b - Answer: A surviving spouse's blackout period ends when she reaches the age of:
Select one:
a. 59 1/2
b. 60
c. 62
d. 65
b - Answer: All of the following are true regarding viatical settlements, EXCEPT:
Select one:
a. A terminally or chronically ill insured can sell their life insurance policy to a third party in
exchange for payment of a large portion of the death benefit.
b. Viatical settlements are a type of life insurance contract.
c. In a viatical settlement, the third party that purchases the insured's life insurance policy is
termed the viatical settlement provider, and the insured is termed the viator.
d. The portion of the death benefit the viator receives in a viatical settlement ranges from 50 to
80 percent of the death benefit.
c - Answer: The time period during which children are young and financially dependent upon
their parents is termed the:
Select one:
a. Blackout period
b. Preretirement period
c. Family dependency period
d. Support period
Comprehensive Questions with
Verified Answers Graded A+
d - Answer: All of the following are true regarding the insurable interest creditors have in the
lives of their debtors, EXCEPT:
Select one:
a. Creditors may take out life insurance on the lives of debtors.
b. Creditors may take out life insurance on the lives of debtors in an amount equal to the unpaid
debt.
c. Creditors must have debtors, consent to take out life insurance policies on them.
d. The face amount of life insurance on debtors stays constant throughout the policy term.
a - Answer: The Social Security blackout period begins when the youngest child reaches the age
of:
Select one:
a. 16
b. 18
c. 19
d. 21
c - Answer: All of the following are drawbacks of buying a viatical settlement, EXCEPT:
Select one:
a. Viatical settlement payouts may be subject to creditors claims if the insured has debt.
,b. Viators may be unable to receive benefits through Medicaid or Supplemental Social Security
Income.
c. The insured's life insurance protection ends.
d. The portion of the death benefit the viator receives in a viatical settlement ranges from 50 to
80 percent of the death benefit.
a - Answer: Viatical brokers represent _______; viatical producers represent _________.
Select one:
a. viators; viatical settlement providers
b. viatical settlement providers; viators
c. insurers; insureds
d. insureds; insurers
d - Answer: Insurance agent Jessica evaluates Ben's life insurance needs. In calculating the
amount of life insurance needed, Jessica uses the cost for funeral and burial, mortgage
payments, cost of education for Ben's children, and the amount of income Ben's dependents
would need to maintain their standard of living. Which method did Jessica use?
Select one:
a. Survivor method
b. Estate method
c. Human life value approach
d. Needs approach
c - Answer: What is the term attributed to the third party that buys the death benefit from a life
insurance policy?
Select one:
a. Beneficiary
b. Annuitant
, c. Viatical settlement provider
d. Viator
b - Answer: A surviving spouse's blackout period ends when she reaches the age of:
Select one:
a. 59 1/2
b. 60
c. 62
d. 65
b - Answer: All of the following are true regarding viatical settlements, EXCEPT:
Select one:
a. A terminally or chronically ill insured can sell their life insurance policy to a third party in
exchange for payment of a large portion of the death benefit.
b. Viatical settlements are a type of life insurance contract.
c. In a viatical settlement, the third party that purchases the insured's life insurance policy is
termed the viatical settlement provider, and the insured is termed the viator.
d. The portion of the death benefit the viator receives in a viatical settlement ranges from 50 to
80 percent of the death benefit.
c - Answer: The time period during which children are young and financially dependent upon
their parents is termed the:
Select one:
a. Blackout period
b. Preretirement period
c. Family dependency period
d. Support period
