1|Page
ALABAMA LIFE & HEALTH INSURANCE EXAM TEST BANK
1 Complete Questions And Correct Detailed Answers. Top Mark
Guaranteed.
The type of policy that can be changed from one that does not accumulate cash values to one that
does is a: - - ANS✔️--Convertible term policy
A limited pay life policy: - - ANS✔️--Requires premium payments for a specified number of
years or until a specified age is reached
Should an insured become totally and permanently disabled two months before the cut-off date
for the waiver of premium rider: - - ANS✔️--The insured remains eligible for all provisions
Warren and Wilma have a joint life policy. Warren dies and the policy pays nothing. Later on,
Wilma dies and the policy death benefit is paid to the beneficiary. This is called a: - - ANS✔️--
Survivorship or second-to-die policy
A whole life policy: - - ANS✔️--Requires the insured to pay premiums for life and endows at age
100
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If Greg's policy on his own life has a guaranteed insurability rider, it means that he can purchase
more insurance: - - ANS✔️--On his own life at certain specified ages without proof of insurability
Any extra premium charged for the waiver of premium rider: - - ANS✔️--Does not apply to the
policy's cash value
If a policyowner has a $100,000 policy with an accumulated cash value of $6,000, the
policyowner can borrow up to: - - ANS✔️--The entire accumulated cash value of $6,000, less
interest for 1 year
An insured allows a permanent policy to lapse. Unless otherwise instructed, the insurance
company: - - ANS✔️--Will automatically institute the extended term option
Each of the following statements about policy loans is correct, except: - - ANS✔️--Policy loans
may be made on any type of policy
What is a postmortem dividend? - - ANS✔️--A dividend earned, but not yet paid, in the year of
the insured's death and paid with the death claim
The factors that determine the amount of each payment under the fixed period settlement option
are: - - ANS✔️--Length of the fixed period, face amount of the policy and interest
,3|Page
Fred purchased a $100,000 policy naming his wife, Wilma, as primary beneficiary, and his only
child, Pebbles, to receive any proceeds if Wilma dies before Fred, or if she dies after Fred, but
before receiving all the policy proceeds. Fred elected the interest settlement option for Wilma,
with the right of withdrawal after 5 years. No settlement option was stipulated for Pebbles. Fred
dies on May 6th, 1991. When Fred dies, his insurance company will make settlement by paying:
- - ANS✔️--Interest in periodic payments to Wilma
Each of the following is a source of life insurance policy dividends, except: - - ANS✔️--
Guaranteed cash value accumulations
Why should a policyowner be especially careful when deciding to increase the amount of an
outstanding policy loan? - - ANS✔️--If the outstanding loan balance, plus interest, equals or
exceeds the cash value of the policy, the company could cancel the insurance
The main purpose of the spendthrift clause contained in a settlement option is to prevent the
beneficiary from doing all of the following, except: - - ANS✔️--Purchasing a new car once the
claim has been settled and proceeds have been paid out according to the beneficiary designations
Collateral for a policy loan is: - - ANS✔️--The cash value of the policy itself
If an insured has an outstanding loan of $5,000 on a policy with a face amount of $25,000, at
death the company will: - - ANS✔️--Pay the beneficiary $20,000, after subtracting the amount of
the outstanding loan
, 4|Page
The nonforfeiture option that provides the most life insurance protection is the: - - ANS✔️--
Extended Term Option
The extended term option provides the most life insurance protection of the available
nonforfeiture options. Paid up additions are considered dividend options and are not considered a
nonforfeiture option.
The settlement option that provides for the proceeds plus interest to be paid in installments for a
specified period of time is called the: - - ANS✔️--Fixed Period Option
All of the following are situations in which the insurer is obligated to pay out a death benefit
after the insured has died, except: - - ANS✔️--The premiums have not been paid and have been
overdue for 3 years
A client purchases an individual disability income policy and receives the policy from the insurer
45 days after application. Upon receipt of the policy, the client typically has ______days to
review and return the policy to receive a full refund for any reason. - - ANS✔️--10
An annuitant has a temporary annuity certain, and dies shortly after the payments start but before
the certain period of 10 years has elapsed. Any money remaining is: - - ANS✔️--Paid to the
beneficiary for the rest of the certain period
ALABAMA LIFE & HEALTH INSURANCE EXAM TEST BANK
1 Complete Questions And Correct Detailed Answers. Top Mark
Guaranteed.
The type of policy that can be changed from one that does not accumulate cash values to one that
does is a: - - ANS✔️--Convertible term policy
A limited pay life policy: - - ANS✔️--Requires premium payments for a specified number of
years or until a specified age is reached
Should an insured become totally and permanently disabled two months before the cut-off date
for the waiver of premium rider: - - ANS✔️--The insured remains eligible for all provisions
Warren and Wilma have a joint life policy. Warren dies and the policy pays nothing. Later on,
Wilma dies and the policy death benefit is paid to the beneficiary. This is called a: - - ANS✔️--
Survivorship or second-to-die policy
A whole life policy: - - ANS✔️--Requires the insured to pay premiums for life and endows at age
100
,2|Page
If Greg's policy on his own life has a guaranteed insurability rider, it means that he can purchase
more insurance: - - ANS✔️--On his own life at certain specified ages without proof of insurability
Any extra premium charged for the waiver of premium rider: - - ANS✔️--Does not apply to the
policy's cash value
If a policyowner has a $100,000 policy with an accumulated cash value of $6,000, the
policyowner can borrow up to: - - ANS✔️--The entire accumulated cash value of $6,000, less
interest for 1 year
An insured allows a permanent policy to lapse. Unless otherwise instructed, the insurance
company: - - ANS✔️--Will automatically institute the extended term option
Each of the following statements about policy loans is correct, except: - - ANS✔️--Policy loans
may be made on any type of policy
What is a postmortem dividend? - - ANS✔️--A dividend earned, but not yet paid, in the year of
the insured's death and paid with the death claim
The factors that determine the amount of each payment under the fixed period settlement option
are: - - ANS✔️--Length of the fixed period, face amount of the policy and interest
,3|Page
Fred purchased a $100,000 policy naming his wife, Wilma, as primary beneficiary, and his only
child, Pebbles, to receive any proceeds if Wilma dies before Fred, or if she dies after Fred, but
before receiving all the policy proceeds. Fred elected the interest settlement option for Wilma,
with the right of withdrawal after 5 years. No settlement option was stipulated for Pebbles. Fred
dies on May 6th, 1991. When Fred dies, his insurance company will make settlement by paying:
- - ANS✔️--Interest in periodic payments to Wilma
Each of the following is a source of life insurance policy dividends, except: - - ANS✔️--
Guaranteed cash value accumulations
Why should a policyowner be especially careful when deciding to increase the amount of an
outstanding policy loan? - - ANS✔️--If the outstanding loan balance, plus interest, equals or
exceeds the cash value of the policy, the company could cancel the insurance
The main purpose of the spendthrift clause contained in a settlement option is to prevent the
beneficiary from doing all of the following, except: - - ANS✔️--Purchasing a new car once the
claim has been settled and proceeds have been paid out according to the beneficiary designations
Collateral for a policy loan is: - - ANS✔️--The cash value of the policy itself
If an insured has an outstanding loan of $5,000 on a policy with a face amount of $25,000, at
death the company will: - - ANS✔️--Pay the beneficiary $20,000, after subtracting the amount of
the outstanding loan
, 4|Page
The nonforfeiture option that provides the most life insurance protection is the: - - ANS✔️--
Extended Term Option
The extended term option provides the most life insurance protection of the available
nonforfeiture options. Paid up additions are considered dividend options and are not considered a
nonforfeiture option.
The settlement option that provides for the proceeds plus interest to be paid in installments for a
specified period of time is called the: - - ANS✔️--Fixed Period Option
All of the following are situations in which the insurer is obligated to pay out a death benefit
after the insured has died, except: - - ANS✔️--The premiums have not been paid and have been
overdue for 3 years
A client purchases an individual disability income policy and receives the policy from the insurer
45 days after application. Upon receipt of the policy, the client typically has ______days to
review and return the policy to receive a full refund for any reason. - - ANS✔️--10
An annuitant has a temporary annuity certain, and dies shortly after the payments start but before
the certain period of 10 years has elapsed. Any money remaining is: - - ANS✔️--Paid to the
beneficiary for the rest of the certain period
