Primerica-Life Insurance| 89 questions| with complete solutions

Stranger-oriented life insurance policies are in direct opposition to the principle of a. law of large numbers b. good faith c. indemnity d. insurable interest correct answer: d. insurable interest-STOLI purchaser doesn't know the insured, or have any interest in the insured's longevity, so it violates the principle of insurable interest Which is generally true regarding insureds who have earned preferred status? a. they keep a higher percentage of any interest earned on their policies b. their premiums are lower c. they can barrow higher amounts off of their policies d. they can decide when to pay their monthly premiums correct answer: b. their premiums are lower- the insured is in excellent physical condition and employs healthy lifestyles and habits All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT: a. the employer pays a bonus to a selected employee to fund to policy b. it is considered a non qualified employee benefit. c. the policy is owned by the company d. any type of insurance policy may be used. correct answer: c. the policy is owned by the company. An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have? a. variable b. term c. securities d. stock correct answer: a. variable- life policies vary in value, as the name suggests, because the value is based on the stocks that support the policy. If a policyholder wants a more stable, reliable value, he/she should invest in a fixed policy. When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a. aleatory contract b. executive bonus c. key person