New Mexico Life and Health Exam Questions With
Complete Solutions
Accumulation period Correct Answers During this period, no
taxes are place on accumulations. Taxes will only come into
play at the time of distribution.
Adjustable life Correct Answers A life policy that offers the
policy owner the options to adjust the policy's face amount,
premium, and length of protection without having to complete a
new application or actually exchange policies.
Aleatory Correct Answers Equal value not given to both
parties.
Annuity certain Correct Answers Provides income during
certain period to annuitant and beneficiary.
Automatic premium loan provision Correct Answers Will
automatically take a loan against the policy cash value to pay the
premium and keep the policy in force. Available on permanent
types of insurance policies.
Benefits of Life Insurance Correct Answers Cash
Accumulation & Liquidity, Survivor Protection, Estate
Conservation, Pre-arrangement or Pre-needs policies, Security,
and Timeliness and Certainty.
Capital conservation Correct Answers This method derives
income only from interest gained on the principal. It generates
income indefinitely.
, Capital liquidation Correct Answers This method uses both
interest and principal to provide income. This means that a
smaller fund is needed when using this method because there is
no concern for leaving the principal intact.
Combination policy Correct Answers Typically a permanent
policy with a term rider, as with Family Income (decreasing
term) or Family Maintenance (level term) added to the base
policy. Term is used to compliment the permanent plan.
Continuous premium whole life Correct Answers Designed to
endow at age 100 - Pay level premium up to age 100. This type
of policy is often referred to as straight life insurance.
Contract of Adhesion Correct Answers Prepared by one party -
courts interpret against the one who prepared it.
Contract of Utmost Good Faith Correct Answers Truthfulness
and integrity on bot parties = trust.
Convertible term Correct Answers Allows the insured to
convert/exchange their term policy to a form of permanent
insurance. (No contestability/no exam).
Current assumption whole life (CAWL) Correct Answers Is a
whole life insurance that bases its premiums on current interest
rates. Its premiums and face amounts will fluctuate with interest
rates.
Complete Solutions
Accumulation period Correct Answers During this period, no
taxes are place on accumulations. Taxes will only come into
play at the time of distribution.
Adjustable life Correct Answers A life policy that offers the
policy owner the options to adjust the policy's face amount,
premium, and length of protection without having to complete a
new application or actually exchange policies.
Aleatory Correct Answers Equal value not given to both
parties.
Annuity certain Correct Answers Provides income during
certain period to annuitant and beneficiary.
Automatic premium loan provision Correct Answers Will
automatically take a loan against the policy cash value to pay the
premium and keep the policy in force. Available on permanent
types of insurance policies.
Benefits of Life Insurance Correct Answers Cash
Accumulation & Liquidity, Survivor Protection, Estate
Conservation, Pre-arrangement or Pre-needs policies, Security,
and Timeliness and Certainty.
Capital conservation Correct Answers This method derives
income only from interest gained on the principal. It generates
income indefinitely.
, Capital liquidation Correct Answers This method uses both
interest and principal to provide income. This means that a
smaller fund is needed when using this method because there is
no concern for leaving the principal intact.
Combination policy Correct Answers Typically a permanent
policy with a term rider, as with Family Income (decreasing
term) or Family Maintenance (level term) added to the base
policy. Term is used to compliment the permanent plan.
Continuous premium whole life Correct Answers Designed to
endow at age 100 - Pay level premium up to age 100. This type
of policy is often referred to as straight life insurance.
Contract of Adhesion Correct Answers Prepared by one party -
courts interpret against the one who prepared it.
Contract of Utmost Good Faith Correct Answers Truthfulness
and integrity on bot parties = trust.
Convertible term Correct Answers Allows the insured to
convert/exchange their term policy to a form of permanent
insurance. (No contestability/no exam).
Current assumption whole life (CAWL) Correct Answers Is a
whole life insurance that bases its premiums on current interest
rates. Its premiums and face amounts will fluctuate with interest
rates.
