Life Insurance 2

11. Sometimes Policy Reserves are also referred as:(select one or more)

a.Legal Reserves

b. Monetary Reserves 通货准备金

c.Statutory Reserves

d. None of the listed options

 

12. PST, the policyholder of self administeredgroup plan is responsible for handling:

I. Administrative aspects of the plan

II. Record keeping aspects of the paln

Select one

a.     Neither I nor II

b.     I

c.      II

d.     Both I and II

 

13.Mr DCB is covered by a comprehensive majormedical expense policy that specifies a $500 calendar-year deductible and a 10percent coinsurance requirement.

In 2010 DCB incurred $1000 in allowable expenses

How much amount will the insurer pay?

a.    $450

b.     $600

c.      $550

d.     $500

 

14.Mr XYZ is covered under group life insuranceplan that his employee provides. The group insurance policy provides $100000 ofgroup term life insurance. $50000 of group accidental death and dismemtermentinsurance and $25000 of business travel accident insurance

If Mr. XYZ dies in an accident while he istraveling on business for his employer, then how much will his beneficiary willbe entitled to receive?

a.     $150000

b.     $50000

c.      $100000

d.   $175000

 

15. An underwriter BBC, has predicted anapproximate loss rate for a group of 10 members. An Underwriter CCB haspredicted approximate loss rate for a group of 25 members.

Which of the following underwriter’s predicted lossrate would be closer to actual loss rate?

a.     CCB

b.     Both Option 1 and Option 2

c.     Can’t say

d.     BBC

 

16. Mr. ACD, aged 30 is employed and wants to savemoney for his retirement. ACD purchased a certain defined annuity. ACD paid aninitial premium of $1000 and paid subsequent monthly premiums of $100 for threemonths before experiencing a financial emergency.

Six months later, after resolving the financialemergency. ACD resumed making monthly premium payment

What can be said about the premium payment for thecontract?

a.     Lumpsum Premium

b.     Single Premium

c.      Contract has lapsed

d.     Flexible Premium

 

17. In a second insured rider, the premium ratecharged for the second insured is based on:

a. A flat amount the company charges for all secondinsured riders

b. Based on the risk characteristics of the secondinsured

c. Based on the combined risk characteristics ofthe person insured under the basic policy and the second insured

d. Based on the risk characteristics of the personinsured under the basic policy

 

 

18. The _______ deductible, is the dollar amount ofclaims that an employer must pay for any individual period of time before thestop-loss insurer reimburses the employer for any excess amount.

a. individual

b. aggregate

c. None of the listed options

d. Group

19. for which of the following insurers, the amount ofbenefits payable is more likely to be definite, specified by the policy?

a. cannot say

b. None of the listedoption

c. Life Insurer

d. Health Insurer

 

20. Which of the following is the primary benefitobligation payable under a life insurance policy, if the insured dies while thepolicy is in force?

a. disability income benefit

b. payor benefit

c. death benefit

d. supplemental benefit

 

21. Which of the following is a contract, under whichone party has the right to avoid his obligations under the contract?

a. informal contract

b. voidable contract

c. void contract

d. offline contract

 

22. Mrs. Dior buys a life insurance policy for herdaughter Chanel. Mr. Dior, the father, is beneficiary of the policy.

For which of the following people, it is mandatoryto have an insurability interest at the time of policy being issued?

a.     Mr. Dior

b.     Chanel

c.      Mrs. Dior

d.     None of the listed options

 

23. Which of the following statements stand FALSE,with respect to modified-premium-whole life policy?

a. By taking a modified-premium-whole life policy,policy owner is able to purchase a larger face amount of whole life insurancethan he/she would be able to afford.

b. The initial annual premium for a modifiedpremium whole life policy is less than the initial annual premium for a similarwhole life policy issued on a level premium basis

c. The cash value build up faster under amodified-premium-whole life policy than under a traditional whole life policy.

d. After a specified period, the annual premium fora modified-premium-policy increases to a stated amount that is somewhat higherthan the usual(non-modified) premium would have been.

 

24. What will the insurer is most likely to do, incase of mis-statement of age of a group member covered under a group lifeinsurance policy?

a. Charge the penalty

b. Adjust the amount of death benefit

c. Adjust the amount of premium

d. Remove the member from the coverage

 

25. Which of the following statement stand TRUEwith respect to monthly debit ordinary policies?

I. MDO policy tend to be sold in higher face amountthan other life insurance policies.

II. MDO policy are marketed by commissioned salesagents who are not permitted to collect revenue premiums

a.     I

b.     II

c.      Neither I nor II

d.     Both I & II

 

26. Ms. Aldo purchased a decreasing term lifeinsurance for five year starting with initial coverage of $50,000 and thendecreasing each year by $10000

In case if Ms. Aldo expires in the 4^thyear, what would be the amount paid by the insurer to policy beneficiary

a.     $30000

b.     $40000

c.      $50000

d.     $20000

 

 

 

 

27. Fendi has a family history of diabetes. Shealso had a heart attack recently. For the insurer, this can be typified as

a. Physical hazard

b. Moral hazard

 

28. Ms. XYZ purchased a variable annuity from theInsurance Company. The contract specifies that, each time Mr. XYZ withdrawsmoney from product, he will be charged a fee, expressed as percentage of thewithdrawal, the percentage will decrease over time, until eventually Mr. XYZcan withdraw funds without incurring a charge by definition, this fee is knownas a

a. Mortality and expense risk(M&E) and it isconsidered a back-end sales charge

b. Mortality and expense risk(M&E) and it isconsidered a front-end sales

charge

c. Contingent deferred sales charge(CDSC) and it isconsidered a back-end sales charge

d. Contingent deferred sales charge(CDSC) and it isconsidered a front-end sales charge

 

 

29. Which of the following statements is NOT acondition that must be met to reinstate a policy

a. The policy owner must pay a specific amount ofmoney; the amount required depends on being reinstated.

b. The policy owner need not provide the insurancecompany with evidence of the insured’s insurability again.

c. The policy owner may be required to either payany outstanding policy loan or have the policy loan including any additionalaccrued interest, reinstated with the policy.

d. The policy owner must complete a reinstatementapplication within the time frame stated in the reinstatement provision

 

30. The following are different types of decreasingterm insurance:

a. Credit Life Insurance

b. None of the listed options

c. Mortgage Insurance

d. Family Life insurance

31.Life Insurance use the level premium pricing system, so that the premium ratesdo not increase, as the insured’s mortality increase. State True or False

a. True

b.False

 

32.Theannuity contract may name  _______  payee who will receive any remaining annuitypayments upon the death of the payee.

a.None of the listed options is applicable to the blank.

b.primary

c. contingent

d.secondary

 

33.Mr. BVP, a surgeon, is insured under a disability income policy that containsthe current usual definition of total disability. The policy’s definitioncontains “own previous occupation”. BVP was involved in an accident and losthis left arm.

AlthoughBVP is unable to perform surgery, he has been hired to teach in medical college.

Forhow long will Mr. BVP receive disability income benefits?

a. Until the end of policy’s benefitperiod

b. Nobenefits will be paid

c.None of the listed options

d. 2years

 

34.Ms. PTA was required to fill out a medical questionnaire to be eligible forgroup life insurance coverage. While completing the questionnaire, PTA madematerial misrepresentations about her death. PTA died six months after hercoverage became effective.

Whileinvestigating the claim, the insurance company discovered PTA’s materialmisrepresentations. The group policy contained a two-year contestable period.

Shouldthe insurance company payout benefits as per the policy to PTA’s benefiaciary?

a.cannot say

b.Coverage is not valid as she didi not provide correct information

c. The Insurance company should contestto validity of her coverage

d.Yes, she was under coverage at the time of her death.

 

35. Afixed amount option is a settlement option under which the insurance companypays equal installments of a stated amount until the policy proceeds, plusinterest earned, are exhausted. Under this option, extra interest earned willresult in:

a. an increase in the number of payments

b. anincrease in the size of each payments

c. adecrease in the size of each payments

d. a decreasein the number of payments

 

36.Which of the following are the necessary conditions for a risk to be insurable?

Selectone or more

a.Risk should be unpredictable

b. Risk should be specific

c. Risk should happen by chance

d.Risk should be indefinite

 

37.What are provisions that describe circumstances under which the insurer willnot pay the policy proceeds, following the death of the insured?

a.Nonforfeiture Provision

b.Grace Period Provision

c.Exclusions

d. Incontestability Provision

 

 

38.Mr. Aldo purchase a life insurance policy. Which risk management technique ishe resorting to?

a. heis avoiding the risk

b. he is transferring the risk

c. heis accepting the risk

d. heis controlling the risk

 

39.Which of the following methods will be used to establish the amount ofdisability income benefits that will be paid to a disabled person covered undergroup disability income policy?

a. None of the listed options

b.Fixed Amount

c.Flat Amount

d.Income Benefit Formula

 

40.Morbidity rates generally ______ with age

a.decrease

b.does not change

c. increase

d.None of the listed options is applicable for the blank

 

41.Inwhich of the following individual Retirement Arrangements are the withdrawalstaxable

a. None of the listed options

b. TraditionalIRA

c.Registered retirement saving plan

d.Roth IRA

 

 

42.Mr. GHI paid a single premium of $150000 for a refund annuity that wouldprovide an income payment of $10000 per year during his lifetime. He named hiswife, HIG as the contingent payee.

GHIdied 20 years after income payments began, at the time of his death, he hadreceived periodic income as per the contract.

Howmuch amount of refund is HIG entitled to receive from the insurer?

a.$90000

b. No Refund

c.$150000

d.$60000

 

43.Mrs. Gucci is the policy owner insured of a whole life insurance policy thatincludes a typical spouse and children’s insurance rider.

Thisrider provides a life insurance coverage for her husband and their two children

Afterthe coverage is purchased, Mrs. Gucci legally adopts another child to theirfamily. Based on this information, which of the following is correct?

a.The third child will be covered only after Mrs. Gucci provides evidence of thechild’s insurability.

b.The premium for the children’s coverage will increase, when Mrs. Gucci adoptsthe third child.

c.Mrs. Gucci will not be able to cover her third child under the same policy

d. Mrs. Gucci’s husband and threechildren will be covered by the term life insurance.

 

44.If the Insurance company invests money in stocks, the dividend earned on thosestocks must be distributed among the policyholders

StateTrue or False

a.True

b. False

 

 

45.Charles purchased a life insurance policy insuring his wife Keith. Several yearslater, Charles and Keith divorced. Which of the following statements holds goodin this scenario?

a. AsCharles and Keith are no longer married, the insurance contract is cancelled

b. As long as the premiums continue tobe paid, the divorce does not affect the contract

c. AsCharles and Keith are no longer married, the life insurance contract is voidand the premiums paid previously are returned to Charles.

d. Anotice will be sent to Keith to either cancel the contract or take charge asthe policy owner of the contract.

 

46.The US Congress enacted a law by which it agreed to leave insurance regulationto the states, as long as Congress considered state regulation to be adequate.This law is called as:

a. McCarran – Ferguson Act

b.Fedral Trade Commission Act

c.Sarbanes – Oxley Act

d.Financial Services Mordernization Act

 

47.Ms. FED, owned a fixed deferred annuity contract. The  contract imposed a surrender charge of 5percent of the accumulated value, if the annuity was surrendered during thefirst contract year, 3 percent of the accumulated value, if the annuity wassurrendered during the second contract year, 1 percent of the accumulated valueif the annuity was surrendered during the third contract year.

Afterthe third year, the contract owner could surrender the contract without anysurrender charge. FED surrendered the contract 28 months after she purchasedit.

Atthat time the contract had a accumulated value of $100000. What is thesurrender value that insurer had to pay?

a.$1000

b.$99000

c.$5000

d. $3000

 

48.Mr. XYZ works for a certain employer, who agrees to provide its employees witha lifetime monthly income benefit that begins at retirement.

Inthis case, Mr. XYZ could be part of which retirement plan?

a.Stock Bonus Plan

b. Defined Benefit Pension Plan

c.Saving Plan

d.Profit sharing plan

 

49. Aparticular life insurance contract is enforceable because the parties to thecontract met requirements concerning the substance of the agreement rather thanrequirements concerning the form of the agreement.

Also,the performance of the insurer’s promise to pay the policy proceeds iscontingent on the death of the insured occurring while the policy is in force.

Thisindicates that the life insurance contract is:

a. An informal, aleatory contract

b. Aformal, aleatory contract

c. Aformal, commutative contract

d. aninformal, commutative contract

 

 

 

51.The ZeusOne Financial Holding company owns and controls ZeusTwo InsuranceCompany which is incorporated in the state of Amanora and currently sellsinsurance in Amanora

HoweverZeusTwo Insurance Company plans o sell insurance products in the state of Floraand Taura State Amonora, Flora and Taura impose minimum requirements on theamount of assets($500,000), liabilities($100,000),capital($300,000) of ZeusTwo.

Whatwill be the owner’s equity of ZeusTwo Insurance Company?

a. $400,000

b.$600,000

c.$100,000

d.$200,000

 

52.Mr. Peter purchased a modified premium whole life insurance policy from EnglandLife Insurance Company. Compared to traditional whole life insurance policy,Mr. Peter’s policy has a premium that’s is normally

a.Lower and cash value that builds more quickly

b.Higher and cash value that builds more quickly

c. Higher and cash value that build moreslowly.

d. Lowerand cash value that builds more slowly

 

53.The renewability clause of a term life insurance without proof of insurabilityleads to a lot of anti-selection. However the following restriction could helpminimize the anti-selection to certain level,

Selectone or more

a.  All of the listed options

b. The coverage may be renewed only fora certain number of times

c. A higher premium is charged onrenewing the policy

d.The coverage may be renewed only until the insured attains a stated age.

 

 

54.For a Defined Benefit plan, which of the following are true for the amount ofParticipant’s Retirement Benefits?

Selectone or more

a.Can only be estimated

b.Uncertain, not specified

c. Reasonably certain

d.Specified

 

55.Which of these clauses state that, if the policy owner does not have abeneficiary, then the insurer will pay the policy proceeds in a stated order ofpreference?

a. Preference Beneficiary Clause

b.Beneficiary Assignment Clause

c.Survivor Assignment Clause

d.Change of Ownership Provision Clause

 

56.Mr. Will Smith aged 45, purchase a paid-up-at-age 65 whole life insurancepolicy on his own life. Mr. Will Smith’s policy can be correctly classified as

a.Continuous Premium Whole Life Policy

b. Limited Payment Policy

c.Modified Premium Policy

d.Single Premium Policy

 

57.ABC and PST both began work on September 1. ABC and PST are both eligible forcoverage under group life insurance policies that their employer provides.

Bothpolicies have 30 da probationary period. ABC’s employer has a contributory planand PST’s employer has a noncontributory plan

Whenwill ABC’s coverage will become effective?

a.When ABC enrolls and signs the payroll deduction authorization from after theeligibility period

b.October 1

c.September 30

d. When ABC enrolls and signs thepayroll deduction authorization form during the eligibility period.

 

58.Louis Philip was the policy owner insured of a $150,000 term life insurancepolicy. The policy annual renewal premium of $500 was due on April 1^steach year. His policy contained a typical 30-day grace period provision Louisdied on April 25^th, without having paid the renewal premium thendue.

Atthe time of his death, Louis had paid a total of $10,000 in premiums to theinsurer

Inthis situation, the amount the insurer would most likely be obligated to pay tothe named beneficiary is,

a. $0

b. $149500

c.$10000

d.$150000

 

59.Which of the following statement given below is/are true in order to form avalid group insurance contract between the group policyholder and the insurer?

a.Exchange legally inadequate consideration

b.They must mutually disagree to the contract’s term

c. Form the contract for a lawfulpurpose

d.Only insurer must have contractual copacity

 

 

 

 

60.Mr. Wrangler aged 55, died when the bus he was travelling in as a passengercrashed into a truck, killing everyone on board.

Atthe time of his death, Mr. Wrangler was insured by  a $225,000 whole life insurance policy with atypical double indemnity accidental benefit rider.

This informationindicates that the insurer will have to pay the designated beneficiary of Mr.Wrangler’s policy, an amount equal to:

a.$0,

b.$450000

c.$225000

d. $675000

 

61.Mrs. Burberry burs a $150,000 term insurance policy on her life. What type of acontract is it?

I.Valued Contract

II.Contract of Indemnity

a. II

b.Both I & II

c. I

d.Neither I nor II

 

62.Mr. Charles Keith’s application indicated Mrs. Clarks as the beneficiary of thepolicy.

 In such a situation the insurable interestrequirement will most likely be fulfilled, if:

a.Mrs. Clarks has an insurable interest in Mr. Keith at the time of the issue ofthe policy

b.Mr. Keith has an insurable interest in Mrs. Clarks all through the life of thepolicy.

c. Mrs. Clarks has an insurable interestin Mr. Keith all through the life of the policy

d.Mr. Keith has an insurable interest in Mrs. Clarks at the time of the issue ofthe policy.

 

 

63.Mr. LMN and Ms. BCD wanted to purchase life insurance policy. So they went tothe life insurance company purchased same policy coverage. Both were of sameage, similar height and none was suffering from any disability or injury at thetime of enrollment.

Insuch case, who will the insurance company charge higher premium rates?

a.cannot say

b.Ms. BCD will be charged Higher premium rate

c. Mr. LMN will be charged Higherpremium rate

d.Both will be charged same premium rate.

 

64.Mrs. Jenny Bonjour wants to insure her Apparel Store as her business faces twokinds of risk – speculative and pure risk.

She caninsure her business having pure risk. By definition a pure risk is one in whichthe possible outcomes

a.Only loss

b.Only gain

c. Only loss or no loss

d.Loss, no loss or gain

 

65.Mr. Van was the policy owner of a $ 130,000 life insurance policy insuring thelife of his wife, Mrs. Heusan. He also named Mr. Marks, his father, as hisprimary beneficiary and his sister, Ms. Spencer, as contingent beneficiary.

WhenMrs. Heusan died, Mr. Van, Mr. Marks and Ms. Spencer had all predeceased her.Therefore the policy proceeds are payable to _____

a.  Mr. Mark’s estate

b. Mrs. Heusan’s estate

c.Ms. Spencer’s estate

d.Mr. Van’s estate

 

 

66.Which of the following statements regarding a general contract is true?

a. Avoidable contract is a contract that does not meet one or more of the legalrequirements to create a valid contract and is never enforceable.

b. A unilateral contract is contract inwhich only one of the parties makes legally enforceable promise when enteringinto the contract.

c. Acontract of adhesion is a contract under which one party provides something ofvalue to another party in exchange for a conditional promise.

d. Analeatory contract is a contract that one party prepares and that the otherparty must accept or reject as a whole, generally without bargaining.

 

67.Mr. LMN went to the Life Insurance Company to purchase a block of policies forhis employees. After collecting the details from LMN, based on the age and sexof the employees , the insurance company calculated the mortality rate.

Insurancecompany found out that group of insured had higher mortality rate and highercost of benefits to the insurer. So the premium rate charged by the insurermust be

a. Higher

b.None of the listed options

c.Lower

d.Proportional to risk

 

68.Which system allows a policy owner to pay the same premium amount annually fora policy in force?

a.Equal Premium System

b. Level Premium System

c.Step Premium System

d.Same Premium System

 

 

 

69. Whichof the following is NOT True regarding the guaranteed insurability benefit?

a.The additional insurance policy would be purchased on specified option datesduring the life of the basic policy.

b. The insured will have to supplyevidence of the insured’s insurability

c.The policy owner has the right to purchase additional insurance of the sametype as the basic life.

d.The additional insurance policy should be purchased for an additional premiumamount.

 

70.Hush puppies own and manage a convenience store. In order to protect theirstore from the risk of fire, they have taken the following measures:

I.Banned smoking in their building

II.Installed smoke detectors and sprinklers in their building.

III.Created a fund from their yearly revenue to help them recoup in case of anyfire casualty

IV.Purchased property insurance

Whichof the techniques can be termed as a measure for self-insurance?

a. Step III

b.Step II

c.Step I

d.Step IV

 

71.Mr. Clarks had purchased an increasing term life insurance policy with facevalue of $10,000. The policy coverage increases by 5% on every policyanniversary.

Howmuch would the policy beneficiary receive if Mr. Clarks expires before thethird policy anniversary?

a.$10500

b.$11500

c.$10000

d. $11000

72. Whichof the following is a death benefit under which the insurer agrees to pay amonthly benefit to a policy owner, if the insured requires constant care for amedical condition?

a. Dread Disease Benefit

b.Terminal Illness Benefit

c.Dread Disease Benefit

d.Accidental Death Benefit

 

73.Mr. Prada has a term life insurance. The policy benefits would be payable, onlyif few conditions are met, which are they?

Selectone or more

a. The policy is in force when Mr. Pradadies.

b.Mr. Prada dies during the policy term

c.The policy is not in force when Mr. Prada dies.

d.Mr. Prada dies after the policy term

 

74.Select TWO among the following options which are not characteristic of afraternal benefit society

 

 

 

 

 

 

 

 

 

75,.An _______ period is the specific amount of time that the insured must bedisabled before becoming eligible to receive policy benefits

a. None of the listed option     b. elimination   c. benefit.    D. disbursement.