Which type of whole life insurance policy will best be able to give Arabella lifetime protection without straining her retirement income?
Single-premium whole life policy
Limited-payment whole life policy
Continuous-premium whole life policy - ANSWER B
Financial needs life insurance can mee...
LOMA 281
Module 2
CORRECT 100%
Which type of whole life insurance policy will best be able to give Arabella lifetime protection without
straining her retirement income?
Single-premium whole life policy
Limited-payment whole life policy
Continuous-premium whole life policy - ANSWER B
Financial needs life insurance can meet - ANSWER - paying household expenses
- covering outstanding debts
- Paying outstanding medical, hospital, and funeral expenses,
- providing financial support for the family
- funding a child's education
Term Life Insurance - ANSWER Life insurance that provides a death benefit only if the insured dies during
the period specified in the policy.
, level term life insurance - ANSWER Term life insurance that provides a policy benefit that remains the
same over the term of the policy.
Decreasing Term Life Insurance - ANSWER Term life insurance that provides a policy benefit that
decreases in amount over the term of coverage
Mortgage Insurance - ANSWER A plan of decreasing term insurance designed to provide a benefit
amount that corresponds to the decreasing amount owed on a mortgage loan.
When Michael bought a house, he obtained a mortgage loan from the Archway Bank. He also bought a
mortgage insurance policy from Able Life.
Is Archway Bank a party to Michael's mortgage insurance contract with Able Life?
a. yes
b. no - ANSWER B.
A 5-year term life insurance policy that provides a $100,000 death benefit if the insured dies at any time
during the 5-year policy term.
a. increasing term insurance
b. level term insurance
c. decreasing term insurance - ANSWER B.
A 5-year term life insurance policy that pays a $100,000 benefit during the policy's first year, a $105,000
benefit during the second year, and so on. The benefit during the fifth year is $120,000.
Increasing term insurance
Level term insurance
Decreasing term insurance
, a. increasing term insurance
b. level term insurance
c. decreasing term insurance - ANSWER A.
Return of Premium (ROP) - ANSWER A form of term life insurance that provides a death benefit if the
insured dies during the term of coverage and promises a return of premiums if the insured does not die
during the term of coverage.
Renewable Term Insurance - ANSWER Term life insurance that gives the policyowner the option to
continue the policy's coverage at the end of the specified term without presenting evidence of
insurability.
Evidence of insurability - ANSWER Proof that a given person is an insurable risk.
Suppose Carter buys a renewable term insurance policy. Do you think he can renew the policy as many
times as he wants?
a. Yes
b. No
c. Can't tell. Need more information. - ANSWER B.
Suppose Blythe renews her $100,000 20-year renewable policy at the end of the policy term. Do you
think the amount of coverage is automatically cut in half to $50,000?
a. Yes
b. No
c. Can't tell. Need more information. - ANSWER B.
Attained Age - ANSWER The age an insured has reached (attained) on a specified date.
Convertible Term Insurance - ANSWER Term life insurance that gives the policyowner the right to convert
the term policy to a cash value life insurance policy without providing evidence of insurability.
, Conversion Period - ANSWER The specified period of time following policy issue during which the owner
of a convertible term life insurance policy can convert the coverage to cash value life insurance.
Assume Blythe Owens purchased a convertible term insurance policy instead of a renewable term policy.
During the conversion period, Blythe's health declined to the point where she would no longer be
considered insurable. Can Blythe convert her term policy to a cash value policy?
a. Yes
b. No
c. Can't tell. Need more information. - ANSWER A.
attained age conversion - ANSWER A conversion of a term life insurance policy to a cash value life
insurance policy in which the premium rate for the cash value policy is based on the insured's age at the
time the policy is converted. Contrast with original age conversion.
Original age conversion - ANSWER A conversion of a term life insurance policy to a cash value life
insurance policy in which the premium rate for the cash value policy is based on the insured's age when
the original term life insurance policy was issued. Contrast with attained age conversion.
antiselection - ANSWER
When a term life insurance policy is RENEWED, the amount of coverage under the policy can ...
a. increase
b. decrease
c. remain the same - ANSWER B & C
When a term life insurance policy is RENEWED, the coverage period can ...
a. increase
b. decrease
c. remain the same - ANSWER B & C
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