25 multiple questions in health and life insurance
Question 1 (1 point)
A human life may have an economic value that can logically serve as the basis for life insurance in which of the following situations?
I. The individual is age 23 and unmarried and has no children.
II. The individual has only one dependent, an aged father.
III. The individual has no dependents but makes sizeable periodic gifts to a favorite charity.
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Question 2 (1 point)
Which of the following is an element of the technically accurate method of calculating the economic value of an individual's life?
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Question 3 (1 point)
Which of the following statements about charitable giving is(are) true?
I. Charitable gifts can be used to minimize estate taxes.
II. A donor can give an existing life insurance policy to a charity, but the charity is not allowed to pay premiums.
III. A donor can name the charity as the beneficiary of an existing life insurance contract.
IV. Life insurance to fund family needs can free assets and other property to be given to the charity.
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Question 4 (1 point)
Which of the following describe(s) a practical difficulty of insuring an individual for the full amount of his or her economic human life value?
I. The economic value of the human life is usually far less than the minimum amount of insurance a typical life insurance company will issue.
II. The economic value of the human life is typically greatest during the years when the individual's ability to pay premiums is low.
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Question 5 (1 point)
The ongoing income needs of the typical family following the death of the breadwinner include all of the following, EXCEPT:
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Question 6 (1 point)
Which of the following statements concerning the economic value of the typical human life is (are) correct?
I. It tends to diminish with the passage of time.
II. It is at its peak when the individual's annual earnings reach their peak.
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Question 7 (1 point)
All of the following statements about trusts are true, EXCEPT:
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Question 8 (1 point)
Life insurance is primarily concerned with which of the following aspects of the human life value?
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Question 9 (1 point)
All of the following are steps in the five-step process of estimating a person's economic value for purposes of life insurance, EXCEPT:
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Question 10 (1 point)
All of the following statements concerning the cash surrender of a life insurance policy are correct, EXCEPT:
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Question 11 (1 point)
A client has paid annual premiums of $2,000 for 10 years on a $100,000 whole life policy. The client took a loan of $10,000 from the policy, and the net cash value is $12,000. If the client surrenders the policy for cash, what amount of taxable income must the client report?
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Question 12 (1 point)
If a beneficiary of a life policy has decided that the death benefit should be distributed under one of the settlement options, which of the following options will result in distributions containing the most taxable income?
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Question 13 (1 point)
In which of the following circumstances will the death benefit from a life insurance policy be included in the decedent-insured's gross estate?
I. The insured's estate is named as the beneficiary of the policy.
II. The insured sold the policy to an investor within 3 years of death.
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Question 14 (1 point)
All of the following statements concerning a level-premium whole life insurance policy that is a MEC are correct, EXCEPT:
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Question 15 (1 point)
Which of the following statements concerning the 1980 or 2001 CSO mortality tables is/are correct?
I. The table shows the same mortality rates for men as for women, age for age.
II. Most large life insurance companies base their premium rates on the mortality rates in this table.
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Question 16 (1 point)
In a term-to-age-65 policy issued under the level premium plan of life insurance, which of the following statements is(are) correct?
I. The sum of the excesses in the premiums paid in the early policy years is equal to the sum of the deficiencies in the premiums paid in the later policy years.
II. The reserve under the policy rises for a time and then falls back to zero at age 65.
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Question 17 (1 point)
Which of the following statements concerning the yearly renewable term plan of life insurance is(are) correct?
I. Insurers typically place a limit on the period during which YRT coverage may be renewed.
II. An insured who elects, after having renewed his or her YRT coverage for many years, to discontinue the coverage will have no cash values available under the policy at the time of discontinuance.
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Question 18 (1 point)
All of the following statements concerning the proper estimation by an American insurance company of the probabilities of death among its insureds are correct, EXCEPT:
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Question 19 (1 point)
According to the theory of probability, which of the following statements when applied to a normal deck of 52 playing cards is/are correct?
I. The probability of drawing a club is 13/52.
II. The probability of drawing a card that is NOT an ace is 48/52.
III. The probability of drawing a card that is BOTH a club and an ace is 1/4 x 1/13.
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Question 20 (1 point)
All of the following statements concerning life expectancy are correct, EXCEPT:
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Question 21 (1 point)
Which of the following statements correctly describe(s) the application of the law of large numbers to the flipping of a coin?
I. As the number of times a coin is flipped is increased, the number of times the result will be heads also increases.
II. As the number of times a coin is flipped is increased, the proportion of times the result will be heads will move steadily toward 50%.
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Question 22 (1 point)
Graduation techniques are statistical methods used to accomplish which of the following?
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Question 23 (1 point)
The mortality rates in a typical mortality table in use today are based on which of the following?
I. The experience of more than one year
II. The experience of more than one insurance company
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Question 24 (1 point)
Assume that a mortality table shows 1 million persons alive at age zero, 999,000 alive at age one, and 998,500 alive at age two. In this case, all of the following statements are correct, EXCEPT:
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Question 25 (1 point)
The 1980 CET mortality table is characterized by which of the following?
I. It is designed for use with extended term insurance.
II. It is frequently used to value pension benefits.
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