Question 1

The sale of a life insurance contract to a third party for a value in excess of the contract's cash surrender value, but less than the contract's death benefit is a:&#10;A) Accelerated Benefit Rider.&#10;B) Guaranteed purchase option rider.&#10;C) Life Settlement.&#10;D) Viatical Settlement.

Accepted Answer

The sale of a life insurance contract to a third party for a value in excess of the contract's cash surrender value but less than the contract's death benefit is known as a life settlement. It allows the policy owner to receive a lump sum payment in exchange for transferring the ownership rights of the policy to the third party buyer. The buyer then assumes responsibility for paying the premiums and is entitled to receive the full death benefit upon the insured's death. Life settlements are typically offered to individuals who are at least 65 years old and have a life expectancy of no more than 15 years.

Question 2

&#34;Interest Only&#34; is a:&#10;A) Advanced Death Benefit.&#10;B) Fixed Amount.&#10;C) Nonforfeiture Option.&#10;D) Settlement Option.

Accepted Answer

"Interest Only" is a type of settlement option that allows the policy beneficiaries to leave the death benefit with the insurer and receive only the interest earned on this amount over time.

Question 3

How many different options are there available for the payment of life insurance proceeds for a death claim to the designated beneficiary?&#10;A) Three.&#10;B) Five.&#10;C) Seven.&#10;D) Eleven.

Accepted Answer

There are five different options for the payment of life insurance proceeds for a death claim to the designated beneficiary. Those options are lump sum, interest only, fixed period, fixed amount, and life income.

Question 4

Universal and variable universal life policies have two types of disability riders. The riders are:&#10;A) Waiver of mortality charges and waiver of premium.&#10;B) Waiver of mortality expenses and waiver of scheduled premium.&#10;C) Waiver of expense charges and waiver of mortality premium.&#10;D) Waiver of scheduled charges and waiver of scheduled premium.

Accepted Answer

The answer of Universal and variable universal life policies have...

Question 5

Which of the following are the most basic forms of health insurance?
I. HMO
II. Hospital expense
III. PPO
IV. Physician's expense

A) I, II
B) II, III
C) II, IV
D) I, III

Accepted Answer

Hospital expense and Physician's expense insurance are among the most basic forms of health insurance, covering hospital stays and medical services by doctors, respectively.

Question 6

Health Flexible Spending Arrangements are funded by:&#10;A) Employee salary reductions only.&#10;B) Employer contributions only.&#10;C) Employee salary reductions or employer contribution, but not both.&#10;D) Employee salary reductions, employer contributions, or a combination of both.

Accepted Answer

Health Flexible Spending Arrangements can be funded by employee salary reductions, employer contributions, or a combination of both. This means that both the employee and the employer can contribute to the FSA, making it a flexible benefit for both parties.

Question 7

Which of the following is not a nonforfeiture option?&#10;A) Cash Surrender.&#10;B) Extended loan.&#10;C) Extended Term.&#10;D) Reduced Paid-up.

Accepted Answer

Nonforfeiture options are benefits in a life insurance policy that prevent the policy from being forfeited by the policyholder. The correct nonforfeiture options include Cash Surrender, Extended Term, and Reduced Paid-up. An "Extended loan" is not a nonforfeiture option; it refers to a policy loan that extends the cash value of a policy but does not directly relate to the nonforfeiture benefits designed to provide value to a policyholder who allows a policy to lapse or chooses to terminate the policy.

Deck 8: Insurance Planning Basics, Part I