Kentucky Life Insurance Exam Questions With All Correct Answers
Elements of a Contract - CORRECT ANSWERS Competent parties, legal purpose, offer and acceptance, consideration Waiver - CORRECT ANSWERS Voluntary giving up of a known right or privilege, can be express or implied Estoppel - CORRECT ANSWERS A person is prohibited by virtue of his own past actions from claiming a right that would work to the detriment of another who relied on the past conduct Aleatory Contract - CORRECT ANSWERS a contract where the values exchanged may not be equal but depend on an uncertain event Contracts of Adhesion - CORRECT ANSWERS One-sided in regards to preparation (prepared by the insurer) Contract of Utmost Good Faith - CORRECT ANSWERS Both parties bargain in good faith when forming and entering into the contract. The two parties rely upon the statements and promises of the other and assume no attempt to conceal or deceive has been made.Executory Contract - CORRECT ANSWERS A contract that has not yet been fully performed.Mortality Rate - CORRECT ANSWERS Determined by dividing the average number of people who will die each year at each age by the entire population of people that age (1980 CSO table) Functions of Life Insurance - CORRECT ANSWERS Create an immediate estate, requires no management or physical upkeep, paid in installments, can be used as collateral Final Expenses - CORRECT ANSWERS Medical and funeral expenses, outstanding debts Total Needs Approach - CORRECT ANSWE RS Totaling the amount required to pay for current and future expenses Living Benefits of Life Insurance - CORRECT ANSWERS Loan value (can be used as collateral,) retirement benefits Human Life Value - CORRECT ANSWERS The monetary value of an individual's life Tax Advantages of Life Insurance - CORRECT ANSWERS Cash value earnings accumulate tax free, proceeds at death pass income tax free
- Types of Life Insurance - CORRECT ANSWERS Permanent, Term,
Industrial, Group Permanent Life Insurance - CORRECT ANSWERS Accumulates cash value, insurance protection decreases as cash value increases Term Life Insurance - CORRECT ANSWERS Accumulates no cash value, only provides death benefits 1 / 3
Kentucky Life Insurance Exam Questions With All Correct Answers
Whole Life Insurance - CORRECT ANSWERS A permanent policy for which you pay a specified premium each year for the rest of your life, cash value accumulates, endows at age 100 Limited-Pay Life Policies - CORRECT ANSWERS Premiums are paid to a specified age or for a specified number of years and then stop. Protection remains for the rest of the insured's life.Endowment Policies - CORRECT ANSWERS As of 1984, no policy can endow before age 95 because the CV and DB would be taxed Single Premium Whole Life - CORRECT ANSWERS Policy is completely paid up after one premium, policyholder pays less than if premiums stretched out over several years
Modified Endowment Contract (MEC) - CORRECT ANSWERS TAMRA: All
single premium policies, any policy that does not satisfy the 7-pay test // money taken from the policy is taxed as ordinary income // if policy owner is younger than 59 1/2 and not disabled 10% penalty is assigned Joint Life Policies - CORRECT ANSWERS First-to-die, contract comes to an end at the first death, no further insurance protection for the other person or persons covered by the policy Survivorship Policies - CORRECT ANSWERS Second-to-die, covers 2 lives and guarantees payment only when second insured dies Adjustable Life Policies - CORRECT ANSWERS Policyholder can adjust face amount of policy, amount/frequency of premium payments, period of insurance protection Universal Life Insurance - CORRECT ANSWERS Flexible premium, adjustable death benefits, accumulates cash values: earlier models have front-end load, later models have back end load. Insurance costs are debited and guaranteed and excess interest are credited.Universal Life Death Benefit Option A - CORRECT ANSWERS Level death benefit throughout life of policy (can be increased with proof of insurability, can also be reduced.) Universal Life Death Benefit Option B - CORRECT ANSWERS Increasing death benefit made up of the policy face value plus cash value account Risk Corridor - CORRECT ANSWERS The minimum separation between the cash value and death benefit.Partial Withdrawal - CORRECT ANSWERS Permanent deduction of the cash value and cannot be reversed, no interest credited or paid, repayment treated as premium payment Cash Value of ULP $0 - CORRECT ANSWERS Contract expires, policy goes into grace period, 2 / 3
Kentucky Life Insurance Exam Questions With All Correct Answers
Variable Life - CORRECT ANSWERS Securities based, whole life, NASD registration required, separate account holds assets, fluctuating death benefit but never below a guaranteed minimum (face amount of policy,) but no guaranteed CV, traditionally a fixed premium Variable Universal Life - CORRECT ANSWERS Flexible premiums, choice of death benefits (A or B,) NASD registration required, separate account holds assets, fluctuating death benefit but never below a guaranteed minimum (face amount of policy,) but no guaranteed CV Indeterminate Premium Policies - CORRECT ANSWERS Low current premium for first 3 years, premium is adjusted at end of 3 year duration based on investment return, mortality, and expenses, which can result in increase or decrease of premium (within a stated maximum) Level Term Insurance - CORRECT ANSWERS Term insurance where the face value of policy remains the same from the date the policy is issued until the date the policy expires.Decreasing Term - CORRECT ANSWERS A type of life insurance that features a level premium and a death benefit that decreases each year over the duration of the policy.Convertible Term Insurance - CORRECT ANSWERS Term to Permanent, no requirement of proof of insurability, most people convert at attained age to avoid paying back premiums, time-limit varies by policy Renewable Term - CORRECT ANSWERS Insurance which can, at the election of the policyowner, be renewed at the end of a term attained age without evidence of insurability within a time limit (commonly 30 days) Interim Term - CORRECT ANSWERS Interim term coverage provides instantaneous coverage and is intended for people who plan on purchasing permanent life insurance coverage within one year, no proof of insurability, at attained age, built in time limit Family Income Policies - CORRECT ANSWERS Income is paid upon death of family breadwinner, combination of permanent and decreasing term coverage, children are added without additional premium and can convert at specified age without proof of insurability. Benefit duration lasts not starting from death but from when policy was purchased.Family Maintenance Policies - CORRECT ANSWERS Combination of level term and permanent policies, income provided starting from insured's death Jumping Juvenile Policy - CORRECT ANSWERS Purchased by parent, the child reaches age 21, coverage increases to five times the face amount, premiums remain the same and no evidence of insurability is required.
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