Question: In the United States, what percentage of property insurance holders have read their policy?
Answer: 50%
Question: Order the steps for calculating annual life insurance premiums.
Answer: Step 1. Look up the age of the insured (for females, subtract 3 years) and the type of insurance in Table 20.1. This gives the premium cost per $1,000.
Step 2. Divide the amount of coverage by $1,000 and multiply the answer by the premium cost per $1,000.
Question: Which insurance policy provides permanent coverage providing the policyholder pays the same premium until death?
Answer: Straight-Life Insurance:
Provides permanent protection rather than the temporary protection provided by term insurance. The insured pays the same premium each year or until death. The premium for straight-life is higher because it provides both protection and a built-in cash savingings feature.
Question: Steve would like to purchase a $1,000,000 straight-life insurance policy. He is 21-Years old at the time the policy is set up. What will be his annual premiums?
Answer: $1,000,000 / $1000 = $1,000
$1,000 x 6.13 = $6,130
NOTE: 6.13 is the Straight-Life Table Factor
Question: Steve would like to purchase a $1,000,000 20-payment life insurance policy. He is 21-years old at the time the policy is set up. What will be his annual premiums?
Answer: $1,000,000 / $1,000=
$1,000
$1,000 x 8.61 = $8,610
NOTE: 8.61 is the 20-Year payment table factor
Question: Steve would like to purchase a $1,000,000 20-year endowment policy. He is 21-Years old at the time the policy is set up. What will be his annual premium?
Answer: $1,000,000 / $1,000=
$1,000
$1,000 x 14.35 = $14,350
NOTE: 14.35 is the 20 year endowment policy table factor
Question: True or False: Universal, like whole life, has stable or fixed premiums.
Answer:
Question: Cash value, reduced paid-up insurance, and extended term insurance are examples of:
Answer: Non-forfeiture values
Question: Match the term to the definition;
Answer: Beneficiary: Person that will receive the insurance proceeds
Face Amount: the stated amount of the policy
Insurer: the company selling the insurance policy
Policyholder: the person receiving the coverage
Premium: the cost of the policy paid in periodic payments.
Question: Which premium payment frequently would carry the highest cost?
Answer: Monthly; the more frequent the payment, the higher the processing cost