Question

5.) All of the following statements concerning variable life insurance are correct EXCEPT

(a)If the variable universal life policy investment experience is weak, the death benefit amount may be reduced to zero.

(b)Variable life has a fixed premium and fluctuating death benefit and cash values.

(c)Variable life policies must be regulated by the Securities and Exchange Commission (SEC).

(d)The owner of a variable universal life policy has the option to invest in a variety of investments.

7.) All of the following statements concerning disability income insurance are correct EXCEPT:

(a)Premiums for disability income insurance coverage are a function of the insured’s health, gender, age, and the level of income benefits provided by the policy.

(b)To qualify for disability income, one must become disabled while the policy is in force and remain so until the elimination (exclusion) period has ended.

(c)A policy that integrates with Social Security will reduce payable benefits by the amount of Social Security the disabled person is eligible to receive.

(d)The Social Security program requires the disabled person to wait 1 month before receiving benefits.

8.) Which of the following statements concerning the characteristics of disability income insurance is correct?

(a)During the elimination period, disability income benefits are paid.

(b)When disability income benefits are being paid the insured still must continue making the policy premium payments.

(c)The residual benefits clause preserves the purchasing power of the insured’s disability income benefits.

(d)In a cost of living rider, an adjustment is made for each year of benefits paid to the insured and is computed by using the same rate of change as, say, the Consumer Price Index.

9.) Which of the following insurance payment benefits would be reported as income and therefore subject to Federal income tax?

(a)The death benefit paid to the spouse after the death of her husband.

(b)When the insured dies and a MEC pays a death benefit.

(c)Disability benefits paid to a disabled worker if premiums for the policy were paid by the employer.

(d)Disability benefits paid to a disabled worker if premiums for the policy were paid by the employee with after tax dollars.

Answer 1

5. Answer is c)Variable life policies must be regulated by the Securities and Exchange Commission (SEC).

7. Answer is (d)The Social Security program requires the disabled person to wait 1 month before receiving benefits.

8. Answer is (c)The residual benefits clause preserves the purchasing power of the insured’s disability income benefits.

9. Answer is a)The death benefit paid to the spouse after the death of her husband.