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11.A "stock" life insurance company is owned by

a.its policyholders.

b.its shareholders.

c.its managers.

d.both a and b above.

 

13.Life insurance companies tend to be larger than casualty insurance companies because of

a.their special income tax exclusions.

b.the characteristics of their term policies.

c.the inability to accumulate policyholders.

d.the long-term, accumulative nature of whole life policies.

 

14.Which contract provision below is NOT likely to be associated with a term life policy?

a.loan provision

b.participating

c.convertible

d.renewable

 

15.A life insurance company needs more liquidity when selling a high proportion of:

a.whole life policies.

b.annuities.

c.thirty-year term policies.

d.one-year renewable term policies.

 

16.A person who saves money for the future by buying a whole life policy

a.probably earns a rate of return on cash values greater than in an equivalent universal life policy.

b.pays the same premium for the same amount of term coverage.

c.is able to accumulate tax-free interest earnings on cash values.

d.buys more insurance for a given premium compared to term.

 

17.Which one of the following economic conditions is best suited for the sale of whole life contracts?

a.moderate inflation (5%) and high economic growth (6%)

b.high inflation (10%) and cyclical instability

c.low inflation (3%) with stable economic growth (4%)

d.none of the above.

 

18.Which one of the following statements about universal life insurance is not true?

a.Cash contributions, net of term premiums, are invested at market rates.

b.The policyholder may vary the level of insurance coverage.

c.The policy does not qualify for the special federal tax exclusion of income built up inside the contract.

d.The amount of policyholder contribution each year is the difference between the contributions and the price of a one-year term policy.

 

19.The major investment area of life insurance companies is                 , while casualty insurance companies hold more of their investments in                  .

a.corporate stock; corporate stock

b.corporate stock; government securities

c.corporate bonds; municipal bonds

d.mortgages, municipal bonds

 

20.Which one of the following combinations of pension terms offers the greatest protection for the future retiree?

a.under funded, vested, uninsured

b.insured, fully funded, vested

c.unfunded, private, company managed

d.trustee managed, under funded, and vested

 

 

 

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