1. All the following statements concerning the findings of behavioral psychologists on the subject of risk tolerance are correct EXCEPT:
A. People are more likely to be risk averse if the major impact of a loss would fall on them rather than on strangers.
B. People tend to overestimate low-probability risks and underestimate higher probability risks.
C. Most people have a greater fear of unfamiliar risks than familiar risks.
D. Most people are more risk tolerant than they are risk averse.
2. Every insurance contract has a set of declarations. What primary declarations do typical insurance policies include?
3. All the following statements concerning variable annuity accumulation units are correct EXCEPT:
A. During the accumulation period, premiums are applied to purchase accumulation units.
B. Capital appreciation is recognized by allocating additional accumulation units to participants.
C. At the beginning of the liquidation period, the accumulation units are exchanged for annuity units.
D. Dividends are usually applied to the purchase of additional accumulation units.
4. List the nonforfeiture options in a whole life insurance policy.
5. All the following statements concerning the grace period clause in a life insurance policy are correct EXCEPT:
A. The grace period is a standard provision that is required by law to be in the policy.
B. If the insured dies during the grace period, the insurer may deduct one month's premium from the death benefit.
C. The standard length of the grace period is 30 or 31 days from the due date for payment of the premium.
D. If the insured survives the grace period, the insurer may deduct one month's premium from the cash value.
6. All the following statements concerning the net payment cost index approach to measuring life insurance costs are correct EXCEPT:
A. Each annual premium is accumulated at the assumed interest rate until the end of the time period.
B. The cash value is subtracted from the amount of accumulated premiums at the end of the time period.
C. Each annual dividend is accumulated at the assumed interest rate until the end of the time period.
D. Accumulated dividends are subtracted from the amount of accumulated premiums at the end of the time period.