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AFE – Accredited Financial Examiner

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Showing 4–6 of 15 questions

Question 4

Loans on policies are valuable to the policyholders, and insurers encourage them to protect this feature by saving it for emergency use. There are two basic types of loans. In case of conventional premium loans:

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    The insured makes a request for a loan. Since an emergency may very well have triggered this request, most companies will accept any form of notice such as a telephone call
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    The maximum loan amount is frequently limited to the cash value of the policy plus the value of paid-up additions
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    an insured has indicated in the insurance application that the policy is not to lapse for nonpayment of premiums so long as there is loan value adequate to cover unpaid premiums
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    Loan can be created to pay policy loan interest if the policyholder-borrower does not pay it in cash
Question 5

Experience refund provisions of group insurance contracts are most often concerned with the manner of distributing any profits between the insurer and the insured group. The agreements usually contain provisions specifying how losses will affect the profit allocations for the insured group. In such situation:

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    Losses may or may not be charged back
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    Losses can never be charged back
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    Gains are distributed according to the agreement between both the parties
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    If charged back, losses for each group are usually accumulated for a certain number of years
Question 6

When dividends are left to accumulate at interest, the insurer typically sends a notice to each policyholder showing the amount accumulated at the end of the policy year. The notice also shows the dividend credited and interest earned for that policy year. The dividend left at interest may later be received by or credited to the policyholder in several ways. Which of the following is/are out of those ways?

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    As a cash withdrawal.
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    As premium applied to the purchase by the policyholder of paid-up insurance.
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    As marketable securities
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    As premium to pay up or mature the policy.