3 - Life Insurance Policies - Provisions, Options and Riders (Exam 1)

Which statement about a whole life policy is correct? -Beneficiary may be changed only with the consent of the premium payor -Death benefit can usually be adjusted -Cash value may be borrowed against -Premiums are flexible

-Cash value may be borrowed against

What type of life policy covers two people and pays upon the death of the last insured? -Shared -Survivorship -Adjustable -Joint

-Survivorship

A variable insurance policy: -guarantees a minimum rate of return -does not allow the policyowner to assume the investment risk -does not guarantee a return on its investment accounts -does not guarantee an assignment provision

does not guarantee a return on its investment accounts

Which is true concerning a Variable Universal Life policy? -Policyowner controls where the investment will go and selects the amount of the premium payment -Policyowner has no say where the investment will go but can choose the premium mode -The investment vehicle for this type of policy is held in the insurer's general portfolio -The death benefit can vary but the policyowner has no say in the premium amount paid

-Policyowner controls where the investment will go and selects the amount of the premium payment

Which of these characteristics is consistent with a Straight Life policy? -Owner can adjust both premium and death benefit -Premiums are lower for the first five years, increase the sixth year, then levels off for the remaining length of the contract -Owner has the option of converting to term insurance -Premiums are payable for as long as there is insurance coverage in force

-Premiums are payable for as long as there is insurance coverage in force

How does a typical Variable Life Policy investment account grow? -Tied to price of gold -Through mutual funds, stocks, bonds -Based on returns from insurer's general account -Tied to Treasury Bills

-Through mutual funds, stocks, bonds

Additional coverage can be added to a Whole Life policy by adding a(n) -payor rider -accelerated benefit rider -decreasing term rider -automatic premium loan rider

-decreasing term rider

When is the face amount paid under a Joint Life and Survivor policy? -when policy reaches maturation -upon death of the first insured -upon death of the last insured -when one of the insureds becomes disabled and no longer able to make premium payments

-upon death of the last insured

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time? -Modified whole life -20-year paid up policy -Endowment -Decreasing term

-Decreasing term

Which statement is correct regarding the premium payment schedule for whole life policies? -Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured -Premiums are payable for a set period/ coverage expires at that point -Premiums are payable until age 65/ coverage lasts a lifetime -A single premium is paid at time of application/ coverage lasts until retirement

-Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured

S is covered by a whole life policy. Which insurance product can cover his children? -Assignment provision -Payor benefit -Accelerated benefit rider -Child term rider

-Child term rider

A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as -Adjustable Life -Graded-Premium Life -Variable Life -Modified Whole Life

-Variable Life

Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options? -Modified Whole Life -Variable Life -Universal Life -Adjustable Life

-Variable Life

Which type of life policy contains a monthly mortality charge as well as self-directed investment choices? -Joint Life -Adjustable Life -Variable Universal Life -Universal Life

-Variable Universal Life

A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? -Straight life accumulates faster than Limited-pay Life -20-Pay Life accumulates cash value faster than Straight Life -Cash value accumulation of both 20-Pay Life and Straight Life depend on the insurer's financial rating -20-Pay Life and Straight Life accumulate cash value at the same rate

-20-Pay Life accumulates cash value faster than Straight Life