AD Banker Chapter Three

A married couple purchases a $250,000 Joint Life Policy. When the older of the two dies, what is the amount payable to the survivor?

$250,000- A Joint Life Policy insures two lives. It is the order of death that is significant in a Joint Life Policy. The entire death benefit is paid at the death of the first insured, regardless of age.

Which of the following term life insurance policies would have the lowest 1st-year annual premium, all other factors being equal?

1-year: The 1-year term life insurance policy would have the lowest first-year premium of the choices provided. In essence, one year of coverage is less risky to the insurer than being locked in to more years.

A permanent life policy issued 30 years ago would endow at what age?

100

C has a $100,000 traditional whole life insurance policy with a $30,000 cash surrender value. What is the maximum loan C can obtain from the insurer using the policy as collateral for the loan?

30,000$

If Mary is 30 years old and buys a 15 Pay Life policy, how old will Mary be when she stops paying premiums?

45- 15 Pay means that the policy is guaranteed to be paid up in 15 years. The policy still endows at age 100.

The waiver of premium rider normally expires at age:

65

How much of a cash value policy loan will an insurer normally grant with a variable type policy?

75-90%

What type of policy has an endowment date, a face amount, and cash value?

A permanent life insurance policy

How is a life settlement transaction similar to a viatical settlement transaction?

A third party buys a life insurance policy for less than its face amount

All of the following are true regarding the accelerated death benefit rider, except: A-Accelerated death benefits have to be repaid if the insured's health improves B-These benefits could be provided based on an insured qualifying as catastrophic illness, such as the need for an organ transplant C-These benefits do not include disability income D-These benefits could be provided based on an insured qualifying for long-term care, if unable to perform activities of daily living

Accelerated death benefits have to be repaid if the insured's health improves

Which of the following riders is used to increase the death benefit if death is the result of an unintended fatal injury, paying a multiple of the face amount?

Accidental Death

An indeterminate premium whole life policy has _______ premiums.

Adjustable

Amounts paid out under the accelerated benefits rider:

Are deducted from the policy's death benefit

The cash value accumulation in a life insurance policy:

Can be used for loans or later as retirement income

What happens to the cash values in a whole life policy if an insured is on claim with a waiver of premium rider?

Cash value and dividends continue as if normal premium payments have been made

The type of policy that can be changed from one that does not accumulate cash values to one that does is a:

Convertible term policy

If a consumer would like to make sure that survivors are left with a paid-off car, boat, and home, at an affordable price, what type of policy should he or she consider acquiring at the time each one of those items were purchased?

Credit life insurance

Which of the following term life insurance policies cannot be renewed?

Decreasing

Any extra premium charged for the waiver of premium rider:

Does not apply to the policy's cash value

What happens to the overall annual premium cost once a term rider expires?

It decreases

What happens to the overall policy premium when most riders on a life insurance policy expire?

It goes down

All of the following regarding term life insurance renewability is correct, except: A-Renewable term costs more than non-renewable term B-No evidence of insurability is required C-Premiums increase at the beginning of each renewal period D-It is similar to the re-entry provision found in some term policies

It is similar to the re-entry provision found in some term policies

What is the name of the life insurance policy that is written on the life of a minor, is owned and paid for initially by a parent, and whose face amount increases to 5 times its original amount at age 21?

Jumping Juvenile

Describe a Straight Whole Life Policy.

Level guaranteed premium and face value for the life of the insured

M purchased a traditional permanent life insurance plan many years ago. What happens when he attains age 100?

M gets a check for the face amount of the policy

Which of the following uses convertible term to help lower premiums initially and then allows you the right to purchase permanent insurance?

Modified whole life-This modifies a whole life policy to use term at the beginning to lower premiums and then converts to whole life later. The purpose is to make whole life affordable in the early years.

Which of the following is not a true characteristic of permanent protection Whole Life? A) The insurer bears all risk B) Premiums are payable to age 100 in older policies, and to age 121 in newer policies C) Premiums are flexible D) Death benefit typically remains level

Premiums are flexible

Sara applies for a $100,000 30 year level term life insurance policy. The producer quoted her a price of $750 annually if issued as applied for. She wants to make sure that the policy premiums are taken care of just in case she has a total disability. The policy is issued but the premium is now $825. What is the most likely reason why the overall premium increased?

Sara now has added a waiver of premium rider, which requires an additional premium payment

Which Whole Life policy is designed to provide a substantial immediate cash value?

Single Premium Whole Life Policy

Who pays all future premiums after the Viatical Settlement?

The Viatical Company

Variable Whole Life and Variable Universal Life are similar, except for: A-The licensing and registration required in order to sell it B-The guaranteed death benefit C-The offering document required to presented to the client prior to purchase D-The investment risk borne by the policyowner

The guaranteed death benefit. Since all premiums are credited to a separate account, there is no guaranteed minimum death benefit in a Variable Universal Life policy.

All of the following statements are true of a juvenile policy, except: A-The premiums remain level B-The death benefit can increase at a specified age usually 21 or 25 without proof of insurability C-The death benefit increase is typically 5 times the original issue amount D-The insured is the premium payor

The insured is the premium payor

The cash value of a variable life policy is determined by what?

The investment experience of the separate account

Universal Life and Variable Universal Life share all of the following characteristics, except: A-The investment risk B-Flexible premiums C-Policy loans, surrenders, and partial withdrawals are permitted D-Adjustable death benefit options

The investment risk

All of the following are true regarding re-entry term, except: A-The new policy's premium will be based on the premium class approved by the company B-The new policy's premiums will be based on the insured's attained age C-The new policy's premium will be based on the rates in effect by the insurer at the time of re-entry D-The new policy's premium will be based on the insured's original age

The new policy's premium will be based on the insured's original age. It would actually be based on the attained age.

A mother with a teenage son purchases a life policy on his life. The policy includes an optional rider called the Payor Benefit. What will happen to the policy if the mother dies or is disabled before her son reaches age of majority?

The premiums on the son's policy would be waived until the son reaches a specified age

What is the primary incentive for a third party to acquire a life insurance policy from a terminally ill insured?

To profit at the time of claim

Flexible premium adjustable life is another name for:

Universal Life

Generally, Universal Life has how many death benefit options to choose from?

Universal Life allows you to choose from two death benefit options, Option A or Option B.

How would a term policy normally be used to pay off a mortgage upon death?

Using the death proceeds after the insured has died