Chapter 2 Quiz

Which of the following best describes annually renewable term insurance? 1 It provides an annually increasing death benefit. 2 Neither the premium nor the death benefit is affected by the insured's age. 3 It requires proof of insurability at each renewal. 4 It is level term insurance.

It is level term insurance. Reasoning: Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost.

The death protection component of Universal Life Insurance is always 1 Decreasing Term 2 Annually Renewable Term 3 Whole Life 4 Adjustable Life

Annually Renewable Term Reasoning: A universal policy has two components: an insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.

A Universal Life Insurance policy is best described as a/an 1 Flexible Premium Variable Life policy. 2 Variable Life with a cash value account. 3 Whole Life policy with two premiums: target and minimum. 4 Annually Renewable Term policy with a cash value account.

Annually Renewable Term policy with a cash value account. Reasoning: A universal policy has two components: an insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.

What type of premium do both Universal Life and Variable Universal Life policies have? 1 Flexible 2 Level fixed 3 Increasing 4 Decreasing

Flexible Reasoning: Variable universal life, like universal life itself, has a flexible premium that can be increased or decreased as the policyowner chooses, as long as there is enough value in the policy to fund the death benefit.

Which of the following is NOT true regarding the annuitant? 1 The annuitant's life expectancy is taken into consideration for the annuity. 2 The annuitant must be a natural person. 3 The annuitant receives the annuity benefits. 4 The annuitant cannot be the same person as the annuity owner.

The annuitant cannot be the same person as the annuity owner. Reasoning: While they don't have to be, the annuitant and annuity owner are often the same person. The annuitant is the person who receives benefits or payments from the annuity and for whom the annuity is written. Since the annuitant's life expectancy is taken into consideration, the annuitant must be a natural person.