Chapter 2 - Quiz Life Product

If an agent wishes to sell variable life policies, what license must the agent obtain?

Securities

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?

Universal Life

Which of the following types of policies allow for a flexible premium and a variable investment component

Variable universal life insurance

Your customer doesn't mind paying a higher premium as long as he gets a life insurance product that would allow for a faster growth of the cash value. What kind of policy would you recommend?

An endowment policy

The LEAST expensive first-year premium is found in which of the following policies?

Annually Renewable Term

A universal life insurance policy is best described as an

Annually Renewable Term policy with a cash value account

Which of the following is an example of a limited-pay life policy

Life paid up at age 65

What type of life insurance is most commonly used for group plans?

Annually renewable term

When an annuity is written, whose life expectancy is taken into account?

Annuitant

A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?

Level term

An insured purchased a variable life insurance policy with a face amount of of $50,000. Over the life of the policy, stock performance declines and the cash value to $10,000. If the insured dies. How much will be paid out?

$50,000

An insured has a Level Term life insurance policy that is guaranteed renewable and also includes a re-entry provision. The re-entry provision would allow the insured to new the policy and

Change the type of insurance by proving insurability

In increasing and decreasing term policies, which policy component fluctuate during the policy term

Death benefit

Which of the following is NOT fundable by annuities

Death benefits

In group life policies, a certificate of insurance is given to

Each insured person

If an annuitant dies before annuitization occurs, what will the beneficiary receive?

Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount.

An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)

Equity Indexed Annuity

All of the following are TRUE regarding the convertibility options under a term life insurance policy

Evidence of the insurability is not required Most term policies contain a convertibility option Upon conversion, the premium for the permanent policy will be based upon attained age

All of the following entities are regulated variable life policies

Federal government SEC The insurance Department

Equity indexed annuitiies

Seek higher returns

Which of the following types of insurance policies would provide the greatest protection for a temporary period during which an insured will have limited financial resources

Term

Which of the following is true regarding variable annuities

The annuitant assumes the risks on investment.

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?

The annuitant must be a natural person.

If an annuitant dies during the accumulation period, who will receive the annuity benefits

The beneficiary

The annuitant dies while the annuity is still in the accumulation stage. Which of the following is TRUE?

The beneficiary will receive the greater of the money paid into the annuity or the cash value

What is the purpose of establishing the target premium for a universal life policy?

To keep the policy in force

Which of the following types of policies allow the policy owner to skip premium payments provided that there is enough cash value in the policy to cover the premium amount?

Universal life

Which of the following is INCORRECT regarding a $100,000 20-year level term policy?

At the end of 20 years, the policy's cash value will equal $100,000.

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid

For 20 years or until death, whichever occurs first

Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?

Greatest

In which of the following cases will the insured be able to receive the full face amount from the whole life policy?

If the insured lives to age 100

Which of the following best describes annually renewable term insurance?

It is level term insurance

An insured has a life policy that requires him to only pay premium for a specified number of years until the policy is paid up. What kind of policy is it?

Limited-pay Life

B just bought a new car, which he anticipates will be paid for 4 years from now. He also wants to buy a life insurance policy, but is financially limited until the car is paid off. Which of the following types of policies would best be for B?

Modified Life

What type of whole life insurance policy has premiums that are adjusted so that during the first years of the policy, the premiums are lower than those of a straight whole life policy, and in subsequent years the premiums are higher than those of a straight whole life policy?

Modified life

What type of whole life insurance policy has premiums that are adjusted so that during the first years of the policy, the premiums are lower than those of straight whole life policy, and in subsequent years the premiums are higher than those of a straight whole life policy?

Modified life

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Option A

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B

All of the following statements are true regarding group insurance

Participants in a group insurance plan are issued certificates of insurance Small groups such as labor unions are eligible for group insurance The group sponsor is the policyholder

All of the following are true about variable products

Policy bear the investment risk The minimum death benefit is guaranteed The cash value is not guaranteed

In term policies, what happens to the premium throughout the term of the policy?

Premium always remain level

If an employee wants to enter the group outside of the open enrollment period, to reduce the adverse selection, the insurer may

Require evidence of insurability

If an employee wants to join group life insurance coverage outside of the open enrollment period, what would the employee have to provide?

Require evidence of insurability

Annuities can be used to fund which of the following

Retirement plans

Annuities can be used to fund which of the following?

Retirement plans

A domestic insurer issuing variable contracts must establish one or more

Separate accounts

Which type of life insurance policy generates immediate cash value?

Single Premium

Which two terms are associated directly with the way an annuity is funded?

Single payment or periodic payments

An insurance policy that only requires a payment of premium at its inception provides insurance protection for the life of the insured, and matures at the end of the insured's age 100 is called

Single premium whole life

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matches at the insured's age 100 is called

Single premium whole life

Which of the following policies would be classified as a traditional level premium contract?

Straight Life

Which of the following statements about group life is correct?

The cost of coverage is based on the ratio of men and women in the group

Which of the following statements about group life is correct?

The cost of coverage is based on the ratio of men and women in the group.

An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?

The insured may renew the policy for another 10 years, but at a higher premium rate

What are the characteristics of a group life insurance plan

The participants receive a Certificate of Insurance A minimum number of participants is requires in order to underwrite the plan The cost of plan is determined by the average age of the group.

Which of the following is not TRUE regarding Equity Indexed Annuities

They earn a lower interest rate than fixed annuities

Which of the following is TRUE for both equity indexed annuities and fixed annuities

They have a guaranteed minimum interest rate

Which of the following is a key distinction between variable whole life and variable universal life products

Variable whole life has a guaranteed death benefit

What is the name of the insured who enters into a viatical settlement?

Viator

When would a 20-pay whole life policy endow?

When the insured reaches age 100

To sell variable life insurance policies an agent must receive all of the following

A securities license A life insurance license FINRA registration

All of the following are types of term policies based on what happens to the face amount during the policy term

Level Increasing Decreasing

A man purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it?

Immediate

A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?

Immediate annuity

An employee is joining a group insurance plan, in order to avoid having to prove insurability, what must the employee do?

Join during the open enrollment period