Chapter 3 Exam: Life Policies

Under a Renewable Term policy,

the renewal premium is calculated on the basis of the insured's attained age

A term life insurance policy matures:

upon the insured's death during the term of the policy

A universal life policy is sometimes known as unbundled life policy because the owner can see the interest earned expense charges and the _____________________.

Cost of Insurance`

All of these are characteristics of an Adjustable Life policy EXCEPT

Face amount can be adjusted using policy dividends

What kind of life insurance pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum?

Family Maintenance Policy

Which actions require a policy owner to provide proof of insurability in an adjustable life policy?

Increatse Face Amount

Who has the option to renew a renewable term policy?

Insured

Whole life is sometimes known as straight-line. What does straight indicate?

The duration of premiums

Which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death?

Joint Life

K, age 65 and wife age 43, have three children. They purchase a Family Policy that covers K's wife to age 65. All of these situations will pay a death benefit except:

K's wife dies at 66

D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?

Level Term

When a life insurance policy exceeds certain IRS table values, the result would create which of the following?

Modified Endowment Contract (MEC)

Which of the following types of permanent life insurance offers the highest initial cash value?

Single Premium

K is shopping for a permanent life insurance policy that will offer the MOST protection per dollar of annual premium. Which of these policies best fit her needs?

Straight Life

What type of life policy covers two people and pays upon death of the last insured

Survivorship

T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?

Ten year Endorsement

What type of insurance are credit policies issued as:

Term

Variable Life products require a producer to

hold a Life Insurance license and a Securities license

S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?

Equity Index Insurance

What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death?

Face amount plus the policies cash value

Term policies carry which characteristic?

Expires at the end of the policy period

K pays on a $20,000 20 year endowment for 10 years and dies from an accident. How much will the beneficiary get?

$20,000 death benefit

J is 35, looking for a whole life policy, which will provide the most rapid cash growth?

20-Pay Life

What type of policy would offer a 40 year old the quickest accumulation of cash value?

20-Pay Life

Which of these is an element of a variable life policy?

A fixed, level premium

Which of the following types of policies pays a benefit if the insured goes blind?

Accidental Death and Dismemberment (AD&D)

How long does the coverage normally remain a Limited Pay Life policy?

Age 100

Under a graded premium policy, the premiums

Are lower during the policies early years

which statement about a whole life policy is true?

Cash Value may be borrowed against

A company owns a life policy on a key employee may do except:

Change the policy's interest

S is covered by a whole life policy. Which insurance product can cover his children?

Child Term Rider

Which provision allows the policy owner to change a term life policy to a permanent one without providing proof of good health?

Conversion

A(n) term is normally used when covering an insureds mortgage balance

Decreasing

The combination of Whole Life and _______________ term insurance is referred to as a Family Income Policy

Decreasing

Credit life insurance is typically issued with which of the following types of coverage?

Decreasing Term

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?

Decreasing Term

Additional coverage can be added to a Whole Life policy by adding a(n)

Decreasing Term Rider

P owns a $25,000 Life Policy that pays face amount to 70% or to his beneficiary if he dies before 70. What kind of policy does P own?

Endowment at age 70

P owns a $25,000 life policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What policy does he own

Endowment at age 70

All of these insurance products require an agent to have proper FINRA securities registration in order to sell them except:

Modified Whole Life

Which of these life products is not considered interest-sensitive?

Modified Whole Life

A amitel-pay life policy has:

Premium payments limited to a specified number of years

Which of these characterisitics is consistent with a straight life policy?

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

Which of the following actions is NOT possible with a Universal Life Policy?

Premiums may be applied as a credit against income tax

Which of the following is not possible with a universal life policy?

Premiums may be applied as a credits against income tax

Which of the following Life Insurance policies combine Term Insurance with an investment element?

Universal Life

A(n) ________ life policy offers the owner investment in products such as money-market funds, long-term bonds and equities

Variable

Which of these types of life allows the policy-owner to have level premiums and to also choose from a selection of investment options?

Variable Life

A life policy that contains a monthly morality charge as well as self-directed investment choices is called a(n)

Variable Universal Life Policy

When is the face amount of a whole life po/icy paid?

When the insured dies or at the policies maturity date

What kind of policy pays the face value upfront upon death of the insured or when the insured reaches 100?

Whole Life

Y purchased $100,000 worth of permanent protection on himself and $50,000 worth of a 10 year term coverage for his wife on the same policy. Which of these policies did Y purchased?

Whole Life Policy with an other Insured Rider

If a 10 year Life Policy contains a renewability, the policy will renew

Without evidence of insurability

Which of these needs is satisfied by adjustable Life insurance?

Insured needs for flexible premiums

Which type of policy is considered to be overfunded, as stated by IRS guidelines?

Modified Endowment Contract (MEC)

J issued life policy and pays $600 per year for the first 5 years. The premium then increases to $900 and remains level thereafter. Policy remains at $100,000. What type of policy is this?

Modified Premium Life

The investment gains from a Universal Life Policy usually go toward

The Cash Value

Under a graded premium whole life policy

The premium increases each year during the early years of the contract and remains the same after

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

Conversion Provision

J issued life policy pays $600 per year for the first 5 years. The premium then increases to $900 and remains level thereafter. Policy remains at $100,000. What type of policy is this?

Modified Premium Life