Chapter 3- Life Policies Quizzes

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?

20-Pay life accumulates cash value faster than Straight Life

J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?

20-pay Life

N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?

30 Pay Life

Which of these is an element of a Variable Life policy?

A fixed, level premium

Which statement is TRUE regarding a Variable Whole Life policy?

A minimum guaranteed Death benefit is provided

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

AD&D

How long does the coverage normally remain on a limited-pay policy?

Age 100

Which statement about a whole life policy is true?

Cash value may be borrowed against

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

Conversion Provision

Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?

Decreasing Term

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 kind of policy does P own?

Endowment at Age 70

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

A Universal Life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, cost of insurance, and the

Expense charges

Term insurance has which of the following characteristics?

Expires at the end of the policy period

What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?

Family Maintenance Policy

K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?

Level

What kind of premium does a Whole Life policy have?

Level

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

Level Term

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

Life insurance that covers an insured's whole life with level premiums paid over a limited time is called:

Limited Pay Life

Which is true concerning a Variable Universal Life policy?

Policy owner controls where the investment will go and selects the amount of the premium payment

Which of the following information is NOT required to be included in a Whole Life policy?

Policy's guaranteed dividend table

Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary time period. Which of these policies should Q purchase?

Term Life

What kind of life insurance product covers children under their parent's policy?

Term rider

A(n) ______ _______ Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities.

Variable

A(n) _________ _________ Life policy combines investment choices with a form of Term coverage

Variable Universal

Which of the following policies is characterized by a flexible premium and death benefit and allows the policy owner control of the investment aspect of the plan?

Variable Universal Life

S owns a life insurance policy with cash values that fluctuate according to the underlying investment performance of common stocks. Which of these policies does S own?

Variable Whole Life

Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit?

Variable life

Term Life Policies that have the ability to be converted to permanent coverage may do so during a specific time period. This conversion period

Varies according to the contract

At what point does a Whole Life Insurance policy endow?

When the cash value equals the death benefit

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

Whole Life policy with an Other Insured Rider

Variable Whole Life Insurance can be described as

both an insurance and securities product

What type of life insurance are credit policies issued as?

Term

Which of these needs to be satisfied by Adjustable Life insurance?

Insured's need for flexible premiums

What type of life policy covers two lives and pays the face amount after the first one dies?

Joint Life Policy

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

Modified Endowment Contract

J is issued a Life Insurance policy with a death benefit of $100,000. She pays $600 per year in premium for the first 5 years. The premium then increases to $900 per year in the sixth year, and remains level thereafter. The policy's death benefit also remains at $100,000. Which type of Life Insurance policy is this?

Modified Premium Life

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

Premiums may be applied as a credit against income tax

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

Survivorship

Whole Life insurance is sometimes referred to as "Straight Life". What does the word "straight" indicate when using this phrase?

The duration of premium payments

The amount of coverage on a group credit life policy is limited to:

The insured's total loan value

All of these statements about Equity Indexed Life Insurance are correct EXCEPT

The premiums can be lowered or raised, based on investment performance

K purchased a Life insurance policy in 1986 which paid 10% interest in the early years of the policy. Twenty years after the purchase, she received a notice from the insurer stating that the policy will soon terminate unless a much-higher premium is paid because of falling interest rates. This type of policy is known as a(n) _________ life policy.

Universal

The cash value in a(n) ____________ Life policy may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors.

Universal

Variable Life products require a producer to

hold a Life Insurance license and a Securities license

Credit Life insurance is:

issued in an amount not to exceed the amount of the loan

Under a Graded Premium Whole Life policy,

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

The investment gains from a Universal Life Policy usually go toward

The cash value

Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?

Variable Life

P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase?

Family Maintenance policy

What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?

Convertible Term

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

Face amount plus the policy's cash value

What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?

Family Maintenance Policy

An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager?

Key Person insurance

Which of the following Life insurance policies combine term insurance with an investment element?

Universal Life

A life insurance policy that provides a policy owner with cash value along with a level face amount is called:

Whole life

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

Universal Life

When is the face amount paid under a Joint Life and Survivor policy?

Upon the death of the last insured

A term life insurance policy matures:

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