chapter 4 quiz

in order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?

5

for variable products, underlying assets must be kept in

a separate account

annually renewable term policies provide a level death benefit for a premium that

increases annually

an individual purchased a $100,000 joint life policy on himself and his wife. eight years later, he died in an automobile accident. how much will his wife receive from the policy

$100,000

the insured is also the policyowner of a whole life policy. what age must the insured attain in order to receive the policy's face amount?

100

all of the following could own group life insurance EXCEPT

a group needing low-cost life insurance

a return of premium term life policy is written as what type of term coverage?

increasing

all of the following are true regarding a decreasing term policy EXCEPT

the payable premium amount steadily declines throughout the duration of the contract

all of the following are true about variable products EXCEPT

the premiums are invested in the insurer's general account

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

life paid-up at age 65

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

limited-pay life

an employee is insured under her employer's group life plan. if she terminates her group coverage, which of the following statements is INCORRECT

the insured may choose to convert to term or permanent individual coverage

an employee quits his job on may 15 and doesn't convert his group life policy to an individual policy for 2 weeks. he dies in a freak accident on june 1. which of the following statements best describes what will happen?

the insurer will pay the full death benefit from the group policy to the beneficiary

a group of 15 skydivers met at a seminar and began talking about life insurance during a break. because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. after they applied for group life insurance, they were rejected. why?

the purpose of the group was to purchase life insurance

all of the following are characteristics of a group life insurance plan EXCEPT

there is a requirement to prove insurability on the part of the participants

the type of term insurance that provides increasing death benefits as the insured ages is called

increasing term

what are the two components of a universal policy

insurance and cash account

an employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his

attained age

which of the following types of policies will provide permanent protection?

whole life

variable whole life insurance is based on what type of premium?

level fixed

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 death of the insured?

option B

in a group life insurance policy, the employer may select all of the following EXCEPT

the beneficiary

an adjustable life policyowner can change which of the following policy features?

the coverage period

which of the following determines the cash value of a variable life policy?

the performance of the portfolio

which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?

universal life

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 EXCEPT

SEC registration

if the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary

a full death benefit

at age 30, an applicant want to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. which of the following policies would most likely fit his needs?

adjustable life

which type of life insurance policy allows the policyowner to pay more or less than the planned premium?

universal life

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

the type of policy that can be changed from one that does not accumulate cash value to the one that does is a

convertible term policy

what characteristic makes whole life permanent protection?

coverage until death or age 100

which of the following best defines target premium in a universal life policy?

the recommended amount to keep the policy in force throughout its lifetime

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

which component increases in the increasing term insurance?

death benefit

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

which statement is NOT true regarding a straight life policy

its premium steadily decreases over time, in response to its growing cash value.

an individual has just borrowed $100,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?

decreasing term

what does "level" refer to in level term insurance

face amount

which policy component decreases in decreasing term insurance?

face amount

what type of premium do both universal and variable universal life policies have?

flexible

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

to keep the policy in force

if a life insurance policy increases significantly in the face amount (death benefit) when the insured reaches a specified age, what type of policy is this

jumping juvenile policy

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

which of the following is NOT a type of whole life insurance

level term

which type of life insurance policy generates immediate cash value?

single premium

the policyowner of an adjustable life policy wants to increase the death benefit. which of the following statements is correct regarding this change?

the death benefit can be increased by providing evidence of insurability

all of the following are characteristics of a group life insurance EXCEPT

premiums are determined by the age, sex and occupation of each individual certificate holder

a domestic insurer issuing variable contracts must establish one or more

separate accounts

which of the following best describes annually renewable term insurance

it is level term insurance

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

annually renewable term

the death protection component of universal life insurance is always

annually renewable term

a universal life insurance policy has two types of interest rates that are called

guaranteed and current

a universal life insurance policy is best described as a/an

annually renewable term policy with a cash value account

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

when an employee terminates coverage under a group insurance policy, coverage continues in force

for 31 days

all of the following statements are true regarding group insurance EXCEPT

participants in the policy each receive a policy

a man decided to purchase a $100,000 annually renewable term life policy to provide additional protection until his children finished college. He discovered that his policy

required a premium increase each renewal

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

securities

an employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy?

she can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan

the policyowner of a universal life policy may skip paying the premium and the policy will not lapse as long as

the policy contains sufficient cash value to cover the cost of insurance

an insured buys a 5-year level premium term policy with a face amount of $10,000. the policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?

it will increase because the insured will be 5 years older than when the policy was originally purchased.

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 insured's age 100 is called

single premium whole life

all of the following entities regulate variable life policies EXCEPT

the Guaranty association

twin brothers are starting a new business. they know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. what type of insurance would be the most affordable and still provide a death benefit should one of them die?

joint life

which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?

universal life - option A

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

annually renewable term

in an adjustable life policy all of the following can be changed by the policy owner EXCEPT

the type of investment

which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?

those who have been insured under the plan for at least 5 years

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 life insurance policies would be considered interest sensitive?

universal life