Chapter exam 1 & 2 life policies & provision
which type of life insurance is normally associated with a Payor benefits rider?
juvenile insurance
which of these would be the best example of a limited pay life insurance policy? - whole life policy that pay out its cash value over a 20 year period - whole life policy with premiums paid up after 20 years - term life policy that returns cash values after 20 years - term life policy with premium paid after 20 years
whole life policy with premium paid up after 20 years
3 brothers who have a $100,000 "first to die" joint life policy covering all three of their lives. If mike dies first, the policy proceeds
will no longer provide insurance protection
James is the insured on a life insurance policy where his age was misstated on the application. Which of the following is CORRECT regarding the death benefit amount? -The original face amount will be paid to the beneficiary - The policy will be voided with no death benefits paid - The death benefit paid will be what the premium would have purchased at the correct age -The amount of premiums paid will be returned with interest
Death benefits paid will be what the premium would have purchased at the correct age
a whole life policy option where extended term insurance is selected is called
non-forfeiture option
The type of multiple protection coverage that pays on the death of the last person is called a(n) joint life policy survivorship life policy annuity joint policy dual life policy
Survivor ship life policy
Joe has a life insurance policy that has a face amount of $300,000. After a number of years. the policy's cash value accumulates to $50,000 and the face amount becomes $350,000. What kind of policy is this?
Universal life polices
which of these is considered to be a living benefit option in a life insurance policy
accelerated death benefit
All of these are common exclusions to a life insurance policy Except - accidental death - military service - aviation - hazardous occupations
accidental death
All of these are valid policy dividend options for a life insurance policy owner EXCEPT - cash outlay to the policy owner - accumulate without interest - reduction in the policy premium - buy additional insurance coverage
accumulate without interest
which dividend option would an insurer invest the policy owner's money and add any interest earning as the dividends accrue?
accumulation at interest option
renewable term life insurance policy can be renewed
at a predetermined date or age, regardless of the insured's health
Donald is the primary insured of a life insurance policy and adds a children's term rider. what is the advantage of adding this rider?
can be converted to permanent coverage without evidence of insurability
Jonas is a whole life insurance policyowner and would like to add coverage for his two children.which of the following products would allow him to accomplish this?
child term rider
life insurance policies will normally pay for losses arising from
commercial aviation
what happens to the coverage under a children's term rider when the child reaches a certain specified age?
coverage is eliminated
Julie has a $100,000 30-year mortgage on her new home. What type of life insurance could she purchase that is designed to pay off the loan balance if she dies within the 30-year period?
decreasing term insurance
The least expensive option to pay off a 30 yr mortgage balance would be
decreasing term life
all of these are standard exclusion found in a life insurance policy except - hazardous occupation - aviation - disability - war
disability
which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive?
endowment
level premium permanent insurance accumulate a reserve that will eventually
equal to face amount of the policy
peter has a policy where 80% to 90% of the premium is invested in traditional fixed income securities and the remainder of the premium is invested in contracts tied to a stipulated stock index. what kind of policy is this?
equity index whole life
which of these would limit a company's liability to provide insurance coverage
exclusion
a spouse and child can be added to the primary insured's coverage as what kind of rider?
family term
which policy feature makes a universal life policy different from the whole life policy? - fixed cash value - flexible premium schedule - fixed death benefits - ability to take out a policy loan
flexible premium schedule
the free-look provision gives the policy owner
full refund within a specified number of days
An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period? Incontestable period Probation period Reinstatement period Grace period
grace period
a life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability, is called an
guaranteed insurability rider
Which of these is NOT a characteristic of the Accelerated Death Benefit option? - face amount and policy premium are not affected by the payment - before payment of the benefit is made, specific conditions must exist, such as suffering from a terminal illness - there may be a dollar limit on the maximum benefit - the benefit can be offered as a rider at a specific extra cost or maybe at no cost
he benefit can be offered as a rider at a specific extra cost or maybe at no cost
what is the purpose for having an accelerated death benefit on a life insurance policy
it allows for cash advances to be paid against the death benefits if the insured becomes terminally ill
what kind of life insurance policy covers two or more people with the death benefits payable upon the last person's death
last survivor life insurance
when a decreasing term policy is purchased, it contains a decreasing death benefit and
level premium
modified endowment contract is best described as
life insurance contract with accumulates cash values higher than the IRS will allow
a limited payment whole life policy provides
lifetime protection
life insurance policy that has premiums fully paid within a stated time period is called
limited payment insurance
premium for a modified whole life policy is
lower than the typical whole life policy during the 1st few years and then higher than typical for the remainder
premium for a modified whole life policy is
lower than the typical whole life policy during the first few years and then higher than typical for the remainder
Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would like to borrow $15,000 against the cash value. Which of the following statements is TRUE? - Net death benefit will be reduced if the loan is not repaid - No interest will be charged on loan balance - Term life policies are the only type of insurance that allows policy loans - A loan can be taken out for up to the face amount of the policy
net death benefits will be reduced if the loan is not repaid
all of these are valid option for an adjustable life policy except - policy's premium can be increased or decreased - policy's death benefit can be increased or decreased - non-forfeiture option can be used to increase the death benefits - policy's protection period can be modified
non-forfeiture option can be used to increase the death benefits
Shirley has a $500,000 10-year non-renewable level term life policy. If she dies 15 years after the policy's inception date, how much will her beneficiary receive?
nothing
which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies?
payor benefits
which of these describes the results of a modified endowment contract that failed to meet the seven-pay test?
pre-death distribution are typically taxable
Which of the following is a reinstatement condition - proof of insurability - changes in the insuring clause - premium increase - premium decrease
proof of insurability
decreasing term life is often used to
provide coverage for a home mortgage
how are survivorship life insurance policies helpful in estate planning
provide funds to help pay taxes
all of the following are considered to be non-forfeiture option available to a policyowner Except - extended term insurance - cash surrender - reduction of premium - reduced paid-up insurance
reduction of premium
life insurance policy owner does not have the rights to
revoke an absolute assignment
an endorsement found in an insurance plan which modifies the provision of the policy is called an
rider
variable life insurance and universal life insurance are very similar. Which of these features are held exclusively by variable universal life insurance - the policy owner may increase or decrease the premium payment - may increase or decrease the face amount - contribute large sums of money - has the rights to select the investment which will provide the greatest return
rights to select the investment which will provide the greatest return
which of the following are the premium payments for a universal life policy not used for? - death benefits - cash value - loading cost - separate account investments
separate account investments
what type of life insurance are normally used for key employee indemnification
term, whole, and universal life insurance
what is a corridor in relation to a universal life insurance policy?
the gap between the total death benefits and the policy cash value
partial surrender is allowed in which of the following life policies?
universal life
partial surrender is allowed in which of the following life policies? - adjustable whole life - universal life - decreasing term life - limited whole life
universal life
a securities license is required for a life insurance producer to sell
variable life insurance
all of these statement concerning whole life insurance are false except? - policy owner can take out a policy loan up to the face amount - when a whole life policy is surrendered , income taxes may be owed - coverage is normally temporary - death benefits is not affected by outstanding loans
when a whole life policy is surrendered income taxes may be owed