Chapter Exam 1- Life Policies
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?
$20,000 Death Benefit
G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income?
10 Years
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 faster than straight 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 level premiums, permanent protection, and be paid up at retirement. Which of these should N purchase?
30 Pay Life
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
S is covered by a whole life policy. Which insurance product can cover his children?
Child Term Rider
Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?
Conversion
Which of the following features of a group Term Life policy enables an individual to leave the group and continue his/her insurance without providing evidence of insurability?
Conversion Privilege
When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
Conversion Provision
A Universal Life Policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, expense charges, and the...
Cost of Insurance
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
Decreasing Term
F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?
Decreasing Term Policy
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 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
Which of these statements describe a Modified Endowment Contract (MEC)?
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
Term insurance has which of the following characteristics?
Expires at the end of the policy period
What does a Face Amount Plus Cash Value Policy pay upon the insurer's death?
Face Amount Plus the Policy's Cash Value
All of these are characteristics of an Adjustable Life policy EXCEPT
Face amount can be adjusted using policy dividends
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance Policy
Variable Life products require a producer to....?
Hold a life Insurance License and a Securities License
Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life Policy
Increase Face Amount
Who has the option to renew a Renewable Term policy?
Insured
Which of these needs is satisfied by Adjustable Life insurance?
Insured's needs for flexible premiums
What type of life policy covers two lives and pays the face amount after the first one dies?
Joint Life 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 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 (MED)
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for
Modified Whole Life
K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?
Modified Whole Life
Whole Life Insurance policies are contractually guaranteed to provide each of the following EXCEPT
Partial Withdrawal Features Beyond A Surrender Charge Period
A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision?
Payor Provision
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
Policyowner
Which is true concerning a Variable Universal Life policy?
Policyowner controls where the investment will go and selects the amount of the premium payment
Which of these characteristics 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
What type of life policy covers two people and pays upon the 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 Endowment
What type of life insurance are credit policies issued as?
Term
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
The investment gains from a Universal Life Policy usually go toward
The Cash Value
The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is
The Cost
What advantage does the renewable feature give to a term policy?
The insured may extend the coverage period
Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n):
Third Party with no Insurable Interest
How does a typical Variable Life Policy investment account grow?
Through mutual funds, stocks, and bonds
Which of the following is considered an element of a Variable Life Policy
Underlying Equity Investment
The cash value in a(n) ___________ Life policy may fluctuate to reflect changing assumptions regarding morality cost, interest, and expense factors
Universal
S, age 40, is looking to buy a Life Insurance policy that will allow for increases or decreases in coverage as his needs change. The policy best suited for S would be
Universal Life
What type of life insurance incorporates flexible premiums and an adjustable death benefit?
Universal Life
Which of the following life insurance policies combine term insurance with an investment element?
Universal Life
When is the face amount paid under a Joint Life and Survivor policy?
Upon death of the last insured
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
Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?
Variable Life
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
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
A policy that becomes a Modified Endowment Contact (MEC)
Will Loose many of it's tax advantages
A(n) ________ term life policy is normally used when covering an insured's mortgage balance.
decreasing
A variable insurance policy
does not guarantee a return on its investment accounts
Under a Renewable Term policy,
the renewal premium is calculated on the basis of the insured's attained age
Which of the following types of Term Life policies most likely contains a Renewable feature?
10 year convertible term
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
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
All of these statements about Equity Indexed Life Insurance are correct EXCEPT
The Premiums can be lowered or raised, based on investment performance
A life policy that contains a monthly charge as well as self-directed investment choices is called a(n)
Variable Universal Life Policy