Chapter Exam 1 Life Policies

The 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". Modified whole life policies are distinguished by premiums that are lower than typical whole life premiums during the first few years and then higher than typical thereafter.

Shawn, Mike, and Dave are 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". In this situation, if Mike dies first, the policy proceeds will no longer provide further insurance protection.

A single premium cash value policy can be described as

A single premium cash value policy is best described as a policy that is paid up after only one payment.

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 policy". This is an example of a Universal Life policy.

Which type of multiple protection policy pays on the death of the last person?

A survivorship life policy pays on the death of the last person

Which of the following are the premium payments for a Universal life policy ?

Death benefits, cash value, loading costs

Which policy feature makes a universal life policy different from a whole life policy?

"A flexible premium schedule". The policy feature that makes universal life different from whole life insurance policies is its flexible premium schedule.

modified endowment contract that failed to meet the seven-pay test

"Pre-death distributions are typically taxable". Failing to meet the seven-pay test results in pre-death distributions likely to likely to.become taxable.

Ordinary life insurance includes

(1) term, (2) whole life, (3) universal, and variable life coverage as well as endowment policies.

- Term life insurance policies issued until a certain age provide

coverage from their date of issue until the insured reaches the specified age

- Term life insurance policies

do not build cash value

Term insurance is appropriate for someone who

Term insurance is appropriate for individuals seeking temporary protection and lower premiums.

All of these are valid options for an Adjustable Life Policy

The policy's premium can be increased or decreased. The policy's death benefit can be increased or decreased. The policy's protection period can be modified

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?

The type of 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 is equity index whole life.

- Group life insurance is written for

employer, employee groups, associations, unions, and creditors

A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate that is higher than the guaranteed rate is called

Universal life has a guaranteed interest rate with the possibility to earn an interest rate that is higher than the guaranteed rate.

- Industrial life insurance collects premiums on

a weekly or monthly basis by the agent at the policy owner's home

Premiums paid on ordinary life insurance policy

are normally paid monthly, quarterly, semi-annually or annually

- Industrial life insurance is characterized

by comparatively small issue amount, i.e. $1,000.00

industrial life insurance is characterized by

characterized by comparatively small issue amounts, i.e. $,1000

- Group life insurance provides

coverage for a number of individuals under one contract

Group life insurance has

grown tremendously over the past few decades

Ordinary Life Insurance

insurance is individual life insurance that includes many types of temporary (term), permanent (whole life), and variable universal life insurance protection plans written on individuals.

A securities license is required for a life insurance producer to sell

life insurance producer needs to possess a securities license to sell variable annuities.

A permanent life insurance policy where the policy owner pays premiums for a specified number of years is called a(n)

limited pay policy

Pre-death distributions from a modified endowment contract (MEC) receive different tax treatment than other life insurance policies because

modified endowment contract (MEC) receives different tax treatment on pre-death distributions than other life insurance policies because it tends to be an investment vehicle.

- Term life insurance pays a benefit

only if the insured dies during that period.

- Term life insurance is also called

temporary life insurance since it provides protection for a temporary period of time.

- Term life provides

the greatest amount of death benefit per dollar of initial cash outlay

Group life insurance underwriting is based on

the group, not the individuals who are insured

- Term life insurance has an advantage

the initial premium is lower than for an equivalent amount of whole life insurance

Term life insurance is

the simplest type of life insurance plan

The period for which Term life insurance policies are issued can be defined in terms of

years and by certain age