Chapter Three: Life Policies
K purchased a $10,000 Life Policy that will pay the face amount to her if she lives to age 65, or to her beneficiary if she dies before age 65. K purchased which of the following types of policies?
Endowment at Age 65
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
What type of life policy covers 2 lives and pays the face amount after the first one dies?
Joint Life Policy
M purchases a $70,000 Life Insurance Policy with premium payments of $550 a year for the first 5 years. At the beginning of the sixth year, the premium will increase to $800 per year but will remain level thereafter. The face amount will remain at $70,000 throughout the life of the policy. The type of policy that M has purchased is
Modified Premium Life Modified whole life policies are distinguished by premiums that are lower than typical whole life premiums during the first few years (usually five) and then higher than typical thereafter.
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for
Modified Whole Life An agent must have proper FINRA securities registration to sell all of these products EXCEPT Modified Whole Life.
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 In this situation, the family would receive an income from the policy for 10 years. Family Income policies pay an income beginning at the insured's death and continues for a period specified from the date of policy issue.
A 15-year mortgage is best protected by what kind of life policy?
15-year decreasing term
A Whole Life Insurance Policy endows when the
Cash value equals the death benefit
A 42-year-old executive wants to purchase life insurance that will allow for increases or decreases to coverage as his/her needs change. Which of the following policies will best meet this need?
Universal Life Universal life insurance is characterized by flexible premiums and an adjustable death benefit.
A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as
Variable Life
Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?
Variable Life Because of the transfer of investment risk from the insurer to the policyowner, variable insurance products are considered securities contracts as well as insurance contracts.
When is the face amount of a Whole Life policy paid?
When the insured dies or at the policy's maturity date, whichever happens first
What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?
Whole Life
What type of insurance offers permanent life coverage with premiums that are payable for life?
Whole Life
A life insurance policy that provides a policyowner with cash value along with a level face amount is called
Whole life
How long does the coverage normally remain on a limited-pay life policy?
age 100 Even though the premium payments are limited to a certain period, the insurance protection extends until the insured's death, or to age 100.
Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy?
increase face amount
Credit Life insurance is
issued in an amount not to exceed the amount of the loan
What kind of premium does a Whole Life policy have?
level
