CLU HS323 - Chp 6 Quiz (Universal Life Insurance)

At which of the following times is a minimum level of premium payment always required in a universal life insurance policy? I - In the first policy year II - In renewal policy years (A) I only (B) II only (C) Both I and II (D) Neither I nor II

(A) I only I - In the first policy year

All the following statements concerning the target premium amount in universal life insurance policies are correct, EXCEPT: (A) The target premium amount is a legal obligation that the policyowner must meet in order to keep the policy in force (B) Insurance companies with aggressive marketing approaches are likely to set lower target premium amounts than companies with conservative marketing approaches (C) Policyowners are allowed to make additional premium payments beyond the target premium amount (D) The target premium amount may be insufficient to keep the policy inforce at advanced ages of policy owners

(A) The target premium amount is a legal obligation that the policyowner must meet in order to keep the policy in force

Which of the following statements concerning policy loans in typical universal life insurance policies is (are) correct? I - Policy loans are not permitted in universal life insurance policies II - Current interest rates are credited on the entire cash value a long as there are no outstanding policy loans III - Reduced interest rates credited on the entire cash value once a policy loan of any amount is taken out (A) I only (B) II only (C) III only (D) II & III only

(B) II only II - Current interest rates are credited on the entire cash value a long as there are no outstanding policy loans

Which of the following statements about indexed universal life insurance is (are) correct? I - The indexed universal life insurance policy has a higher guaranteed rate than a standard universal life insurance policy II - In a bull market, the indexed universal life insurance policy typically will perform better than the guaranteed rate (A) I only (B) II only (C) Both I and II (D) Neither I nor II

(B) II only II - In a bull market, the indexed universal life insurance policy typically will perform better than the guaranteed rate

Which of the following statements concerning the withdrawal feature in a typical universal life insurance policy is (are) correct? I - Interest is charged on amounts withdrawn. II - Partial withdrawals are permitted (A) I only (B) II only (C) Both I and II (D) Neither I nor II

(B) II only II - Partial withdrawals are permitted

Which of the following statements concerning the death benefits under a universal life insurance policy is (are) correct? I - Under the level death benefit design, the death benefit never increases, despite the size of the cash value II - Under the increasing death benefit design, the death benefit is a constant amount paid in addition to the policy's cash value (A) I only (B) II only (C) Both I and II (D) Neither I nor II

(B) II only II - Under the increasing death benefit design, the death benefit is a constant amount paid in addition to the policy's cash value

Which of the following statements concerning prefunding in a universal life insurnace policy is (are) correct? I - The level of prefunding determines the amount of investment risk borne by the policy owner II - If the policy owner elects minimal or no prefunding, the premiums will increase as the insured grows older (A) I only (B) II only (C) Both I and II (D) Neither I nor II

(C) Both I and II I - The level of prefunding determines the amount of investment risk borne by the policy owner II - If the policy owner elects minimal or no prefunding, the premiums will increase as the insured grows older

Universal Life Insurance is characterized by all of the following, EXCEPT: (A) A high degree of premium flexibility (B) The choice of either a level death benefit design or an increasing death benefit design (C) Adjustment provisions similar to those in adjustable life policies (D) An option for the policy owner to direct the allocation of his or her investment portfolio

(D) An option for the policy owner to direct the allocation of his or her investment portfolio

An accurate assessment of the competitiveness of a universal life insurance policy's pricing structure should include consideration of which of the following elements? I - The interest crediting rate II - The timing and amount of the surrender charges III - The mortality rates charged (A) I only (B) I & II only (C) II & III only (D) I, II, & III

(D) I, II, & III I - The interest crediting rate II - The timing and amount of the surrender charges III - The mortality rates charged