Cram course ch 3
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
N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?
30 Pay Life
Which of these is an element of a variable life policy?
A fixed, level premium
Which statement about a whole life policy is true?
Cash value may be borrowed against
When a policy owner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
Conversion provision
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance Policy
Which of these needs is satisfied by Adjustable Life insurance?
Insured's need 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, age 45, and his wife, age 43, have three children. They purchase a Family Policy that covers K's wife to age 65. All of these situations will pay a death benefit EXCEPT
K's wife dies at age 66
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Modified Endowment Contract
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
Which of the following policies is characterized by a flexible premium and death benefit and allows policyowner control of the investment aspect of the plan
Variable Universal Life
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
Under an Interest Sensitive Whole Life policy, premiums are determined by the policyowner no cash value ever accrues the policy normally renews every 10 years cash values are determined by interest rates
cash values are determined by interest rates
A(n) __________ term life Policy is normally used when covering an insured mortgage balance
decreasing
Variable life products require a producer to
hold a Life Insurance license and a Securities license
Who has the option to renew a renewable term policy?
insured
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
Whole life insurance policies are contractually guaranteed to provide each of the following, except:
partial withdrawal features beyond a surrender charge period
A Limited-Pay Life policy has
premium payments limited to a specified number of years
What type of life policy covers two people and pays upon the death of the last insured?
survivorship
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 time
Under a Renewable Term policy,
the renewal premium is calculated on the basis of the insured's attained age
Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n):
third-party with no insurable interest
K purchased a Life insurance policy in 1986 which paid 10% interest in the early years of the policy. Twenty years after the purchase, she received a notice from the insurer stating that the policy will soon terminate unless a much-higher premium is paid because of falling interest rates. This type of policy is known as a(n) _________ life policy.
universal Universal life insurance, popular in the 1980s, worked as advertised for years, when interest rates were high single digits and above. Interest rates have since taken a dramatic fall, which negatively affected the performance of the universal life policies issued in the 1980s. The ultimately resulted in the policy owner paying a much higher premium due to the increased cost of the underlined term life policy and having no cash value to offset premiums.
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
A life policy with the death benefit and cash value that can fluctuate according to the performance of its underlying investment portfolio is referred to as:
Variable Life
Which of these types of life insurance allows the policy owner to have level premiums and to also choose from a selection of investment options?
Variable Life
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 Variable life has a guaranteed minimum
A life policy that contains a monthly mortality charge as well as self-directed investment choices is called a(n)
Variable universal life policy
Term life policies that have the ability to be converted to permanent coverage may do so during a specific time period. The conversion period
Varies according to the contract
What type of policy would offer a 40 year old at the quickest accumulation of cash value
20-pay life
J is issued a Life Insurance policy with a death benefit of $100,000. She pays $600 per year in premium for the first 5 years. The premium then increases to $900 per year in the sixth year, and remains level thereafter. The policy's death benefit also remains at $100,000. Which type of Life Insurance policy is this?
Modified Premium Life
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for
Modified Whole Life
Which of these life products is not considered interest sensitive
Modified Whole Life
All of these statements about Equity Indexed Life Insurance are correct EXCEPT
The premiums can be lowered or raised, based on investment performance
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
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
Which of the following types of policies pays a benefit if the insured goes blind?
AD&D
What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?
Convertible Term
The most important factor to consider when determining whether to convert term insurance at the insurance attained age or the insurance original age is:
Cost
S is covered by a whole life policy. Which insurance product can cover his children?
Child term rider
What type of life policy has a death benefit that adjust periodically and is written for a specific period of time?
Decreasing term
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
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
S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?
Equity index insurance
A universal life policy is sometimes referred to as an unbundled life policy because the owner can see the interest earned, cost of interest and the
Expense charges
Term insurance has which of the following characteristics?
Expires at the end of the policy period
P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase?
Family Maintenance Policy
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 the 30 years?
Family Maintenance Policy
Which statement is correct regarding the premium payment schedule for a whole life policies?
Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured
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
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
What kind of life insurance products covers children under their parents policy
Term rider
What advantage does the renewability feature give to a term policy?
The insured may extend the coverage period
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
The Combination of Whole Life and _____ Term insurance is referred to as a Family Income Policy
decreasing
Credit life insurance:
issued in an amount not to exceed the amount of the loan
T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?
renewable
The amount of coverage on a group credit life policy is limited to:
the insured's total loan value
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
