L&H Ch.3 - Types of Policies and Riders

What rider is designed to help the insured offset the effects of future inflation on the policy's face amount?

Cost of Living

Is cash surrender value a feature of term life insurance?

No.

A disability income rider......

pays a % of of the death benefit as a monthly income of the insured when totally disabled.

What does a long-term care rider do that a living needs (terminal illness rider) does not?

A long-term care rider provides an advance payment of the death benefit for the covered expenses of long-term care a chronically ill person may incur.

Term Life insurance is designed to provide coverage for ___________.

A specified period of time

Which of the following situations will require proof of insurability?

Adjusting the face amount up on a Universal Life insurance policy with Option A death benefit selected

Which of the following is a true characteristic of a Variable Universal Life policy?

As long as there is sufficient cash value to cover policy expenses when due, the insured is not required to pay the planned premium

True or false? By paying over a shorter period of time, each of the payments will be lower.

False.

Which of the following is TRUE of a term rider when attached to a permanent life policy?

It can provide additional temporary coverage on the insured or on other members of the family

What happens to the overall policy premium when most riders on a life insurance policy expire?

It goes down

A participating life insurance policy has a long-term care rider. The insured qualifies for the benefit. Where does the initial benefit money come from?

It is an advance of the face amount of the policy

Of the following, which best describes a Straight Whole Life Policy?

Level guaranteed premium and face value for the life of the insured

If the premium payable for the first few years of the policy (e.g. 3-5) are lower than an ordinary whole life policy in order to make it more affordable, what premium paying method was used?

Modified

Whole Life is also known as ________ protection.

Permanent

Bert is the owner and insured of a traditional whole life insurance policy he purchased 20 years ago. He has never missed a premium payment. He would like to buy a new car but his bank account is running low. How can he obtain the necessary funds while still maintaining coverage?

Take a policy loan from the insurer

Money accumulated in a permanent policy that the policyowner may borrow via a policy loan or receive if the policy is surrendered, refers to:

The Cash Value

What "jumps" in a jumping juvenile policy?

The face amount (death benefit) jumps one time, usually five times the amount of insurance, at age 21 or 25.

When a whole life policy endows, what happens to the policy cash value?

The face amount of the policy is paid to the owner.

In a life settlement transaction who represents only the owner and owes a fiduciary duty to the owner to act in the best interest according to the owner's instructions, regardless of the manner in which they are compensated?

The life settlement broker

Which of the following statements is correct regarding a Waiver of Premium Rider on a participating whole life policy?

The premiums are waived until either the insured recovers from the disability, the policy achieves paid-up status, or the insured dies

A viatical statement is made between a purchaser of a person's life insurance policy and......

The terminally ill insured who must receive at least as much as would be available from the insurance company under any full cash surrender or living needs rider.

If a policyowner has a whole life insurance policy with a disability waiver of premium rider, when does the rider benefit start if a qualifying disability should occur?

Typically 6 months after the disability occurs

What type of policy would be most appropriate for a husband and wife concerned about paying estate taxes after they have both died?

a last-to-die policy

A "level term" policy means that ____ remains the same throughout the lifetime of the policy.

policy proceeds (death benefit or limit of liability)

What is the face amount of insurance?

the limit of liability (or death benefit)

Death benefit options, and the ability for the death benefit and premiums to be changed are characteristics of what type of life insurance policy?

universal life insurance

A ____ policy has a death benefit that can increase or decrease over time based on stock market performance, but with a guaranteed minimum death benefit, a choice of sub-accounts in which cash value may be allocated, and a fixed premium.

variable life