Life Ch2 - Quiz - Types of Life Policies

c) renews each year with an increased premium

An annually renewable term policy? a) increases in premium based on the insured's health, b) maintains a level premium each year, c) renews each year with an increased premium, d) increases in coverage each year

period / flexible premium - multiple payments; the principal is created over time (used for deferred annuity only)

Define period / flexible premium annuity?

1) basic policy, 2) level death benefit, 3) insured pays premiums for life or until age 100.

What are Ordinary whole life or permanent continuous premium?

1) pure protection, 2) lasts for specific term 3) no cash value

What are 3 general characteristics of Term Life policies

1) immediate annuity payment AND 2) Deferred annuity payment.

What are annuity income payment types?

Coverage gradually decreases at predetermined times; best used when the need for protection declines from year to year.

What is decreasing Term life insurance policy?

fixed annuities - guaranteed, fixed payment amount; premiums in general account

What is fixed annuity?

1) Types of whole life insurance, 2) flexible premiums

What is flexible premium general characteristics?

Indexed annuities - interest rate tied to an index; earn higher rate than fixed annuities; not as risky as variable annuities or mutual funds.

What is indexed annuities?

variable annuities - payment not guaranteed; premiums in separate account, and invested in stocks and bonds.

What is variable annuity?

level death benefit and level premium

What is level premium term for term life policy?

1) fixed premium, minimum death benefit, 2) cash value and the actual amount of death benefit are not guaranteed, 3) assets in separate accounts, 4) agents must be dually licensed in insurance and in securities.

What are other types of variable life policies

c) decreasing term

When the insured purchased a new home, he wanted to purchase a life insurance policy that would protect his family against losing it should he die before the mortgage was paid. Which of the following policies is best suitable for that need? a) whole life, b) level term, c) decreasing term, d) return of premium

b) Premium is based on the average age of the insureds

Which of the following is true regarding a joint life policy? a) it pays a death benefit after the last insured's death, b) premium is based on the average age of the insureds, c) it is a form of group life insurance, d) it is used to offset the liability of the estate tax upon the insured's death

c) the premiums can be decreased by the insured

which of the following statements is TRUE regarding a universal life policy? a) the insurer sets the cash value and premium payment period, b) the death benefit can be increased without evidence of insurability, c) the premiums can be decreased by the insured, d) it is issued without a guaranteed interest rate.

b) the accumulation period

the tie period during which an annuitant contributes to an annuity is called? a) the annuity period, b) the accumulation period, c) the deferred growth, d) the savings period

b) Annuitant

whose life expectancy is taken info consideration in an annuity? a) owner, b) annuitant, c) beneficiary d) life expectancy is not a factor in annuities

b) variable

An insured receives a monthly summary of his life insurance policy. The cash value this month is significantly lower than it was last month. What type of policy is it?

Premiums paid in one lump sum; coverage continues to age 100.

What is single premium whole life insurance policy?

a) single premium

Which type of life insurance policy generates immediate cash value? a) single premium, b) level term, c) variable life, d) decreasing term

a) remains constant over time

With a traditional whole life policy, the death benefit? a) remains constant over time, b) increases over time, c) decreases over time, d) becomes pure death protection after 20 years

single premium - one lump sum payment, the principal is created immediately (both immediate and deferred annuities)

Define single premium annuity payment?

1) joint life: a) premium is based on the joint average age of the insured and b) death benefit upon the first death only. 2) survivorship life: a) premium is based on the joint average age of the insured and b) death benefit upon the last death.

What are other combination types of policies

d) 100

The insured is also the policy owner of a whole life policy. What age must the insured attain in order to receive the policy's face amount?

c) deferred

An individual inherited a large sum of money at age 40 and wanted to use it to provide a guaranteed income after his retirement at age 60. Which of the following types of annuities would bes meet this need? a) immediate, b) flexible premium, c) deferred, d) variable

purchased with either lump sum or period-payments premium; benefits start sometime after 1 year from the date of purchase (often used to accumulate funds for retirement)

Define deferred annuity payment/

Immediate annuity payment is purchased with a single premium; income payments start within 12 months from the date of purchase.

Define immediate annuity payment?

a) without evidence of insurability.

The renewable provision allows the policy owner to renew the coverage at the expiration date? a) without evidence of insurability, b) only with evidence of insurability, c) with evidence of insurability if the insurer requires it, d) with evidence of insurability if the insured risk has increased

1) Annuitant - insured (must be a person); policy issued on annuitant's life, 2) Beneficiary - will receive any amount contributed to annuity (plus any gain) if annuitant dies during accumulation period, 3) owner-has all rights to policy (usually annuitant); can be corporation or trust.

What are annuity parties?

1) fixed annuities, 2) variable annuities, 3) indexed annuities.

What are the 3 types of annuities?

single premium and periodic / flexible premium.

What is anuities premium payment types?

1) an insurance component in the form of annually renewable term, 2) 2 death benefit options: Option A: level death benefit, and Option B - increasing death benefit, 3) can make partial surrender/cash withdrawal

What is flexible premium Universal Life insurance policy?

premiums paid until a certain time; coverage in effect to age 100

What is limited payment for whole life insurance policy?

d) cash value growth

which of the following features of the indexed whole life policy is NOT fixed? a) premium, b) death benefit, c) policy period, d) cash value growth

1) accumulation (pay-in) payments made into the annuity and 2) Annuitization (pay-out) payments made to the annuitant from the annuity.

What are annuity phases?

b) if the insured dies after the end of the term, there is no death benefit to the beneficiary.

Which of the following would be considered a disadvantage of term insurance? a) if the insured dies during the term, the policy pays only the accumulated cash value, b) if the insured dies after the end of the term, there is no death benefit to the beneficiary, c) the policy provides the smallest amount of coverage for the high premium, d) it cannot be renewed or converted to a permanent policy.

b) life paid-up at age 65

which of the following is an example of a limited-pay life policy? a) straight life, b) life paid-up at age 65, c) renewable term to age 70, d) endowment maturing at age 65.

1) renewable - renew the policy without evidence of insurability, 2) convertible - right to convert a term policy to a permanent policy without evidence of insurability.

What are features of term life policies?

1) permanent protection, 2) guaranteed elements (face amount, premium, and cash value), until death or age 100, 3) level premium, 4) cash value and other living benefits.

What are general characteristics of Whole Life insurance policy?

1) renews each year without proof of insurability and 2) premiums increase due to attained age

What is annually renewable term life policy?