Life Insurance chapter 4
Which of the following is INCORRECT regarding a $1000,000 20-year level term policy?
At the end of 20 years, the policy's cash value will equal $100,000
Annually renewable term policies a level death benefit for a premium that
Increases annually
Which of the following is NOT a type of whole life insurance?
Increasing term
An employee is joining a group insurance plan. In order to avoid having to prove insurability, what must the employee do?
Join during the open enrollment period
Which of the following best defines target premium in a universal life policy?
The recommended amount to keep the policy in force throughout its lifetime
What is the purpose of establishing the target premium for a universal life policy?
To keep the policy in force
Which of the following types of policies allows for a flexible premium and a variable investment component?
Variable universal life insurance
Which of the following types of policies will provide permanent protection?
Whole life
Which type of life insurance policy generates immediate cash value?
Single Premium
The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as
The policy contains sufficient cash value to cover the cost of insurance
An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?
$100,000
When would a 20-pay whole life policy endow?
When the insured reaches age 100
Which of the following statements about group life is correct?
The cost of coverage is based on the ratio of men and women in the group
Which of the following determines the cash value of a variable life policy?
The performance of the policy portfolio
If an agent wishes to sell variable life policies, what license must the agent obtain?
Securities
The LEAST expensive first-year premium is found in which of the following policies?
Annually Renewable Term
Which of the following policies would be classified as a traditional level premium contract?
Straight life
Which of the following would help prevent a universal life policy from lapsing?
Target premium
A policy will pay the death benefit if the insured dies during the 20-year-premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?
Level term
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT
Upon conversion, the death benefit of the permanent policy will be reduced by 50%
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a
Convertible Term Policy
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
SEC registration
A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why?
The purpose of the group was to purchase life insurance.
Which component increases in the increasing term insurance?
Death Benefit
All of the following entities regulate variable life policies EXCEPT
The Guaranty Association
Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?
Joint Life
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?
The death benefit can be increased by providing evidence of insurability
An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy?
She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan
All of the following are true about variable products EXCEPT
The premiums are invested in the insurer's general account
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy
Required a premium increase each renewal
Which of the following statements is correct regarding a whole life policy?
The policyowner is entitled
In order to qualify for conversion from group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?
5
An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his
Attained age
What characteristic makes whole life permanent protection?
Coverage until death or age 100
What does "level" refer to in level term insurance?
Face amount
A universal Life insurance has two types of interest rates that are called
Guaranteed and Current
In which of the following cases will the insured be able to receive the full face amount from a whole life policy?
If the insured lives to the age 100
Which of the following has the right to convert the existing term coverage to permanent insurance?
Policyowner
An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?
The insurer will pay the full death benefit from the group policy to the beneficiary
What are the two components of a universal policy?
Insurance and cash account
An individual had just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation
Decreasing term
Which of the following is an example of a limited-pay life policy?
Life Paid-up at Age 65
Which of the following best describes annually renewable term insurance?
It is level term insurance
A domestic insurer issuing variable contracts must establish one or more
Separate accounts
All of the following statements are true regarding group insurance EXCEPT
Participants in the policy each receive a policy
All of the following could own group life insurance EXCEPT
A group needing low-cost life insurance
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be
Adjusted to the insured's age at the time of renewal
An insurance policy that only requires a payment of premium at its inception provides insurance protection for the life of the insured, and matures at the insured's age 100 is called
Single premium whole life
A Straight Life policy has what type of premium?
A level annual premium for the life of the insured
If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may
Require evidence of insurability
The death benefit under the Universal Life Option B
Gradually increases each year by the amount that the cash value increases
What type of premium do both Universal Life and Variable Universal Life policies have
Flexible
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?
Limited pay whole life
All of the following are characteristics of a group life insurance plan EXCEPT
There is a requirement to prove insurability on the part of the participants
Which of the following type of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?
Universal Life
