LIFE INSURANCE POLICIES

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

100.

A policy states that it will pay a specific face amount 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?

20 year level term.

What type of life insurance policy is Life Paid-up at Age 65?

Limited-pay Whole Life

What type of whole life insurance policy generates immediate cash value?

Single Premium whole life

Who is entitled to the cash values in a life insurance policy?

The policyowner

In a joint life policy, when is the death benefit paid?

Upon the first death

Which of the following is true regarding term insurance?

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

What are the characteristics of the group that underwriters will consider before issuing a group life policy?

Group's purpose, size, financial strength and turnover

An insured receives a monthly summary regarding his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does he have?

Variable.

A policy states that it will pay a specified face amount if the insured dies during the 20 year premium-paying period and nothing if the death occurs are the 20 year period. What type of policy is this?

20-year level term.

Whole life policies provide protection until the insured reaches what age?

AGE 100.

What type of policy is typically issued without proof of insurability from the insured?

Group Policy

Which of the following best describes annually renewable term insurance?

It is level term insurance.

Between adjustable life and universal life policies, which one provides more flexibility to the policyowner?

Universal life

Both Universal Life and Variable Universal Life have a?

Flexible premium.

Which of the following are generally NOT considered when underwriting group insurance?

The insureds' medical history.

What is the major difference between the most common types of whole life policies: Straight Life, Limited Payment and Single Premium?

Premium payment mode

With a traditional whole life policy, the death benefit.

Remains constant over time.

Which of the following types 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.

Which of the following is an example of a limited-pay life policy?

Life paid-up at age 65.

In an Adjustable Life policy all of the following can be changed by policy owner Except?

The type of investment.

A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that?

Joint Life Policy.

In term policies, what happens to the premium throughout the term of the policy?

The premium remains level.

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?

Universal Life - Option A.

When dose an adjustable life policy accumulate cash value?

When the premiums paid are more than the cost of the policy.

What policy component must decrease in decreasing term insurance?

Face amount

A Universal Life insurance policy has two types of interest rates that are called?

Guaranteed and Current.

When the insured purchased a new home he wanted to purchase a life insurance policy that would protect his family against losing the home should he die before the mortgage was paid. The most inexpensive type of policy that would accomplish this need would be?

Decreasing term.

In variable universal life insurance, to what policy component does the term variable refer?

Cash value and death benefit

What are the death benefit options in universal life policies?

Option A - level death benefit, and Option B - increasing death benefit

Why are policy loans not available on term insurance?

There is no cash value to barrow against.

All other factors being equal, the least expensive first-year premium payment is found in

Annually Renewable Term.

When the amount of insurance is increased in an adjustable life policy, what will the insurer require from the insured?

Evidence of Insurability

An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?

It will increase because the insured will be 5 years older than when the policy was originally purchased.

An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?

Limited-pay Life.

What are the living benefits of whole life insurance?

Loan values

To sell variable life insurance policies, an agent just receive all of the following EXCEPT?

SEC registration.

If an agent wishes to sell variable life policies, what license must the agent obtain in addition to a life insurance license?

Securities.

What type of life insurance policy offers pure death protection?

Term

Whole life insurance policies mature when the insured reaches the age of 100. If the owner of a whole life policy (the insured) dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?

The full death benefit

What happens to the premium in an annually renewable term life policy?

The premium increases with each renewal.

How is the premium determined in a joint life insurance policy?

The premium is based on the average age of the insureds.

When would a 20-pay whole life policy endow?

When the insured reaches age 100

Regarding taxation, how does the cash value of a universal life policy accumulate?

Tax deferred

A group of 15 skydivers meet at a seminar and begin talking about life insurance during a break. Because it is expensive to get individual life insurance, they decide to band together to form a small group so that they will be eligible. They apply for small group life insurance and are rejected. Why?

The purpose of the group was to purchase life insurance.

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.

Which policy component decreases in decreasing term insurance?

Face amount.

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

Age 100.

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 increase by providing evidence of insurability.

What type of life insurance policy provides permanent protection?

Whole Life

What type of life insurance is most commonly used for group plans?

Annually renewable term.

In a single employer group plan, what is the name of a document that is issued to the employer?

. Master contract

What happens to the cash value when a whole life insurance policy matures?

Cash value is paid to the policyowner

The death protection component of a universal life policy is expressed as what type of coverage?

Annually renewable term

Which of the following would help prevent a universal life policy from lapsing?

Target premium.

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.

A policy that allows the beneficiary to collect both the death benefit and cash value upon the death of the insured is?

Universal Life, Option B.

Which of the following Life Insurance policies would be considered interest sensitive?

Universal Life.

If an insured terminates membership in group life insurance, to what type of insurance can the insured convert the coverage?

Whole life

What is the purpose of establishing the target premium for a universal life policy?

To prevent the policy from lapsing

Under Option B in a universal life policy, what happens to the death benefit?

The death benefit increases each year by the amount of the cash value increases

The policyowner of a Universal Life policy may skip paying and the policy will not lapse as long as?

The policy contains sufficient cash value to cover the cost of insurance.

A Universal Life Insurance policy is best described as a/an?

Annually Renewable Term policy with a cash value account.

Group life insurance policies are written as what type of insurance?

Annually renewable term

Who owns a group life insurance contract?

The employer (also known as the sponsor of the group)

What type of life insurance is best suited to cover a mortgage?

Decreasing term

If an employee wants to join group life insurance coverage outside of the open enrollment period, what would the employee have to provide?

Evidence of insurability

What is the main advantage of converting from group life insurance to individual coverage?

Evidence of insurability is not required.

What does "level" refer to in level term insurance?

Face amount

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must bee paid for what time period?

For 20 years or until the insured's death, whichever occurs first.

What type of policy issues certificates of insurance to the insured?

Group policy.

What type of life insurance policy provides permanent protection?

Whole Life.

All of the following could own group life insurance EXCEPT?

A group needing low-cost life insurance.

A Straight Life policy has what type of premium?

A level annual premium for the life of the insured.

Which of the following is true regarding a joint life policy?

Premium is based on the average age of the insureds.

Universal life policies have two types of interest rates. What are they?

Guaranteed and current

An individual has just borrowed $10,000 on a 5-year note from his bank. The note is due in installments. What type of life insurance policy would be best suited to this situation?

Decreasing term

What is the purpose of establish the target premium for a universal life policy?

To keep the policy in force.

An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?

Variable

What universal life option has a gradually increasing cash value and a level death benefit?

Option A.

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Option A.

An annually renewable term policy?

Renews each year with an increased premium.

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.

An individual owns an adjustable life policy. Sometime in the future he 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.

A whole life policy that requires that the policy-owner only pays premiums for a specified number of years is known as what kind of policy?

Limited-pay whole life.

The premium of a survivorship life policy compared with that of a joint life policy would be?

Lower.

What type of premium is charged on a straight life policy?

A level premium for the life of the insured

Who is insured under a juvenile life policy?

A minor

At age 30, an applicant wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit his needs?

Adjustable Life.

What are the two components of a universal policy?

Insurance and cash account

An insurance policy that only requires a payment of premium at its inception and provides insurance protection for the life of the insured and endows at the insured's age 100, is called?

Single premium whole life.

What type of whole life insurance policies only requires a payment of premium at its inception, and in addition to providing insurance protection for the life of the insured, endows at the insured's age 100?

Single premium whole life.

Which of the following policies be classified as a traditional level premium contract?

Straight Life.

What elements of an adjustable life policy can be changed by the policyowners?

The amount and payment period of the premium, the face amount, and the period for protection.

In annually renewable term policies, what is the annual premium based upon?

The insured's attained age

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?

Universal Life.

In what type of life insurance policies can the policyowner skip premium payments without the policy lapsing?

Universal life