Life Insurance Policies
What type of life insurance policy offers pure death protection?
Term
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 death occurs after the 20-year period. What type of policy is this?
20-year level term
What type of premium is changed 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? A: Adjustable life B: single premium whole life C: interest-sensitive whole life D: Decreasing term
A: Adjustable life Adjustable life policies allow for increases or decreases in the face amount or premium, so long as the premium is sufficient to pay for the mortality. Any increase in face amount requires proof of insurability
The LEAST expensive first-year premium is found in which of the following policies? A: Annually renewable term B: increasing term C: Decreasing term D: Level term
A: annually renewable term
Which of the following statements about group life is correct? A: The cost of coverage is based on the ratio of men and women in the group B: The premiums are higher than in an individual policy because there is no medical exam C: the group sponsor receives a Certificate of Insurance D: the policy can be converted to an individual term insurance policy
A; the cost of coverage is based on the ratio of men and women in the group Group life insurance can be converted to an individual whole life, Not a term, policy; the group life insurance premiums are usually lower than those of an individual policy; the group sponsor receives a master contract, while the participants receive certificates of insurance.
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an A; Adjustable life B: Interest-sensitive whole life C: Credit life D: Annual Renewable term
B: interest-sensitive whole life
An adjustable life policyowner can change which of the following policy features? A: the insured B: the coverage period C: the mortality expense D; the investment account
B: the coverage period
All of the following are characteristics of a group life insurance plan EXCEPT A; the cost of the plan is determined by the average age of the group B: there is a requirement to prove insurability on the part of the participants C: the participants receive a certificate of insurance as their proof of insurance D: a minimum number of participants is required in order to underwrite the plan
B: there is a requirement to prove insurability on the part of the participants
The policy owner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? A: the death benefit can be increased only when the policy has developed a cash value B: the death benefit can be increased only be exchanging the existing policy for a new one C; the death benefit can be increased by providing evidence of insurability D: The death benefit cannot be increased
C: The death benefit can be increased by providing evidence of insurability
what happens to the cash value when a whole life insurance policy matures?
Cash Value is paid to the policyowner
In variable universal life insurance, to what policy component does the term variable refer?
Cash value and death benefit
An individual has just borrowed $10,000 on a 5 year note from the bank. The note is due in installments. What type of life insurance policy would be best suited to this situation?
Decreasing term
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 type of policy is typically issued without proof of insurability from the insured?
Group policy
What type of policy issues certificates of insurance to the insureds?
Group policy
What are characteristics of the group that underwriters will consider before issuing a group life policy?
Group's Purpose, Size, Financial strength and turnover
A whole life policy that requires that the policyowner only pays premium for a specified number of years is known as what kind of policy?
Limited pay whole life
What type of life insurance policy is Life Paid-up at age 65
Limited pay whole life
What are the living benefits of a whole life policy?
Loan values
What type of life insurance policy provides permanent protection?
Whole life
What universal life option has a gradually increasing cash value and a level death benefit?
Option A
What are the death benefit options in universal life policies?
Option A - Level death benefit Option B - Increasing death benefit
What happens to the premium in an annually renewable term life policy?
Premium increases with each renewal
What is the major difference between the most common types of whole life policies: Straight life, Limited payment and Single premiums?
Premium payment mode
Who owns a group life insurance contract?
The employer (sponsor of the group)
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
Who is entitled to the cash values in a life insurance policy?
The policyowner
In term Policies, what happens to the premium throughout the term of the policy?
The premium remains level
Why are policy loans not available on term insurance?
There is no cash value to borrow against
Between adjustable life and universal life policies, which one provides more flexibility to the policyowner?
Universal Life
In what type of life insurance policies can the policyowner skip premium payments without the policy lapsing?
Universal Life
In a joint life policy, when is the death benefit paid?
Upon the first death
When does an adjustable life policy accumulate cash value?
When the premiums paid are more than the cost of the policy
If an insured terminates membership in group life insurance, to what type of insurance can the insured convert the coverage?
whole life
Which type of life insurance policy generates immediate cash value? A: Single Premium B: level term C: decreasing term Continuous premium
Single premium
Regarding taxation, how does the cash value of a universal life policy accumulate?
Tax deferred
What is the purpose of establishing the target premium for a universal life policy?
To prevent the policy from lapsing
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 is another name for interest-sensitive whole life insurance? A: Current assumption life B: Variable life C: Term Life D: adjustable life
A: Current assumption life Interest-sensitive whole life, also referred to as current assumption life, is a whole life policy that provides a guaranteed death benefit at age 100
The policyowner of 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
Whole life policies provide protection until the insured reaches what age?
Age 100
Group life policies are written as what type of insurance?
Annually renewable term
The death protection component of a universal life policy is expressed as what type of coverage?
Annually renewable term
How is the premium determined in a joint life insurance policy?
Based on the average age of the insureds
Which of the following best describes annually renewable term insurance? A: It requires proof of insurability at each renewal B: Neither the premium nor the death benefit is affected by the insured's age C: it provides an annually increasing death benefit D: It is level term insurance
D: It is level term insurance Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost
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? A: variable life B: adjustable life C: graded premium life D: Limited-pay life
D: Limited-pay life In limited-pay policies, the premiums for coverage will be completely paid up well before age 100, usually after a specified number of years
If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may A: Require a higher premium B: prolong the open enrollment period C: Increased medical requirements on existing members D: Require evidence of insurability
D: Require evidence of insurability In group underwriting the evidence of insurability is usually not required of each participant unless he or she is enrolling for coverage outside of the normal enrollment period.
To sell variable life insurance policies, an agent must receive all of the following except A: FINRA registration B: A securities license C: A life insurance license D: SEC registration
D: SEC registration
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 A: Built cash values B: Required proof of insurability every year C: decreased death benefit at each renewal D: required a premium increase each renewal
D: required a premium increase each renewal Annually renewable term policies' premiums are adjusted each year to the insured's attained age; however, the policy may be guaranteed renewable. Death benefits remain level, and as with any term policy, there are no cash values
When the amount of insurance is increased in an adjustable life policy, what will the insurer require from the insured?
Evidence of insurability
What policy component must decrease in decreasing term insurance?
Face Amount (death benefit)
What does level refer to in level term insurance
Face amount. Level term policies maintain level death benefit (or face amount) throughout the term of the policy. In level term insurance, the premium also remains consistent over the years, unlike the premiums of many policies, which increase as the policyholder ages.
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid for what time period?
For 20 years or until the insured's death, whichever occurs first
Universal Life policies have two types if interest rates. What are they?
Guaranteed and current
What type of whole lfie 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
What type of whole life insurance policy generates immediate cash value?
Single premium whole life
What elements of an adjustable life policy can be changed by the policy holder?
The amount and payment period of the premium the face amount the period of protection
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
IF annually renewable term policies, what is the annual premium based upon?
The insured's attained age
When would a 20-pay whole life policy endow?
When the insured reaches age 100 A limited-pay whole life policy, just like straight life, endows for the face amount if the insured lives to age 100. The premium is, however, completely paid off in 20 years.