Life Insurance Policies

describe a whole life policy

a policy providing death benefit protection for life or to age 100, cash value, level death benefit, and level premium

what happens at age 100?

age 100 is the age at which many insurers calculate the policy's cash value as equal to its death benefit

which life policy has cash value gains that mirror or are tied to a stock market index, such as the s&p 500?

an Indexed Life Insurance policy

what life insurance policy pays a benefit at the earlier of death or the end of a specified period?

an endowment

what is a lump-sum premium?

another name for single-pay whole life

at what age does a whole life policy mature?

at age 100

at what age is a whole life policy's cash value assumed to equal its death benefit?

at age 100

whole life is a combination of term protection and ___

cash value

how long will coverage be provided under a 10-pay whole life product?

coverage will continue until death or age 100

generally, credit insurance uses ___ term

decreasing

premiums on a VL policy are ___

fixed

for how long will the premium on a 20-year level term policy remain level?

for 20 years

when converting policies, what must remain constant?

generally, the death benefit must remain constant

who assumes the investment risk in a traditional insurance contract?

insurance company

what are the advantages of term insurance?

it is initially less expensive than whole life, it may offset debts, and ensures insurability

what is another name for a "first to die" policy?

joint life

which policy pays a death benefit and concludes or ends on the death of any insured party listed on the contract?

joint life policy

what is cash value?

the equity that grows inside a permanent policy

true or false: a 20-year family income policy will pay for 7 years if insured dies 13 years after the policy issue

true. the policy will pay the 7 years of remaining benefit as it uses decreasing term insurance

can the death benefit of a variable life policy increase over time?

yes, assuming the underlying investments outperform expectations and increase in value

does a variable life policy have a guaranteed minimum death benefit?

yes. regardless of account performance, the minimum DB is paid (typically, the initial DB listed on the policy's face).

a 10-year term policy provides coverage for ___ years

10

which whole life payment option would have the highest annual premium -10, 20, or 30 pay?

10 pay. the fewer the payments, the greater each payment must be for the policy to mature

the cash value of a single premium whole life policy will equal the death benefit at age ___

100

whole life premium rates are based on a rate per $___ of coverage

1000

a 20-year endowment will mature at the end of ___ years

20

the cash value of a whole life policy grows at a minimum interest rate of ___% to ___%

3, 4

a jumping juvenile policy has a death benefit that increases to ___ times its stated value with no premium increase

5

name the policy that combines whole life insurance and a level term rider providing coverage on the breadwinner

a family maintenance plan

what two licenses are required to sell variable products?

a life insurance and FINRA license

describe an adjustable life policy

a policy that offers the ability to change the death benefit based on a person's needs

what is original age or retroactive conversion?

a type of conversion that uses the age of the original policy purchase

what nontraditional life insurance policy has a flexible death benefit and a rate of return that is interest-sensitive?

a universal life policy

which life insurance policy has a cash value that is invested in securities and has the potential for greater growth?

a variable life policy

what is single-pay whole life?

a whole life policy with a one-time premium and coverage provided until age 100 or death

what is 10-pay whole life?

a whole life policy with premiums paid for 10 years and coverage provided until age 100 or death

what is straight life or continuous premium life?

additional ways to describe ordinary whole life

why is whole life insurance more expensive than term insurance?

because of the building up of cash value

what is attained or actual age conversion?

conversion where new policy premiums are based on a person's current age

name the ability to change from a term policy to a whole life policy without providing evidence of insurability?

convertibility

___ life insurance is purchased to protect a borrower if a lender dies and cannot repay a loan

credit

what type of policy protects the bank in the event a borrower dies?

credit life

what is another name for interest-sensitive whole life insurance?

current assumption whole life

the cash value and potential death benefit of a VL policy vary ___

daily

a VL contract has a guaranteed minimum ___

death benefit

decreasing term insurance has a ___ death benefit

decreasing

what type of insurance policy is most often used as a mortgage redemption policy?

decreasing term insurance

most credit life policies utilize ___ term insurance and coverage may not exceed the ___

decreasing, amount of the loan

the premium on an annually renewable level term policy increases ___

each year

___ pay a living benefit at end of a set timeframe or a death benefit should death occur during that timeframe

endowments

describe an endowment

endowments have heavy cash savings, intended for future uses such as retirement or college funding

what life insurance policy uses dividends to purchase one-year term insurance to supplement a reducing death benefit?

enhance ordinary or economatic life

what WL product has a guaranteed minimum return and opportunity for CV growth based on the performance of a stock index?

equity-index whole life

true or false: term insurance builds cash value

false

true or false: upon death, the cash value is payable in addition to the whole life death benefit

false

true or false: a 20-year old family maintenance income policy pays for 5 years if insured dies 15 years after policy issue

false. regardless of the death date, the policy will pay for 20 years since it uses level term insurance

what policy combines whole life insurance and a decreasing term rider providing coverage on the breadwinner?

family income policy

the premium on a universal life policy may be ___

flexible

a VL policy has a ___ minimum death benefit, but the cash value is ___

guaranteed, not guaranteed

a jumping juvenile policy may also be called ___

juvenile life insurance

a WL death benefit and premium both remain _______ for the life of the policy

level

the death benefit and premium in a whole life contract are ___ throughout the owner's lifetime

level

whole life premiums remain ___ for the life of the policy

level

decreasing term insurance has a ___ premium and a ___ death benefit

level, decreasing

a level term policy has a ___ death benefit and premiums will increase at the ___ period

level, next renewal

a VL policy has a ___ premium and a cash value that is ___

level, not guaranteed

a 5-year level term policy will renew every 5 years subject to ___

maximum age limitations

what are loan option and cash surrender?

methods available to the policy owner to obtain or access the policy's cash value

what whole life product has lower premiums for the first 3 to 5 years of the contract, with a one-time premium increase

modified premium whole life

what whole life product has lower premiums for the first 3 to 5 years of the contract, with a one-time premium increase?

modified premium whole life

does a term life policy have cash value?

no. term life is pure insurance

what are the two UL death benefit options?

options a and b

who is the owner of a juvenile insurance policy?

parent or legal guardian

as a client ages, what happens to her premium payments in a variable life policy?

payments in a variable life policy remain fixed (level)

in a group credit policy, the bank is both the ___ and the ___

policyowner, beneficiary

straight life has a ___ and ___ premium

predetermined, level

cash value increases with every ___ payment after the ___ year

premium, third

what age is used to determine level term policy renewals?

premiums are based on a person's actual age, and renewal premiums will increase

term insurance is described as ___ protection

pure

which WL payment option would have the lowest overall premium over the policy life-- 10-pay, 20-pay, or single-pay?

single pay

what is another name for a second or last to die policy?

survivorship life

which policy pays a death benefit, but only after the last remaining policy insured dies?

survivorship life

what are the disadvantages of term insurance?

temporary protection, no cash value, premiums increase with each renewal (level term)

the death benefit of a term policy is payable only if death occurs during the ___ period

term coverage

which type of insurance provides temporary protection?

term insurance

what is the renewability feature?

the ability to renew a term policy without having to provide evidence of insurability

what is policy equity?

the cash value in a whole life policy

what is predetermined in a whole life contract?

the death benefit, cash values, premiums, nonforfeiture and surrender values

what is the target premium?

the initial premium established to fund a UL policy

what does term insurance provide?

the maximum amount of protection with the lowest initial outlay of premiums

describe a family policy

the policy provides whole life benefits on the breadwinner, with level term insurance on spouse and dependents

cash value generally begins to build within a whole life policy sometime in the ___ year

third

true or false: a universal life policy allows for partial withdrawals of the cash value

true

true or false: a whole life policy never requires renewal

true

true or false: regardless of cash value performance, VL policies have a guaranteed minimum death benefit

true

true or false: term insurance is temporary, but whole life is permanent

true

describe an Equity Index Life policy

usually a UL policy with cash value tied to an equity index account; offers a guaranteed minimum rate of return

identify the acronym: VL

variable life

what policy combines variable life with flexible premiums?

variable universal life

what is an unbundled premium?

when a UL life policyowner receives an annual statement breaking down all of the policy expenses and charges