Life Policies

This life insurance policy provides death protection for the insured's entire life, but premiums are not paid for the insured's entire life. a. 20-pay life b. Economatic life c. Modified whole life d. Indeterminate premium

20-pay life

Sandra wants to have flexibility with her life insurance policy to accommodate changes in her situation. She should consider: a. Convertible term b. Adjustable life c. Limited payment d. Economatic

Adjustable life

What policy provides flexible premiums, cash values, face amounts, premium-paying period and length of coverage? a. Adjustable life b. Whole life c. Equity indexed universal life d. Term life

Adjustable life

All of the following term life insurance policies have level premiums, EXCEPT: a. Level b. Decreasing c. Increasing d. Annual renewable term

Annual renewable term

Which life insurance policy has annual increasing premiums and does not build cash value? a. Annual renewable term b. Level premium term c. Decreasing term d. Increasing term

Annual renewable term

All of the following are guaranteed features in a variable life insurance policy, EXCEPT: a. Death benefit b. Cash value c. Premium rate d. Period of death protection

Cash value

Blake just bought a home and needs insurance to cover his mortgage. He does not have a lot of money to spend on this coverage. What policy would you recommend to Blake? a. Variable life b. Increasing term c. Ordinary whole life d. Decreasing term

Decreasing term

Sheldon wants a life insurance policy with premiums that do not increase over time. Which of the following policies would you recommend to him? a. Increasing term b. Annual Renewable term c. Indeterminate Premium term d. Convertible term

Increasing term

All of the following are drawbacks of term life insurance, EXCEPT: a. Term insurance can be increasingly expensive. b. Each time a term life insurance policy is renewed, the premium increases. c. Living benefits are available to the policyholder in the form of cash accrual. d. If term insurance must be discarded due to expense or the insured has surpassed the maximum age limit, then the insured may be left without any life insurance protection when it is needed most.

Living benefits are available to the policyholder in the form of cash accrual.

If Sandra chooses an adjustable life policy, all of the following are flexible, EXCEPT: a. Face amount of the policy b. Type of protection c. No requirement for proof of insurability d. Length of protection

No requirement for proof of insurability

A person who has a universal life policy and needs cash from the policy, but does not want to have an outstanding policy loan should: a. Take a partial surrender of the policy's cash value b. Take a full surrender of the policy's cash value c. Get a loan from the bank d. Take out a policy loan

Take a partial surrender of the policy's cash value

What are the two major types of life insurance? a. Term and whole b. Permanent and whole c. Temporary and term d. None of the above

Term and whole

Pure death protection only is provided by which life insurance policy? a. Term life insurance b. Whole life insurance c. Annuities d. None of the above

Term life insurance

What happens when a universal life policyholder pays the target premium? a. The face amount will automatically increase. b. The face amount will automatically decrease. c. The policy will resemble term life insurance. d. The policy will resemble whole life insurance

The policy will resemble whole life insurance.

Which type of life insurance provides living benefits? a. Whole b. Term c. Conventional d. No life insurance policy provides living benefits.

Whole

In a universal life insurance policy, the two most common adjustments made during a month are: a. Decrease premium and increase death benefit b. Shorten premium-paying period and decrease premium c. Lengthen premium-paying period and increase death benefit d. Cost of death protection deducted and current interest rate credited

Cost of death protection deducted and current interest rate credited

___________ policies have premiums that fluctuate between the current rate and maximum rate, as stated in the policy. a. Increasing b. Interim c. Indeterminate premium d. Decreasing

Indeterminate premium

Whole life and universal life policies have some similarities and differences. Which of the following is NOT a characteristic of a universal life policy? a. Policy owner may increase or decrease the death benefit b. Cash value is fixed and guaranteed c. Interest earned by the cash account cannot vary d. Flexible premiums schedule is available

Interest earned by the cash account cannot vary

All of the following statements are correct regarding variable universal life contract charges and fees, EXCEPT: a. Sales and loading charges are deducted from the policy's cash value. b. The full cost of death protection is deducted from the policy's cash value. c. Insurers must provide policyowner's with an annual statement of charges and interest earned. d. Interest earned is credited to the death benefit.

Interest earned is credited to the death benefit.

An adjustable life policy allows the policyowner to make all of the following changes, EXCEPT: a. Invest premiums in a separate account b. Change the length of the coverage period c. Increase or decrease the premium d. Change the length of the premium-paying period

Invest premiums in a separate account

Which of the following changes may the policyowner of an adjustable life policy NOT make? a. Lengthen the coverage period b. Decrease the premium c. Increase the premium d. Invest premiums in the insurer's separate account

Invest premiums in the insurer's separate account

Some universal policies permit a cash withdrawal. All of the following are true statements about universal life, EXCEPT: a. It is treated as a loan. b. It will reduce the cash value. c. It is not subject to interest. d. Repayment is treated like a premium payment.

It is treated as a loan.

Which of the following is not true regarding the cash value in an ordinary whole life policy? Select one: a. It grows tax-deferred. b. It may be used as a policy loan without affecting the death benefit. c. It is a nonforfeiture value that is fully guaranteed to the policyowner. d. It can be used to pay policy premiums.

It may be used as a policy loan without affecting the death benefit.

A limited payment life insurance policy is best suited for: a. Josh, a 25-year old successful entrepreneur with extra funds, who doesn't want to pay life insurance premiums when he retires. b. Kelly, a 40-year single waitress who wants the most insurance protection for the least amount of money. c. Megan and Tom, newlyweds who need a life insurance policy to cover the mortgage on their house. d. Berry, an 18-year old student with limited funds.

Josh, a 25-year old successful entrepreneur with extra funds, who doesn't want to pay life insurance premiums when he retires.

Which of the following policies has a level face amount with level premiums? a. Level premium term b. Convertible term c. Decreasing term d. Annual renewable term

Level premium term

Which term policy has level premiums and a level face amount? a. Annual renewable term b. Decreasing term c. Increasing term d. Level premium term

Level premium term

Gina and Jerry are purchasing life insurance. They decided on policies that would be paid up in 20 years. What type of policies did they purchase? a. Limited payment policies b. Continuous payment policies c. Economatic policies d. Single premium policies

Limited payment policies

All of the following statements regarding renewable term life insurance policies are false, EXCEPT: a. Renewable term life insurance policies can only be renewed by the insurance company, and the insured must provide evidence of insurability. b. Renewable term life insurance policies are always convertible. c. Renewable term life insurance policies may be renewed by the insured as long as evidence of insurability is provided. d. Renewable term life insurance policies are renewable at the insured's option.

Renewable term life insurance policies are renewable at the insured's option.

Which of the following laws defined a security product? a. Securities Act of 1933 b. Securities Act of 1934 c. Investment Company Act of 1940 d. None of the above

Securities Act of 1933

Which of the following best describes option B/option 2 under a universal life policy? a. The death benefit is the policy face amount or policy cash value, but not both. b. The death benefit is the policy face amount and the cash value. c. The death benefit is only the face amount. d. The death benefit is only the cash value.

The death benefit is the policy face amount and the cash value.

What policy can be described as annual renewable term with a cash value account? Select one: a. Universal life b. Adjustable life c. Decreasing term d. Modified whole life

Universal life

Which life policy offers the owner the opportunity to invest in products such as money -market funds, long -term bonds and the stock market? a. Adjustable Life b. Term Life c. Variable Life d. Universal Life

Variable Life

Gerald wants a life insurance policy in which he can choose the investment vehicle. Which policy would you recommend to him? a. Ordinary whole b. Variable life c. Universal life d. Adjustable life

Variable life

Which of the following policies allows the policyowner to buy term and direct the investments made in the cash value account? Select one: a. Variable b. Universal c. Variable universal life d. Equity indexed universal life

Variable universal life

Which policy has fixed premiums, a guaranteed minimum death benefit and nonguaranteed cash values? a. Whole life b. Universal life c. Variable whole life d. Variable universal life

Variable whole life

All of the following are true regarding adjustable life policies, EXCEPT: a. An adjustable life policy can be entirely whole or term, or a mix of both. b. If the policyowner decreases the premium, the policy could be adjusted to have more term coverage. c. When the premium is decreased, the insured is not required to provide evidence of insurability. d. When the face amount is increased, the insured is required to provide evidence of insurability.

When the premium is decreased, the insured is not required to provide evidence of insurability.

What is the primary purpose of the Securities Act of 1933? a. Defines a securities product b. Regulates sales representatives' duties c. Requires insurer to maintain a separate account for variable investments d. Sets a cap for sales fees

Defines a securities product

Which policy works the same way as universal life, but has an interest rate that is tied to the stock market index? a. Equity indexed universal life b. Adjustable life c. Flexible premium adjustable life insurance d. Universal life

Equity indexed universal life

Which of the following is not a characteristic of decreasing term life insurance? a. The policy face decreases to zero by the end of the policy period. b. The premium decreases to zero by the end of the policy period. c. The face amount equals zero on the day of policy expiration. d. Decreasing term insurance is often used to insure a mortgage.

The premium decreases to zero by the end of the policy period.

All of the following are advantages of whole life insurance, EXCEPT: a. Life insurance protection is provided for the insured's entire life. b. Premiums are level. c. The policy has living benefits _ grows cash value. d. The premium-paying period may extend beyond the income-earning years.

The premium-paying period may extend beyond the income-earning years.

Mortgage protection insurance uses what type of life insurance coverage? a. Level premium term b. Convertible term c. Decreasing term d. Annual renewable term

Decreasing term

What part of a mortgage reduction policy decreases over time? a. Policy premiums b. Cash value c. Face amount d. Policy term

Face amount

Term insurance is categorized by all of the following, EXCEPT: a. Temporary protection b. Premiums increase each time the policy is renewed c. Policy cash value grows tax-deferred d. Provides the largest amount of protection for the least amount of premium

Policy cash value grows tax-deferred

The primary difference between universal life and adjustable life is: a. Premium payments are flexible. b. Premium payments can be skipped. c. Face amount can be increased or decreased. d. None of the above

Premium payments can be skipped.

For what reason would the insurance company raise the death benefit of a universal life policy? a. Prevent the cash value from growing too quickly b. Require the policyowner to pay higher premiums c. To accommodate lower cash value growth d. To allow the policy to become a MEC

Prevent the cash value from growing too quickly

What are the benefits of a convertible and renewable term life insurance policy? Select one: a. Lower premiums for higher face amounts b. Increasing face amount with a level premium c. Decreasing face amount with a level premium d. Proof of insurability is not required to convert or renew coverage.

Proof of insurability is not required to convert or renew coverage.

All of the following statements are false regarding universal life insurance, EXCEPT: a. Proof of insurability is required to increase the policy face amount. b. Premium payments cannot be skipped. c. The face amount is level. d. Premiums are fixed.

Proof of insurability is required to increase the policy face amount.

All of the following characterize term life insurance, EXCEPT: a. Term life insurance provides the largest amount of coverage for the lowest amount of premium. b. Term life insurance provides pure death protection. c. Term life insurance provides living benefits (cash accrual). d. Term life insurance usually cannot be renewed beyond a certain age, usually 75.

Term life insurance provides living benefits (cash accrual).

Because variable contracts are equity products, they are subject to various regulations. Which of the following applies to variable contracts? a. NAIC regulations b. The 12% rule c. Flexible premium amounts d. Insurance regulations only

The 12% rule

Which of the following characteristics does not describe convertible term life insurance policies? a. No matter which age is used, premiums will be higher when the policy is converted. b. Most converted term policies use the insured's attained age to determine the new premium. c. The attained age is the insured's age upon purchase of the term life insurance policy. d. The terms of the conversion option are clearly stated in the policy.

The attained age is the insured's age upon purchase of the term life insurance policy.

All of the following are characteristics of whole life insurance, EXCEPT: a. Whole life insurance is permanent protection providing death protection for the insured's entire life. b. Whole life insurance provides living benefits in addition to permanent life insurance. c. Whole life insurance policies use the insured's age at issue to establish policy premiums. d. The cash value in a permanent life insurance policy is not a nonforfeiture benefit.

The cash value in a permanent life insurance policy is not a nonforfeiture benefit.

Wesley purchases an increasing term life insurance policy. Which of the following elements must increase in Wesley's policy? a. The premium b. The interest rate c. The death benefit d. The dividend options

The death benefit

Which of the following best describes option 1 under a universal life policy? a. The death benefit is the policy face amount or policy cash value, but not both. b. The death benefit is a designated amount specified by the policy owner. c. The death benefit is only the face amount. d. The death benefit is only the cash value.

The death benefit is a designated amount specified by the policy owner.

What happens when the cash value of a life insurance policy equals the face value? a. Taxes must be paid on the interest accumulation. b. Premiums must be increased so the policy does not become a MEC. c. The policy endows. d. The policy is void.

The policy endows.

Which of the following is true with regards to a Variable Universal life policy? a. The policyowner has no say in the investment choices, but can choose the premium payment b. The policyowner controls the investment choices and the premium amounts c. The insurer controls the investment choices in their general account d. The death benefit fluctuates, but only the insurer has a say in premium choices

The policyowner controls the investment choices and the premium amounts

After looking at his options, Randy decided on a single premium whole life policy. What is an advantage of this type of policy? a. The cost of protection is low if Randy dies soon after paying the premium. b. Administrative costs are higher on this policy. c. The total premium is lower. d. All of the above

The total premium is lower.

Why are whole life policies more expensive than some other insurance options? a. They must cover cash values, net insurance and mortality costs, as well as expenses. b. They last a really long time. c. The policyholders are high risk. d. Whole life is generally not more expensive.

They must cover cash values, net insurance and mortality costs, as well as expenses.

Which of the following best describes a circumstance in which the insurer would increase the death benefit of a universal life insurance policy? a. To lower premiums b. To decrease the death benefit c. To prevent the cash value from growing too quickly d. To decrease the policy loan interest rate

To prevent the cash value from growing too quickly

Term life insurance provides ________________. Whole life insurance provides _______________. a. pure death protection only; pure death protection only. b. pure death protection; death benefit and living benefits. c. death benefit and living benefits; pure death protection only. d. death benefit and living benefits; death benefit and living benefits.

pure death protection; death benefit and living benefits.