Life Policies - Section 5 - Quiz

The Payor Rider is mainly used with what policies?

Juvenile (Hint Payor Rider is mainly used with juvenile policies. If the payor (parent or guardian) becomes disabled or dies, the insurance company waives the premiums until the child reaches a certain age (usually 21))

_____________ charges a level annual premium with guaranteed death benefits to the insured when he/she is 100 years old

Limited Pay Life (Hint This policy is designed so that premiums for coverage will be completely paid up well before age 100. This type of policy is best designed for someone who doesn't want to pay premiums beyond a certain age)

Which type of life insurance policy has a rate of return that may be able to keep up with inflation, provide flexibility while protecting the cash value from market risk?

Index Universal Life (Hint Index universal life guarantees a minimum interest rate to be credited or gains linked to a specific index such as Standard & Poor's, whichever is greater)

All of the following concerning variable life is incorrect, except

The premium for the variable life policy purchases units (Hint The premium for a Variable life also known as a Variable Whole life policy is a fixed premium that purchases units in the separate account. Though the death benefit is guaranteed the cash value is not)

A Life Agent license will allow you to sell which of the following products without other licenses?

Universal life policy that has the death benefit linked to the S and P 500 (Hint Linking the death benefit to indexes such as CPI or SP 500 is offered by an additional rider and doesn't require a variable license)

Which of the following policies endow at age 100?

Whole life policies and 10 yr pay ( Hint A 10 yr pay is a limited pay whole life and all whole life policies endow at 100. Universal life which is one of the flexible policies are not guaranteed to endow)

Companies rate their policies based on what mode?

Yearly (Hint A life insurance company's policy rates are based on an annual payment plan so the company can invest a years worth of premiums)

A term policy is designed to mature upon:

The death of the insured during the insured period (Hint Term insurance pays the death benefit only if the insured died during the specified period of time)

All of the following statements about Whole Life are true except

The premium generally lower than most permanent plans (Hint Whole life policies are also known as permanent protection because the policy lasts for the duration of the life of the insured, or age 100. The death benefits and premiums are guaranteed and will remain level for life)

Universal term life insurance policies provide all of the following except

Though it's a hybrid it has the same 31 day grace period as term insurance (Hint The grace period is 62 days which begins with the first day of the first policy month in which both the net cash surrender value and the coverage protection amount, less the policy loan balance are less than zero)

All the following term policies would have a level premium for at least 10 years except

10/5 year level (Hint The split tells you the premium is only guaranteed level for 5 years, though the policy is a 10 year policy)

What is the difference between Par and Non-Par insurance policies?

A Non-Par is a nonparticipating life policy (Hint A non-par (stock company) or nonparticipating life insurance policy does not pay dividends to policyowners but dividends are paid to stockholder)

What life policy features a level premium and a death benefit that decreases each year?

Decreasing Term (Hint Decreasing term policies feature a level premium and a death benefit that decreases each year over the duration of the policy term)

The life insurance policy that is a 20 year pay with a level death benefit and the cash value increases in increments to an amount equal to the face of the policy at 65.

Endowment (Hint This is a 20 pay endowment to 65. The cash value equals the face amount in an endowment before age 100)

The death benefit of a whole life insurance policy is

Fixed (Hint The death benefit of a whole life policy is level which means its fixed at the same amount throughout the policy term)

What is a life policy written as a master policy?

Group (Hint Group life insurance is written as a master policy issued to the sponsoring organization, covering the lives of more than one individual member of that group)

A term policy where the premium may fluctuate between the current charge and a maximum amount that is stated in the insurers premium table, based on the insurers mortality experience, expenses, and investment return is known as

Indeterminate level premium term (Hint This is indeterminate level premium term. Non-guaranteed level premium term the premiums are only guaranteed for a limited time period such as five or ten years, after which the insurer reserves the right to increase the premiums. Guaranteed level premiums term guarantees the premium will remain the same throughout the policy period)

What is the difference between a jumping juvenile and a regular juvenile life policy?

Jumping juvenile's face amount increases at a certain age, but premiums remain level. (Hint Jumping juvenile is a common juvenile policy where the face amount increases at a predetermined age (usually 21) but the premium remains level)

The statement that does not apply to a Modified life policy would be

Premiums increase in the early years of the policy however eventually level out (Hint A modified whole life policy is premium paying to age 100 and it has premium increase. The premium are discounted for the first 5 years)

What term insurance provision is an incentive for an insured to obtain lower premiums?

Re-entry provision (Hint The incentive for an insured to re-enter is that the premium will typically be lower over the next level premium period than if the policy is simply allowed to renew)

A form of term insurance that provides the policyowner with a reduced premium rate if he/she can requalify by providing evidence of insurability form time to time is referred to as

Re-entry term (Hint Re-entry term is a renewable and convertible term issued at low rates due to extensive underwriting. Upon renewal if the insured submits to being underwritten again they may qualify to keep the rates low. If not there is a maximum rate that can be charged at renewal)

Which whole life policy insures two or more lives for a premium that is based on a joint age?

Survivorship life (Hint Survivorship life insures two or more lives for a premium that is based on a joint age)

Which of the following is true when comparing whole life with universal life?

The interest rate earned in a whole life policy is fixed and guaranteed. The interest rate paid by Universal life is interest-sensitive and he actual rate paid depends upon what the insurer can earn from year to year)

Whole life policies are permanent plans because they last for the duration of

The life of the insured or age 100 (Hint Whole life policies are also known as permanent protection because they last for the duration of the life of the insured or age 100)

All the following statements are true about endowments except

The living benefits are always paid to the beneficiaries (Hint Endowments are payable as a living benefit to the insured and as a death benefit to the beneficiary)

All of the following apply to universal life except

The policy is considered unbundled as it consists of an increase term and a cash account (Hint The universal life policy is unbundled however it consists of decreasing term and a cash account)

Universal Life is a flexible premium adjustable benefit life insurance policy that

accumulates cash value (Hint Universal Life is a flexible premium adjustable benefit life insurance policy that accumulates cash value)

All the following are true about the term conversation provision except

Policies being waived must wait 30 days before converting (Hint The policy is not eligible for conversion if premiums are currently being waived)

All of the following are true regarding survivorship life except

Survivorship life is a contract that insures one person on the policy and one on a rider (Hint Survivorship life insurance is a contract that insures two people, with the promise to pay only upon the second death)

Term insurance is considered

Temporary with no cash value. (Hint Term insurance is considered temporary because it only last for the length of time specified in the contract)

Which of the following types of contract does not have a variable version?

Term (Hint Term insurance does not have a variable version)

Which of the following are disadvantages to term insurance?

Term policies have no living benefits (The following is a brief list of other disadvantages to term insurance Term is pure death protection only, with no living benefits such as cash values. The term premium increases with each renewal, and over a long period of time the premium becomes expensive and probably unaffordable. Most term policies are generally not renewable beyond a certain age, and thus protection is lost. An estimated 90% of all term policies never pay out a death benefit due to either the insured living through the contract period or the insured cancelling the policy)

Which of the following statements about decreasing term is false?

The death benefit decreases over the policy's term until it reaches 20% of the initial face amount (Hint The amount of death benefit decreases with time and eventually reaches zero, the policy is not renewable. It may be convertible, however)