Type of Life Policies
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a A Decreasing Term Policy. B Whole Life Policy. C Convertible Term Policy. D Renewable Term Policy.
Convertible Term Policy.
The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer is called the A Complete contract. B Entire contract. C Total contract. D Aleatory contract.
Entire contract.
Variable Whole Life insurance is based on what type of premium? A Increasing B Flexible C Graded D Level fixed
Level fixed
Which of the following is called a "second-to-die" policy? A Survivorship life B Family income C Juvenile life D Joint life
Survivorship life
All of the following entities regulate variable life policies EXCEPT A The Insurance Department. B The Guaranty Association. C Federal government. D The SEC.
The Guaranty Association.
The initial amount of credit life insurance may NOT exceed A The borrower's annual income. B The amount to be repaid under the contract. C An amount set by statute and adjusted regularly for inflation. D The borrower's monthly income.
The amount to be repaid under the contract.
An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term? A The insured may renew the policy for another 10 years at the same premium rate. B The insured may renew the policy for another 10 years, but at a higher premium rate. C The insured must provide evidence of insurability to renew the policy. D The insured may only convert the policy to another term policy.
The insured may renew the policy for another 10 years, but at a higher premium rate.
Which of the following is correct regarding credit life insurance? A It insures the life of a creditor. B It has a maximum term of 20 years. C It insures the life of a debtor. D It is purchased on an installment basis.
It insures the life of a debtor.
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client? A Life annuity with period certain B Increasing term C Limited pay whole life D Interest-sensitive whole life
Limited pay whole life
Which of the following policies would be classified as a traditional level premium contract? A Adjustable Life B Universal Life C Variable Universal Life D Straight Life
Straight Life
Which component increases in the increasing term insurance? A Interest on the proceeds B Premium C Death benefit D Cash value
Death benefit
Which of the following would be the beneficiary in credit life insurance? A Borrower B Creditor C Insured D Company
Creditor
A Return of Premium term life policy is written as what type of term coverage? A Decreasing B Renewable C Level D Increasing
Increasing
Which of the following is a key distinction between variable whole life and variable universal life products? A Variable whole life allows policy loans from the cash value. B Variable universal life has a fixed premium. C Variable whole life has a guaranteed death benefit. D Variable universal life is regulated solely through FINRA.
Variable whole life has a guaranteed death benefit.
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? A Variable life B Universal life C Whole life D Decreasing term
Decreasing term
If an agent wishes to sell variable life policies, what license must the agent obtain? A Securities B Adjuster C Surplus Lines D Personal Lines
Securities
Which of the following life insurance policies is designed to cover two people and pay benefits after both insureds have died? A Indexed Universal Life B Guaranteed Universal Life C Variable Universal Life D Survivorship Universal Life
Survivorship Universal Life
The premium of a survivorship life policy compared with that of a joint life policy would be A As high. B Half the amount. C Lower. D Higher.
Lower.
The following are features of the Indexed Universal Life EXCEPT A Policy's cash value is dependent on the performance of the equity index. B Sale of this product requires a securities license. C Flexible premium. D Adjustable death benefit.
Sale of this product requires a securities license.
Which statement is NOT true regarding a Straight Life policy? A The face value of the policy is paid to the insured at age 100. B It usually develops cash value by the end of the third policy year. C It has the lowest annual premium of the three types of Whole Life policies. D Its premium steadily decreases over time, in response to its growing cash value.
Its premium steadily decreases over time, in response to its growing cash value.
What is the purpose of a suicide provision within a life insurance policy? A To limit the insurer's liability after the 2 year waiting period B To deter the policyowner from committing suicide C To protect the policyowner D To protect the insurer from persons who purchase life insurance with the intention of committing suicide
To protect the insurer from persons who purchase life insurance with the intention of committing suicide
The policyowner 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 by exchanging the existing policy for a new one. B The death benefit can be increased by providing evidence of insurability. C The death benefit cannot be increased. DThe death benefit can be increased only when the policy has d eveloped a cash value.
The death benefit can be increased by providing evidence of insurability.
Which of the following is NOT allowed in credit life insurance? A Creditor having a collateral assignment on the policy B Creditor requiring that a debtor has a life insurance C Creditor becoming a policy beneficiary D Creditor requiring that a debtor buys insurance from a certain insurer
Creditor requiring that a debtor buys insurance from a certain insurer
A young father would like a life insurance policy to provide coverage for all five family members at the lowest cost. Which type of policy would he most likely buy? A Family Protection Policy B Universal Life Policy C Family Income Policy D Level Term Policy
Family Protection Policy
Annually renewable term policies provide a level death benefit for a premium that A Decreases annually. B Remains level. C Fluctuates. D Increases annually.
Increases annually.
Which of the following determines the cash value of a variable life policy? A The company's general account B The policy's guarantees. C The premium mode D The performance of the policy portfolio
The performance of the policy portfolio
For variable products, underlying assets must be kept in A A revenue account. B A money market account. C A general account. D A separate account.
A separate account.
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
Adjustable Life
The death benefit under the Universal Life Option B A Decreases by the amount that the cash value increases. B Increases for the first few years of the policy, and then levels off. C Remains level. D Gradually increases each year by the amount that the cash value increases.
Gradually increases each year by the amount that the cash value increases.
One of the advantages of a family life insurance policy that provides coverage for children is that it A Allows any income the children make to be included in coverage. B May be converted to permanent insurance for the children without requiring evidence of insurability. C Covers children for free. D Allows the spouse extra coverage for every child covered.
May be converted to permanent insurance for the children without requiring evidence of insurability.
An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called A Modified Endowment Contract (MEC). B Level term life. C Graded premium whole life. D Single premium whole life.
Single premium whole life.
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? A The insured's premiums will be waived until she is 21. B The premiums will become tax deductible until the insured's 18th birthday. C Since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected. D The insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums.
The insured's premiums will be waived until she is 21.
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? A Survivorship Life Policy B Second-to-Die C Family Income Policy D Joint Life Policy
Joint Life Policy
To sell variable life insurance policies, an agent must receive all of the following EXCEPT A A securities license. B A life insurance license. C SEC registration. D FINRA registration.
SEC registration.
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be A Determined by the health of the insured. B Based on the issue age of the insured. C Discounted. D Adjusted to the insured's age at the time of renewal.
Adjusted to the insured's age at the time of renewal.
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 A Until the policyowner reaches age 65. B For at least 20 years. C Until the policyowner's age 100, when the policy matures. D For 20 years or until death, whichever occurs first.
For 20 years or until death, whichever occurs first.
Concerning Juvenile Life insurance, which of the following statements is INCORRECT? A Usually a parent or guardian is the applicant for insurance on the life of a minor. B It can be a limited premium payment policy. C Juvenile Life is classified as any life insurance written on the life of a minor. D Juvenile Life is classified as any life insurance purchased by a minor.
Juvenile Life is classified as any life insurance purchased by a minor.
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary? A Joint and survivor B Single life C Fixed-amount D Life income with period certain
Life income with period certain
In a survivorship life policy, when does the insurer pay the death benefit? A If the insured survives to age 100 B Upon the last death C Upon the first death D Half at the first death, and half at the second death
Upon the last death
In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT A The amount of insurance. B The type of investment. C The length of coverage. D The premium.
The type of investment.
Which of the following is TRUE regarding the insurance amount in a credit life policy? A The amount of coverage can be greater than the amount owed. B The creditor can only insure the debtor for the amount owed. C The creditor may insure the debtor for an unlimited amount of coverage. D Allowable amount of coverage is determined by the State Insurance Commissioner.
The creditor can only insure the debtor for the amount owed.
Which of the following policies is characterized by a provision where the premiums are lower in the early years of the policy and increase over time to a point where they become level for the remainder of the policy? A Indeterminate premium whole life B Enhanced whole life C Minimum deposit whole life D Graded premium whole life
Graded premium whole life
What kind of policy issues certificates of insurance to insureds? A Nonqualified annuity B Any insurance C Group insurance D Individual insurance
Group insurance
If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this? A Single premium policy B Jumping juvenile policy C Limited pay whole life policy D Modified life insurance policy
Jumping juvenile policy
A Straight Life policy has what type of premium? A An increasing annual premium for the life of the insured B A decreasing annual premium for the life of the insured C A variable annual premium for the life of the insured D A level annual premium for the life of the insured
A level annual premium for the life of the insured
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy, as well as a refund of all of the premiums paid. Which rider is attached to the policy? A Decreasing term B Accidental death C Return of premium D Cost of living
Return of premium
Which of the following types of insurance policies is most commonly used in credit life insurance? A Increasing term B Whole life C Equity indexed life D Decreasing term
Decreasing term
What type of insurance would be used for a Return of Premium rider? A Annually Renewable Term B Increasing Term C Level Term D Decreasing Term
Increasing Term
All of the following are true regarding a decreasing term policy EXCEPT A The contract pays only in the event of death during the term and there is no cash value. B The face amount steadily declines throughout the duration of the contract. C The payable premium amount steadily declines throughout the duration of the contract. D The death benefit is $0 at the end of the policy term.
The payable premium amount steadily declines throughout the duration of the contract.
All of the following are true about variable products EXCEPT A The cash value is not guaranteed. B Policyowners bear the investment risk. C The premiums are invested in the insurer's general account. D The minimum death benefit is guaranteed.
The premiums are invested in the insurer's general account.
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined and the cash value fell to $10,000. If the insured dies, how much will be paid out? A $10,000 B $40,000 C $50,000 D $60,000
$50,000
Which of the following is TRUE regarding an indeterminate premium whole life policy? A The premium can be raised up to a guaranteed maximum rate. B The premium is lower in the first year of the policy; then it is gradually raised every year. C The premium is level throughout the life of the policy. D The premium is usually higher in the first few years of the policy.
The premium can be raised up to a guaranteed maximum rate.
Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value? A Decreasing term life B Variable universal life C Increasing term life D Credit term life
Variable universal life
Which of the following features of the Indexed Whole Life policy is NOT fixed? A Policy period B Cash value growth C Premium D Death benefit
Cash value growth
Which of the following types of insurance covers the whole family in a single contract? A Family Income Policy B Survivorship Policy C Whole Life Policy D Family Policy
Family Policy
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.
It is level term insurance.
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? A Joint Life B Decreasing Term C Whole Life D Ordinary Life
Joint Life
Which of the following riders would NOT cause the Death Benefit to increase? A Accidental Death Rider B Payor Benefit Rider C Guaranteed Insurability Rider D Cost of Living Rider
Payor Benefit Rider
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 Decreased death benefit at each renewal. B Required a premium increase each renewal. C Built cash values. D Required proof of insurability every year.
Required a premium increase each renewal.
Graded-Premium Whole Life policy premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will A Continue to increase. B Return to the initial premium amount. C Decrease again. D Be level thereafter.
Be level thereafter.
All of the following statements are correct regarding credit life insurance EXCEPT A Benefits are paid to the borrower's beneficiary. B The amount of insurance permissible is limited per borrower. C Premiums are usually paid by the borrower. D Benefits are paid to the creditor.
Benefits are paid to the borrower's beneficiary.
What provision in an insurance policy extends coverage beyond the premium due date? A Waiver of premium B Grace period C Free look D Automatic premium loan
Grace period
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? A Equity Indexed Universal Life B Variable Universal Life C Universal Life - Option A D Universal Life - Option B
Universal Life - Option A
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.
Interest-sensitive Whole Life.
When the breadwinner that is insured by a Family Policy dies, what rights are provided to other family members that are covered under the policy? A They can convert their coverage to permanent life insurance without evidence of insurability. B They can convert their coverage to permanent life insurance with evidence of insurability. C Family members are not provided any rights. D They can surrender the coverage for its cash value.
They can convert their coverage to permanent life insurance without evidence of insurability.
Which of the following riders would NOT cause the Death Benefit to increase? A Cost of Living Rider B Accidental Death Rider C Payor Benefit Rider D Guaranteed Insurability Rider
Payor Benefit Rider
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? A It will increase each year during the next 5 years as the face amount increases each year. B It will increase because the insured will be 5 years older than when the policy was originally purchased. C It will remain the same for the new 5-year term. D It will decrease for the new 5-year term since the insured is now a lesser risk to the company.
t will increase because the insured will be 5 years older than when the policy was originally purchased.
B just bought a new car, which he anticipates will be paid for 4 years from now. He also wants to buy a life insurance policy, but is financially limited until the car is paid off. Which of the following types of policies would be best for B? A Limited Pay B Interest-sensitive Whole Life C Modified Life D Limited Term
Modified Life
An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called A Single premium whole life. B Modified Endowment Contract (MEC). C Level term life. D Graded premium whole life.
Single premium whole life.
When the breadwinner that is insured by a Family Policy dies, what rights are provided to other family members that are covered under the policy? A They can surrender the coverage for its cash value. B They can convert their coverage to permanent life insurance without evidence of insurability. C They can convert their coverage to permanent life insurance with evidence of insurability. D Family members are not provided any rights.
They can convert their coverage to permanent life insurance without evidence of insurability.
The following are features of the Indexed Universal Life EXCEPT A Adjustable death benefit. B Policy's cash value is dependent on the performance of the equity index. C Sale of this product requires a securities license. D Flexible premium.
Sale of this product requires a securities license.
An insured and his spouse own a home. When the insured dies, the insurer pays the remaining balance on his home loan. Which type of life insurance provision/rider does this describe? A Accidental Death and Dismemberment B Family Term C Mortgage Redemption D Payor Benefit
Mortgage Redemption
Which of the following has the right to convert the existing term coverage to permanent insurance? A Producer B Policyowner C Insurer D Beneficiary
Policyowner
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT A Upon conversion, the death benefit of the permanent policy will be reduced by 50%. B Evidence of insurability is not required. C Most term policies contain a convertibility option. D Upon conversion, the premium for the permanent policy will be based upon attained age.
Upon conversion, the death benefit of the permanent policy will be reduced by 50%.
A domestic insurer issuing variable contracts must establish one or more A Annuity accounts. B General accounts. C Separate accounts. D Liability accounts.
Separate accounts.
What type of premium do both Universal Life and Variable Universal Life policies have? A Increasing B Flexible C Level fixed D Decreasing
Flexible
Which policy component decreases in decreasing term insurance? A Dividend B Premium C Face amount D Cash value
Face amount
Which of the following life insurance policies does NOT build cash value? A Universal life B Variable life C Whole life D Guaranteed universal life
Guaranteed universal life
Which of the following types of policies allows for a flexible premium and a variable investment component? A Guaranteed issue variable life insurance B Variable whole life insurance C Whole life insurance D Variable universal life insurance
Variable universal life insurance
A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium? A If the father is disabled for at least a year B If the daughter is disabled for more than 3 months C If the daughter is disabled for any length of time D If the father is disabled for more than 6 months
If the father is disabled for more than 6 months
Which Universal Life option has a gradually increasing cash value and a level death benefit? A Juvenile life B Term insurance C Option B D Option A
Option A
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? A Corridor option B Variable option C Option A D Option B
Option B
An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy? A Nothing B $50,000 C $100,000 D $200,000
$100,000
Which of the following is an example of a limited-pay life policy? A Renewable Term to Age 70 B Level Term Life C Straight Life D Life Paid-up at Age 65
Life Paid-up at Age 65
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 Limited-pay Life B Variable Life C Adjustable Life D Graded Premium Life
Limited-pay Life
The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called A Decreasing whole life. B Multiple Protection insurance. C Credit life. D Credit health.
Credit life.
When would a 20-pay whole life policy endow? A At the insured's age 65 B After 20 payments C In 20 years D When the insured reaches age 100
When the insured reaches age 100
An Adjustable Life policyowner can change which of the following policy features? A The coverage period B The mortality expense C The investment account D The insured
The coverage period
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? A Jumping Juvenile B Juvenile Premium Provision C Waiver of Premium D Payor Benefit
Payor Benefit
Which type of life insurance policy generates immediate cash value? A Single Premium B Level Term C Decreasing Term D Continuous Premium
Single Premium
An employer offers group life insurance to its employees for the amount of $10,000. Which of the following is true? A The cost of coverage is a deductible expense by the employer. B The value of insurance will be deducted from the employees' compensation. C The cost of coverage paid by the employer is taxed to the employees. D The cost of coverage paid by the employer is tax deductible by the employees.
The cost of coverage is a deductible expense by the employer.
What do Modified Life and Straight Life policies have in common? A Graded premium B Temporary protection C Accumulation of cash value D Same amount of premium
Accumulation of cash value
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
Annually Renewable Term
Which of the following is TRUE about credit life insurance? A Debtor is the annuitant. B Creditor is the insured. C Debtor is the policy beneficiary. D Creditor is the policyowner.
Creditor is the policyowner.
If an agent wishes to sell variable life policies, what license must the agent obtain? A Adjuster B Surplus Lines C Personal Lines D Securities
Securities