Types of Life Insurance Policies

What type of annuity is best used for a large sum of money that should be paid out over several years?

immediate annuity

What are the three basic types of term coverage?

increasing, decreasing, level

If an annuitant has a straight life annuity that had a face amount of 25,000, but he died after receiving only 12,500, how much would his beneficiary, his wife, receive?

$0, and there would be no beneficiary.

A Universal Life insurance policy is best described as what?

An annually renewable term insurance with a cash account

What is subrogation?

An insurer's legal right to seek damages from third parties after reimbursing insureds for a loss

Which of the following policies would be classified as a traditional level premium contract? Why? Variable Univeral Straight Life Adjustable Life Universal Life

Straight Life. Straight Up life insurance, you pay this amount and you receive this amount, a level premium, and a level death benefit for the life of the insured

What type of life insurance is also called "second to die" insurance?

Survivorship Life

What is level throughout the insured's life in a Straight Life Policy?

The premium remains level throughout the life of the insured.

How can the policyowner of an adjustable life policy increase the death benefit?

by providing evidence of insurability

When does a pure life annuity stop paying?

when the annuitant dies

When does a straight life annuity stop paying?

when the annuitant dies

If an annuitant has a paid up 50,000 whole life policy, and passes away, how much would his beneficiary, his wife, receive?

50,000

What is another name for "interest sensitive whole life" insurance?

Current assumption life

What is true about annually renewable term insurance?

It requires a premium increase at each renewal

What type of insurance is best suited for covering a loan for 10,000 or a mortgage?

a decreasing term policy

Fixed annuities are paid into what type of account?

a general account

For variable products, underlying assets must be kept in: A general Account A Separate Account A Money Market Account A Revenue Account

a separate account

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 how long?

20 years or Until Death, whichever comes first

If an annuitant has a straight life annuity that had a face amount of 25,000, but he died after receiving only 12,500, and he also had a paid up 50,000 whole life policy, how much would his beneficiary, his wife, receive?

50,000 from the whole life insurance policy and 0 from the straight life policy

Which type of insurance generates immediate cash value, and why? Hint, what is the cash value of term insurance?

A single premium policy, because it is paid up front as one lump sum. Term insurance has no cash value.

What does a target premium do?

Helps prevent a universal life policy from lapsing

In what case will the insured receive the full face amount (death benefit) of the whole life policy?

If they live to age 100.

What is a Life Payout with 20 year period certain?

payments are guaranteed for life of the annuitant. If the annuitant dies during the 20 years, the beneficiary receives the payments for the remainder of that 20 years.

If a client wishes for whole life coverage but only wants to pay premiums up to a certain age, which type should they purchase?

Limited Pay Whole Life

What are the three types of Whole life insurance policies?

Interest Sensitive, Market Sensitive, and Adjustable Life Limited Pay and Single Premium Life Ordinary Whole Life

What is the difference between the following: Joint Life Survivorship Life Joint and Survivor Life

Joint life stops making payments when the first party dies Survivorship life stops making payments when the second dies Joint and survivor pays, and then pays a reduced amount after the first dies.

What happens to the death benefit of a variable life insurance policy if the cash value falls?

Nothing. the full death benefit remains

What age does a whole life policy mature?

100

What type of term insurance has the lowest premium in its first year?

Annually Renewable Term Insurance

Return of premium term life coverage is written as what type of term coverage?

Increasing, because the death benefit increases by the amount equal to the amount of premiums paid.

When the annuitant selects a time period and the insurer selects the amount to be paid, this is called what?

Installments for a fixed period

Which portion of a Universal Life Insurance Policy will be taxed if the policyowner makes a partial withdrawal?

Interest

In universal Life option B, what happens to the death benefit over time?

It increases by the same amount as the cash value

What are the two types of life contingency options?

Pure Life (Straight Life) or Life with Guaranteed Minimum

What is the difference between the two life contingency options?

Pure Life (straight life) stops paying when the annuitant dies, but life with a guaranteed minimum pays the minimum death benefit no matter what.

A domestic insurer issuing variable contracts must establish one or more what?

Separate Accounts

What type of insurance provides coverage until age 100 or death, and is paid for at its inception?

Single Premium Whole life

Of the three types of whole life policies, which has the lowest annual premium?

Straight Life

Which will cost less, Joint life or survivorship life, and why?

Survivorship life, because it pays over a longer time, reducing individual payments.

What are the two major categories of life insurance?

Term and permanent (whole)

A universal life insurance policy has what two components?

an insurance component, and a cash account.

Why does a fixed annuity not provide hedge against inflation?

because it is a safe and conservative investment portfolio. it provides a specific dollar amount at each payment.

What will happen to the death benefit in Universal Life Insurance in Option A?

nothing, the death benefit stays the same, or is level

How can the life with guaranteed minimum settlements be paid out?

single lump sum (cash refund) or paid over time (installments).

For variable annuities, which party bears the risk?

the annuitant

What element of a fixed annuity is not fixed?

the death benefit

What is guaranteed with a whole life insurance policy?

the death benefit

In a whole life insurance policy, if the insured dies at age 80, but there are no outstanding loans on the policy, which portion of the death benefit will be paid out, and to whom?

the full benefit will be paid to the beneficiary

In a life settlement policy, who does the life settlement broker represent?

the policyowner

In a "Life with Guaranteed minimum" annuity settlement option what is guaranteed?

The entire principal will be paid out, even if the annuitant has died

Which type of whole life insurance has a flexible premium?

Universal Life

What kind of policy allows for partial withdrawals or surrenders of the policy cash value?

Universal Life.