Types of Life Policies
Face amount
The amount of benefit stated in the life insurance policy
Which of the following is NOT true regarding the annuitant?
The annuitant cannot be the same person as the annuity owner.
Deferred
Withheld or postponed until a specified time or event in the future
Suitability
a requirement to determine if an insurance product is appropriate for a customer
Nonforfeiture values
benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses
Variable life insurance
contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a
convertible term policy
Liquidation of an estate
converting a person's net worth into a cash flow
A man purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it?
immediate
Policy maturity
in life policies, the time when the face value is paid out
A universal life insurance policy is best decried as a/an
Annually renewable term policy with a cash value account.
The insured is also the policy owner of a whole life policy. What age must the insured attain in order to receive the policy's face amount?
100
A straight life policy has what type of premium
A level annual premium for the life of the insured
Cash value
A policy's savings element or living benefit
Qualified plan
A retirement plan that meets the IRS guidelines for receiving favorable tax treatment.
For variable products, underlying assets must be kept in
A separate account
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
Adjusted to the insured's age at the time of renewal
Which of the following products provides income for the specified period of years for life and protects a person against outliving his or her money/
An annuity
A least expensive first-year premium is found in which of the following policies
Annually renewable term
When an annuity is written, whose life expectancy is taken into account?
Annuitant
Fixed life insurance
Contracts that offer guaranteed minimum or fixed benefits
What is another name of interest-sensitive whole life insurance?
Current assumption life
The term "fixed" in fixed annuity refers to all of the following EXCEPT:
Death benefit- a fixed annuity is fixed in the sense that it provides a guaranteed minimum rate of interest and income payments that do not vary from one to the next. The company also guarantees the specified dollar amount for each payment and the length of the payout period. Annuities do not provide a death benefit.
An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)
Equity indexed annuity
What does "level" refer to inn level term insurance?
Face amount
Securities
Financial instruments such as stocks, bonds, and mutual funds that are traded on a stock exchange.
What type of premium do both universal life and variable universal life policies have?
Flexible
Which of the following terms best describes the coverage provided by the term policies, as compared to any other form of protection?
Greatest- Term policies provide for the greatest amount of coverage for the lowest premium, as compared to any other form of protection.
Annually renewable term policies provide a level death benefit for a premium that
Increases annually
Which of the following is TRUE regarding the accumulation period of an annuity?
It is a period during which the payments into the annuity grow tax deferred.- The "accumulation period" is the period of time over which the annuitant makes payments (premiums) into an annuity. This is the period of time during which the payments earn interest and grow tax deferred.
Which of the following best describes annually renewable term insurance?
It is level term insurance
Which of the following is true regarding the annuity period
It may last for the lifetime of the annuitant
The premium of a survivorship life policy compared with that of a joint life policy would be:
Lower: Survivorship Life is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age. The major difference is that survivorship life pays on the last death rather than upon the first death. Since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life.
Which option for universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?
Option B
Which of the following is NOT one of the three basic types of coverages that are available, based on how the face amount changes during the policy term?
Renewable- There are three basic types of term coverage available, based on how the face amount (death benefit) changes during the policy term: Level, Increasing, and Decreasing. Regardless of the type of term insurance purchased, the premium is level throughout the term of the policy.
Equity indexed annuities
Seek higher returns
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
Single premium whole life
Which of the following is called a "second-to-die" policy
Survivorship life
If the annuitant dies during the accumulations period, who will receive the annuity benefits?
The beneficiary
In joint life policies:
The death benefit is paid upon the first death only
All of the following are true of an annuity owner except
The owner must be the party to receive benefits.
All of the following are true regarding a decreasing term policy EXCEPT
The payable premium amount steadily declines through out the duration of the contract- Premiums retail level with a decreasing term policy; the face amount decreases
Attained age
The sured's age at the time the policy is issued or renewed
Which of the following is not true regarding Equity Indexed Annuities?
They earn lower interest rates than fixed annuities.
What kind of policy allows withdrawals or partial surrenders?
Universal Life
Which of the following types of policies will provide permanent protection?
Whole life
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
interest-sensitive whole life
Endow
the cash value of a whole life policy has reached the contractual face amount
Which of the following is true regarding the premium in term policies?
the premium is level
Level premium
the premium that does not change throughout the life of a policy
All of the following are true about variable products except
the premiums are invested in the insurer's general account