Types of Life policies Chapter Two Quiz questions

What license or licenses are required to sell variable annuities?

Both a life insurance license and a securities license

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A Straight Life policy has what type of premium?

Answer: A level annual premium for the life of the insured Explanation: Straight Life policies charge a level annual premium for the lifetime of the insured and provide a level, guaranteed death benefit.

The death protection component of Universal Life Insurance is always...

Answer: Annually Renewable Term. Explanation: A universal policy has two components: an insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.

The LEAST expensive first year premium is found in which of the following policies?

Answer: Annually Renewable Term Explanation: Annually renewable term is the purest form of term insurance. The death benefit remains level, but the premium increases each year with the insured's attained age. In decreasing policies, while the face amount decreases, the premium remains constant throughout the life of the contracts. In level term and increasing term policies, the premium also remains level for the term of the policy. Therefore, in the other types of level policies, the first-year premium would not be different from any other year.

Concerning a whole life policy, which of the following statements is correct?

Answer: Cash value is guaranteed Explanation: whole life is a guaranteed contract. Both the death benefit and the cash value at age 100 are guaranteed.

An agent selling variable annuities must be registered with?

Answer: FINRA and hold a securities license Explanation: Because variable annuities are considered to be securities, a person must be registered with the FINRA and holds a securities license in addition to a life agents license in order to sell variable annuities.

Annually, renewable term policies provide a level death benefit for a premium that

Answer: Increases annually Explanation: Annually renewable term policies, provide a level death benefit for a premium that increases each year with the age of the insured.

Which statement is not true regarding straight life policy?

Answer: Its premium steadily decreases over time, in response to its growing cash value. ~ Straight Life policies charge a level annual premium throughout the insured's lifetime and provide a level, guaranteed death benefit.

A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per months for as long as she lives. When the wife dies, payment stop. What settlement option did they select?

Answer: Joint and Survivor Explanation: under a joint settlement option, payments would stop at the first death, but under the joint and survivor option, the payment would continue until both recipients die. Usually, the surviving beneficiary receives 1/2 or 2/3 of the amount received when both beneficiaries were alive.

The premium of a survivorship life policy compared with that of a joint life policy would be?

Answer: Lower Explanation: 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.

Under a pure life annuity, an income is payable by the company

Answer: Only for the life of the annuitant. ~ With pure life annuity, income payments cease at the annuitant's death and there is no refund or payments to survivors. This type of annuity is also referred to as Life Only or Straight Life.

A domestic ensure issuing variable contracts must establish one or more?

Answer: Separate accounts Explanation: Any domestic insurer issuing variable contracts, must establish one or more separate accounts. The insurer must maintain in each separate account assets with a value, at least equal to the reserves and other contract liabilities connected to the account.

All of the following entities, regulate variable life policies, except?

Answer: The Guaranty Association Explanation: variable life insurance is regulated by both the state and federal government, as well as the insurance department, and the SEC.

A policy owner borrowed a portion of cash value from his whole life policy. If the loan is not repaid, how will that affect the death benefit to the beneficiary?

Answer: The amount of the loan will be subtracted from the death benefit. Explanation: the policy owner has the right to borrow the cash value of a whole life policy. The loan does not have to be repaid; however, the amount of any outstanding loans, plus interest, will be deducted from the policy face amount up on the insured death.

All of the following statements about equity index annuities are correct EXCEPT?

Answer: The annuitant receives a fixed amount of return. Explanation: Equity indexed annuities have a guaranteed minimum interest rate, so while they are aggressive in nature, the annuitant will not have to worry about receiving less than what the minimum interest rate would yield.