CA LAH Ch 4
Which limited pay Whole Life contract below would have the lowest annual premium? 10 Pay 20 Pay 30 Pay 25 Pay
30 Pay
Which statement below is NOT TRUE with regard to policy loans?
If unpaid at time of death, only the loan amount is subtracted from the death benefit.
If an individual desires life insurance protection and cash value buildup and is willing to pay premiums until retirement, what type of policy would he or she purchase? A. Limited payment life B. An annuity C. Straight life D. An endowment at age 55
Limited payment life
A level term policy has all of the following characteristics except:
Loan Option
Which of the following policies possesses the lowest initial annual premium? A. Ten-pay life B. Whole life C. Ten year endowment D. Modified life
Modified life
The ability to continue a term insurance contract without having to provide evidence of insurability best describes what option?
Renewability
Whole life insurance provides death protection and a cash savings feature. Which of the following policies is potentially the least expensive over the life of the contract? A. Single premium whole life policy B. Whole life policy C. An endowment D. Limited payment policy
Single premium whole life policy
What increases each year in an increasing term insurance rider? A. The number of insureds B. The premium C. The amount of outlay D. The amount of coverage
The amount of coverage
All are incorrect regarding Variable Life insurance except:
The cash value is not guaranteed.
Interest sensitive whole life policies utilize changing interest rates for which of the following purposes? A. To determine policy settlement options B. To arrive at future premium rates C. To determine the death benefit amount D. To determine policy cash values
To determine policy cash values
Which of the following life insurance policies is a type of limited payment life insurance plan and provides a greater tax advantage than other permanent plans? A. Modified whole life B. Graded premium whole life C. Variable universal life D. Single premium whole life
Single premium whole life
Term life insurance is a form of insurance that is typically less expensive initially than whole life insurance and provides pure or temporary protection for a limited period of time. Which of the following statements is not true?
The cash value endows at age 100.
Each is a true statement regarding Juvenile Insurance except:
Death benefit increase means premium increase.
A single pay whole life contract provides coverage until death or age ___.
100
A person age 40 desires a life insurance policy that will allow him to increase or decrease the death benefit in the future. What would you recommend that he purchase? A. Whole life policy B. Adjustable life policy C. Modified life policy D. Renewable term policy
Adjustable life policy
Joe is a building contractor whose income dramatically fluctuates from year to year. Because of his fluctuating income, which whole life policy below would you probably recommend to him?
Adjustable whole life
Which of the following policies would be best suited for an individual whose income fluctuates from year to year? A. Annual renewable term insurance B. Adjustable whole life C. Limited-pay whole life D. Modified whole life
Adjustable whole life
The cash savings value of a traditional whole life insurance policy will equal the policy's face amount at an insured's: A. Age 55 B. Age 65 C. Age 100 D. Age 70
Age 100
Michael borrows $164,000 to buy the sports car of his dreams. He wants to make sure that if he should die, he has a death benefit to pay off the loan so that his wife can enjoy the car. Short on cash, he wants the "most economical" policy available on the market. Which type of life insurance product would you recommend?
Decreasing term
Permanent whole life protection with decreasing term insurance would be found in which policy below?
Family Income
A life insurance plan that combines permanent whole life protection with decreasing term insurance best describes:
Family income
Ted is only able to pay $25 per month for a life insurance policy. Which of the following policies would provide the greatest face amount of life insurance for this premium? A. Five year term life B. Ten pay life C. Ordinary life D. An endowment
Five year term life
Which of the following is true regarding an interest sensitive whole life policy? A. Interest credited decreases cash value and lengthens the premium payment period B. Interest credited increases cash value and shortens the premium payment period C. Interest credited decreases cash value and shortens the premium payment period D. Interest credited increases cash value and lengthens the premium payment period
Interest credited increases cash value and shortens the premium payment period
Which of the following is not a characteristic of Whole Life? Level lifetime premium Level Lifetime death benefit Cash Value = Face Amount At Age 100 Is not considered a property
Is not considered a property
Advantages of term life insurance would include all of the following except:
It always provides permanent protection to age 100
Jack owns a life insurance policy that requires that he pay premiums for a specified period only or until he dies, assuming this occurs prior to the end of the specified period. Which of the following types of policy does Jack possess? A. Straight life B. Herbal life C. Variable life D. Limited pay life
Limited pay life
Which of the following life insurance policies would have the lowest first-year premiums?
Modified whole life
What type of life insurance policy may a person purchase to make sure that a debt or loan will be paid off in case of his or her premature death? A. Increasing term insurance B. Flexible premium annuity C. Level term life insurance D. Mortgage redemption insurance
Mortgage redemption insurance
All of the following are characteristics of a universal life policy, EXCEPT: A. The face amount may be increased or decreased annually B. Premium credited annually increases the coverage amount C. Premiums paid for coverage may be variable D. The policy's cash savings may be used to pay premiums
Premium credited annually increases the coverage amount
A whole life policy has a level death benefit and premium. It also builds cash value. Another name for whole life is:
Straight
Which of the following policies is best suited to provide funds to pay for taxes due and other administrative expenses with regard to a deceased's estate? A. Modified life insurance B. Joint life insurance C. Survivor life insurance D. An endowment at age 65
Survivor life insurance
Which of the following may occur if an insured makes an additional premium payment on a life insurance policy? A. The death benefit will decrease B. The future premium will be waived C. The future premium may be reduced D. The death benefit will increase
The future premium may be reduced
All of the following life insurance policies include a policy loan provision, EXCEPT: A. Limited payment life B. Whole life C. Yearly renewable term D. Modified whole life
Yearly renewable term
Cash value growth potential based upon stock and bond performance would help describe which of the following policies?
Variable life
Which of the following policies is characterized by a flexible premium and death benefit and allows the policyowner control of the investment aspect of the plan? A. Universal life B. Variable life C. Variable universal life D. Adjustable life
Variable universal life
Theresa is age 38 and purchases a twenty-pay whole life insurance policy. The death benefit is $50,000. It is attractive to Theresa since she will no longer be required to make premium payments at the end of the twenty-year period. When will her policy mature? A. Age 100 B. Age 65 C. Age 70 D. Age 53
Age 100
This type of insurance contract insures two or more persons under a single contract and pays a death benefit upon the death of any insured party. A. Credit Life B. Single premium whole life C. Survivorship Life D. Joint Life
Joint Life
A forty-five-year-old male purchases a single premium life policy. The total projected lifetime premium cost of this plan would be: A. Equivalent to five years of straight life coverage B. Equal to a straight life policy C. Greater than a straight life policy D. Less than a straight life policy
Less than a straight life policy
Which of the following life insurance policies generally covers two lives only? A. Survivorship life B. Joint and survivor life C. Variable life D. Whole life
Survivorship life
Which policy/product below, sold to a 40 year old man, will mature or endow the soonest? 10 Pay Life 20 Pay Life Ordinary Whole Life 20 Year Endowment
20 Year Endowment
A universal life insurance policy provides a combination of term insurance protection and: A. Cash savings plan B. Current bond yield C. A non-forfeiture value D. A deferred income
Cash savings plan
Each year the owner of a Universal Life policy would receive all except: Interest earnings Policy expenses Upcoming premium Change of Beneficiary form.
Change of Beneficiary form.
Jane can only pay $35 per month for a life insured premium. Which of the following policies would provide her with permanent insurance for such a premium? A. Credit life B. Mortgage protection life C. Ten pay life D. Twenty year term life
Ten pay life
If an insured purchases a decreasing term life insurance policy, what portion of the contract decreases? A. The death benefit B. The annual premium C. The non-forfeiture values D. The cash values
The death benefit
Why would someone normally purchase credit life insurance?
To provide a death benefit to pay off a loan
Which of the following is characterized by the least expensive premium ? A. An annuity B. Single premium life insurance C. Decreasing term life D. Modified life
Decreasing term life
Gains realized each year in a Universal Life policy are credited to which of the following? A. Separate account B. General account C. Cash value D. Loan value
Cash value
Which of the following is not a characteristic of term insurance?
Cash value builds after 3 years
John owns a ten pay life plan. Premiums for this policy must be paid: A. For ten years B. Until John retires C. For ten years or until death, whichever occurs first D. Until the first spouse dies
For ten years or until death, whichever occurs first
Which of the following statements is true with regard to a Universal Variable life insurance policy? A. It is an investment product B. It is a securities and investment product C. It is a fixed premium policy D. It is a securities product
It is a securities and investment product
Which of the following statements in incorrect regarding Whole Life policy loans? Loans do not need to be repaid. At death, outstanding loans plus interest are subtracted from the death benefit. Only fixed interest rates can be charged against the loan. Loans may be delayed by the insurer for up to 6 months.
Only fixed interest rates can be charged against the loan.
A Variable Life policy provides a combination of death protection with a variety of investment options. Which of the following are guaranteed in a Variable Life insurance policy? A. The death benefit and investment performance B. The death benefit and premium C. The cash value and death benefit D. The premium and the cash value
The death benefit and premium
Which statement below is not correct with regard to Credit Life insurance?
The insured is also the beneficiary.
Which of the following life insurance policies provides the greatest amount of growth potential? A. Variable life insurance B. Straight life insurance C. Term life insurance D. Universal life insurance
Variable life insurance
The death benefit of a Joint Life policy pays:
When either insured dies.
Some life insurance policies may cover more than one individual. A life insurance contract which insures two or more individuals with the proceeds paid upon the death of the first to die is known as a: A. Joint life policy B. Survivorship life policy C. Joint and survivor policy D. Family policy
Joint life policy
Which of the following provides a combination of level renewable term insurance and a cash value fund? A. Annual renewable term life B. Variable life C. Universal life D. Annuity
Universal life
Which of the following life insurance policies permits a beneficiary to receive a death benefit and the cash value upon the death of the insured? A. Universal life option B B. Modified life C. Variable universal life D. Thirty pay life
Universal life option B
A whole life policyowner's cash savings value will equal the policy's face amount at what age? A. Age 70 B. Age 55 C. Age 100 D. Age 65
Age 100
Several types of life insurance plans are available to the public. Which of the following is true regarding a Universal Life insurance policy? A. Cash values, premium and the coverage amount may be adjusted B. There are no interest rate guarantees in this policy C. It is backed by equities such as a bond portfolio D. It is identical to a Variable Whole Life plan
Cash values, premium and the coverage amount may be adjusted
For a universal life policy's cash value accumulations to receive favorable tax treatment, a specific percentage of premiums must be used to purchase: A. Paid-up additions B. Death benefit C. One year term insurance D. Guaranteed amounts of coverage
Death benefit
Cameron borrows $275,000 to buy a small beachfront vacation home. He wants to make sure that should he die, a death benefit is available to payoff the loan so that his wife can continue to use the vacation home. He has little additional cash for insurance, and wants the most economical policy available to cover his new debt. What type of life insurance policy would you recommend?
Decreasing Term
Larry, age 52 wishes to convert his level term policy to a whole life policy. He has owned the term policy for 10 years. His agent informs him that the insurance company could use age 42 to determine the future whole life premiums. What term describes this convertibility option?
Original age.
When a life insurance policy renews at the end of a specified period, what may the policyowner do in order to continue coverage? A. Pay a higher premium for a new specified period B. Pay a lower premium for a new specified period C. Provide proof of insurability for a new specified period D. Provide proof of insurability and pay a higher premium for a new specified period
Pay a higher premium for a new specified period
A combination policy that provides a large death benefit be paid upon the death of the last insured, and is typically utilized to pay estate taxes is called:
Survivorship life
A combination policy that provides a large death benefit to be paid upon the death of the last insured, and is typically utilized to pay estate taxes is called:
Survivorship life
Which of the following policies is characterized by permanent life insurance protection? A. Estate creation life B. Survivorship life C. Credit life D. Mortgage protection life
Survivorship life
How does the cash value of a universal life insurance policy accumulate? A. Tax-deferred B. As a capital gain C. Tax-exempt D. Tax free
Tax-deferred
Which of the following statements is TRUE regarding variable life insurance?
The cash value is not guaranteed.
Which life insurance policy listed below has the greatest cash value growth potential?
Variable life
Which of the following has an investment characteristic and includes a flexible premium? A. Limited payment life B. Universal life C. Variable universal life D. Variable life
Variable universal life
Which of the following life insurance policies permits a policyholder to direct where the cash value will be invested? A. Modified life B. Variable universal life C. Ten-pay life D. Universal life Option B
Variable universal life
A joint life policy pays a death benefit:
When either insured dies
Which of the following best describes a life insurance policy with no cash value and increasing premiums over a period of time? A. Term life B. Graded premium whole life C. Whole life D. Variable life
Term life
A variable life policy can be characterized by investing cash values in stocks, bonds, or other investment-like vehicles. Which statement below is NOT TRUE regarding this kind of life insurance product?
Agents only need a life insurance license to sell this product.
Life insurance protection will be provided to an insured in consideration of a premium payment. Which of the following life insurance policies possesses the lowest initial premium? A. Variable life B. Modified life C. Whole life D. Ten-pay life
Modified life
What type of whole life policy would you recommend to your client if she desired to have $30,000 in ten years? A. A ten year endowment B. A $30,000 endowment at age 65 C. A $30,000 whole life policy D. A ten-pay life policy
A ten year endowment
Which of the following statements regarding universal life insurance is NOT CORRECT?
It has a level premium with a cash value that fluctuates depending upon stock and bond market performance.
Credit life insurance policies generally provide which of the following types of life insurance? A. Whole life insurance B. Single premium life insurance C. Term life insurance D. Universal life insurance
Term life insurance
Life insurers also offer variable products. Which of the following statements is true regarding Variable Life insurance? A. The cash value in the policy is not guaranteed B. The fixed interest rate paid on the cash value may vary each year C. The premiums paid on this policy are variable D. It is characterized by an predetermined death benefit
The cash value in the policy is not guaranteed
A Universal Life policy provides an insured with a combination of death protection and a cash savings plan. It also provides the insured with the ultimate in flexibility. Which of the following statements is true regarding this type of policy? A. It provides a combination of investment options combined with permanent protection B. The interest rate paid on the cash savings plan is guaranteed but interest sensitive C. It provides a guaranteed minimum death benefit D. It is characterized by a predetermined premium
The interest rate paid on the cash savings plan is guaranteed but interest sensitive
A variable life policy is characterized by investing cash values in stocks, bonds, or mutual funds. Which of the following statements is not true concerning this form of life insurance protection? A. Variable life includes a flexible premium B. Variable life provides a guaranteed minimum death benefit C. The amount of the variable life death benefit is dependent upon the performance of securities D. Variable life cash values are deposited in a separate account
Variable life includes a flexible premium
Terry Johnson purchased a life insurance policy twenty-five years ago. If the policy states that the cash value will be $420 per $1,000 of coverage in the twenty-third year, what type of policy did Terry buy? A. Level premium annuity B. Variable life C. Convertible term life D. Whole life
Whole life
Which of the following is characterized by fixed premiums and coverage for life? A. Family policy B. Whole life insurance C. Universal life insurance D. Level term insurance
Whole life insurance
Joe enters Sara's insurance office and makes the following statement: "I want to purchase a standard whole life insurance policy." Sara's initial reaction or thought would probably be:
"There is no such thing as a standard life insurance policy."
A whole life policy provides permanent insurance protection since it never needs to be converted. All of the following are types of traditional whole life insurance, EXCEPT: A. Ten-pay life insurance B. Graded premium life insurance C. Single premium life insurance D. Mortgage redemption life insurance
Mortgage redemption life insurance
All the statements below are TRUE of survivorship life insurance EXCEPT:
A Survivorship life policy pays a death benefit upon the death of the first insured
A Single Pay Whole life contract provides coverage until death or age ___? 90 95 100 Until the cash value is exhausted
100
Each of the following is provided to the policyowner of a universal life policy on an annual basis except:
Change of beneficiary form.
In an adjustable life policy, no further underwriting has to be done for all of the following, EXCEPT: A. Changing the beneficiary B. Change of insured C. Transferring ownership D. Borrowing against the equity
Change of insured
An adjustable life insurance policy provides the policyowner the flexibility A. Adjust cash values on an annual basis B. Reduce the premium at various intervals C. Change the interest rate paid on the cash value each year D. Change the face amount at various intervals
Change the face amount at various intervals
Which of the following types of policy conversion is allowed without evidence of insurability? A. Conversion to a flexible premium policy B. Conversion from a term life policy to a whole life plan C. An absolute conversion D. Conversion from a whole life policy to a term life plan
Conversion from a term life policy to a whole life plan
Jean Reamer borrowed $14,000 to purchase a new boat. What type of cost effective life insurance is best suited to make sure that her loan is paid off in the event of her death? A. Level term insurance B. Decreasing term insurance C. Family policy D. Annual renewable term insurance
Decreasing term insurance
Whole life insurance provides a combination of death protection and a cash value buildup. What type of protection is provided by a Universal Life policy? A. Temporary death benefit B. Flexible death coverage C. Constant or continuous death benefit D. Level death benefit
Flexible death coverage
A survivorship life policy generally covers two individuals. Which of the following provides a reason for purchasing such a life insurance policy? A. It protects a family when the first covered person dies B. It provides protection for a family when the primary insured reaches retirement age C. It provides protection to a surviving spouse when the breadwinner dies D. It provides funds to pay off possible estate or inheritance taxes
It provides funds to pay off possible estate or inheritance taxes
An endowment contract is designed to pay a benefit either at the end of a specified time frame or death, whichever occurs first. Which statement below is TRUE with regard to endowments?
Its primary focus is on an accelerated cash value.
Jeff is 42 years of age and is attempting to decide what type of whole life policy he should buy. If cash flow is his primary consideration, which of the following policies would be most beneficial to Jeff? A. Life paid-up at age 65 B. Single premium whole life C. Twenty-pay whole life D. Ten-year endowment
Life paid-up at age 65
If an individual desires permanent life insurance protection and desires to fund the policy for no more than a decade, which of the following has he or she purchased? A. Limited pay life B. Whole life C. A deferred annuity D. Renewable and convertible term
Limited pay life
Which of the following policies would best suited for an individual who wants permanent life insurance coverage but does not wish to pay premiums indefinitely? A. Modified whole life insurance B. Graded premium whole life C. Limited pay whole life insurance D. Straight life insurance
Limited pay whole life insurance
Which of the following items, if any are considered level in a Variable Life policy?
Premium
When discussing Life or Health insurance policies, it is important to remember that:
There is no such thing as a standard Life or Health insurance contract.
When discussing life or health insurance policies, it is important to remember that:
There is no such thing as a standard life or health insurance contract
Insurance companies use age 100 to calculate life insurance death benefits because: A. They assume everyone will have died by that age B. It makes sure they never have to pay a death benefit C. They assume that mortality rates will decrease by then D. It allows them to charge higher premiums
They assume everyone will have died by that age
The concept of "corridor" is most often associated with which of the following policies? A. Universal life B. Term life C. Temporary insurance D. Modified life
Universal life
Which life insurance policy below is a combination of death benefit protection, cash value buildup and the opportunity for premium flexibility?
Universal life
Which of the following insurance plans allows the policyowner to increase coverage every year?
Universal life
Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit? A. Universal life B. Fixed annuity C. Modified endowment contract D. Variable life
Variable life
Which of the following life insurance policies provides a policyowner with flexibility and control over the investment portion of the contract? A. Continuous premium life policy B. Variable life policy C. Whole life policy D. Adjustable life policy
Variable life policy
A life insurance policy that provides an opportunity for investment growth potential and is characterized by a flexible premium best describes: A. Variable universal life B. Universal life C. Combination life D. Variable life
Variable universal life
Which policy/product below, sold to a 65-year-old man, will mature or endow the soonest?
20-year endowment
Which policy below would have the lowest first year premiums? Whole Life Universal Life Single Pay Life Modified Whole Life
Modified Whole Life
A whole life policy is characterized by a level death benefit, a level premium, and a cash savings value. This type of life insurance plan is also known as: A. Adjustable whole life B. Convertible term life C. Straight life D. Universal life
Straight life
Premiums for policies covering multiple insureds, such as a survivorship life plan, are based upon which of the following? A. The youngest insured B. The joint probabilities of both proposed insureds C. The bilateral enhancement of both proposed insureds D. The oldest insured
The joint probabilities of both proposed insureds
A survivorship life insurance plan is a specialty type of contract. This type of policy is generally purchased in order to cover how many individuals? A. 3 B. 7 C. 5 D. 2
2
Which statement below is true with regard to Endowments? Its primary focus is on an accelerated cash value. Endowments are designed to pay for nursing home costs. Premiums are flexible and may be skipped entirely. There is no guaranteed cash value accumulation
Its primary focus is on an accelerated cash value.
Term life insurance is a form of insurance that is typically less expensive initially than whole life insurance and provides pure or temporary protection for a limited period of time. Which of the following statements is NOT TRUE?
The cash value endows at age 100.
Paul owns a $500,000 whole life insurance contract. He takes a $10,000 loan against the cash value. His premium is $6,000, which he pays annually on September 10th. He is tragically killed on September 12th while on his way to the post office to mail his overdue premium. The loan also has an accumulated interest amount of $500. How much benefit, if any, will be paid to his beneficiary?
$483,500
Which limited pay whole life contract would have the highest annual premium?
10 pay
Joe is a real estate salesman whose income dramatically fluctuates from year to year. Which Whole Life policy below would you probably recommend, due to his fluctuating income?
Adjustable Whole Life
Which type of life insurance product pays a lump sum at the earlier of an insured's death or at the completion of a specified period? A. Deferred annuity B. Combination policy C. Endowment D. Immediate annuity
Endowment
Which of the following statements regarding Universal Life insurance is NOT correct? Partial Cash Value withdrawals are allowed. The owner receives an annual statement listing the premiums paid, death benefit amount and related contract expenses. It is a combination of Annually Renewable Term and a Cash Value Fund. It has a level premium with a cash value that fluctuates depending upon stock and bond market performance.
It has a level premium with a cash value that fluctuates depending upon stock and bond market performance.
Each of the following is a traditional whole life insurance plan, EXCEPT: A. Joint life B. Single premium life C. Straight life D. Limited payment life
Joint life
Traditional whole life policies include each of the following, EXCEPT: A. Joint life B. Limited payment life C. Single premium life D. Straight life
Joint life
Brad buys a permanent life insurance policy that has a fixed premium for five years. In year six, the premium increases to a higher amount and stays level for life. What type of life insurance policy did Brad purchase? A. Group life B. Straight life C. Modified life D. Indexed life
Modified life
A whole life or continuous premium whole life insurance policy includes a loan provision. Which of the following statements in INCORRECT?
Only fixed interest rates can be charged against the loan.
Ricky d., age 42, wishes to convert his level term policy to a whole life policy. He has owned the term policy for 4 years. His agent informs him that the insurance company could use age 38 to determine his future whole life premiums. What term best describes this convertibility provision?
Original age
Which of the following items, if any, are considered level in a variable life policy?
Premium
