Ch. 2 : Types of Life Policies

If an agent wishes to sell variable life policies, what license must the agent obtain?

Securities license

A domestic insurer issuing variable contracts must establish one or more

Separate accounts assets with a value at least equal to the reserves and other contract liabilities connected to the account.

The policy owner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

The death benefit can be increased by providing evidence of insurability.

Which of the following types of policies allows the policy owner to skip premium payment provided that there is enough cash value in the policy to cover the premium amount?

Universal Life The policyowner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. In fact, the policyowner may even skip paying a premium and the policy will not lapse as long as there is sufficient cash value at the time to compensate for the nonpayment of premium.

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?

Universal Life - Option A

Survivorship (second-to-die) has a more/less expensive premium than joint life

less

Which of the following best describes annually renewable term insurance?

level term insurance

All of the following are true regarding term policy EXCEPT? - the payable premium amount steadily declines throughout the duration of the contract -The death benefit is $0 at the end of the policy term -The contract pays only in the event of death during the term and there is no cash value -The face amount steadily declines throughout the duration of the contract

- the payable premium amount steadily declines throughout the duration of the contract

Which of the following is an example of a limited-pay life policy? -level term life -straight life -life paid-up at Age 65 -renewable term to age 70

-life paid-up at age 65

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?

Decreasing Term - A decreasing term policy's face amount decreases as the amount of debt is reduced.

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?

Joint Life Policy

Variable Whole Life insurance is based on what type of premium?

Level fixed premium investment-based product

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

Required a premium increase each renewal based on insured's age.

Which of the following policies would be classified as a traditional level premium contract?

Straight Life

Which of the following best describes what the annuity period is?

The period of time during which accumulated money is converted into income payments.

Which of the statements is not true regarding a Straight Life policy? - face value is paid to insured at 100 - it develops cash value by the end of the third policy year - it has the lowest annual premium of the three types of Whole Life policies - 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

If the annuitant dies during the accumulation period, who will receive the annuity benefit? the beneficiary the annuity owner

the beneficiary