Ch 3 Life Insurance Policies Exam Review
S, age 40, is looking to buy a Life Insurance policy that will allow for increases or decreases in coverage as his needs change. The policy best suited for S would be
Universal Life
What type of life insurance incorporates flexible premiums and an adjustable death benefit?
Universal Life
Which of the following Life insurance policies combine term insurance with an investment element?
Universal Life
A life policy that contains a monthly mortality charge as well as self-directed investment choices is called a(n)
Variable Universal Life policy
Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?
Variable life
At what point does a Whole Life Insurance policy endow?
When the cash value equals the death benefit
When is the face amount of a Whole Life policy paid?
When the insured dies or at the policy's maturity date, whichever happens first
A life insurance policy that provides a policyowner with cash value along with a level face amount is called:
Whole life
What type of insurance offers permanent life coverage with premiums that are payable for life?
Whole life
What type of policy would offer a 40-year old the quickest accumulation of cash value?
20-pay life
K, age 45, and his wife, age 43, have three children. They purchase a Family Policy that covers K's wife to age 65. All of these situations will pay a death benefit EXCEPT
K's wife dies at age 66
An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager?
Key Person insurance
Which of these would be considered a Limited-Pay Life policy?
Life Paid-Up at Age 70
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Modified Endowment Contract
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them, EXCEPT for:
Modified Whole Life
Which of these life products is NOT considered interest-sensitive?
Modified Whole Life
All of these statements about Equity Indexed Life Insurance are correct, EXCEPT:
The premiums can be lowered or raised, based on investment performance
How does a typical Variable Life Policy investment account grow?
Through mutual funds, stocks, bonds
Which of the following is considered an element of a Variable Life Policy?
Underlying equity Investment
The cash value in a(n) _________ Life policy may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors.
Universal
Which of the following types of Term Life policies most likely contains a Renewability feature?
10 Year Convertible Term
G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income?
10 years
N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?
30 Pay Life
Which of these is an element of a Variable Life policy?
A fixed, level premium
Which statement is TRUE regarding a Variable Whole Life policy?
A minimum guaranteed Death benefit is provided
Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?
Conversion
Which of the following types of policies pays a benefit if the insured goes blind?
AD&D
Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?
Conversion privilege
When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
Conversion provision
Which statement about a whole life policy is true?
Cash value may be borrowed against
The combination of Whole Life and _______ Term insurance is referred to as a Family Income Policy
Decreasing
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
Decreasing term
P owns a $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own?
Endowment at Age 70
Which of these statements describe a Modified Endowment Contract (MEC)?
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance
What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?
Family Maintenance Policy
P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase?
Family Maintenance policy
Which of these needs is satisfied by Adjustable Life insurance?
Insured's need for flexible premiums
Which of the following information is NOT required to be included in a Whole Life policy?
Policy's guaranteed dividend table
Which is true concerning a Variable Universal Life policy?
Policyowner controls where the investment will go and selects the amount of the premium payment
Which statement is correct regarding the premium payment schedule for whole life policies?
Premiums are payable throughout the insured's lifetime/coverage lasts until death of the insured
Which of the following actions is NOT possible with a Universal Life policy?
Premiums may be applied as a credit against income tax
K is shopping for a permanent life insurance policy that will offer her the MOST protection per dollar of annual premium. Which of these policies best fits her needs?
Straight life
What type of life policy covers two people and pays upon the death of the last insured?
Survivorship
T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?
Ten-Year Endowment
Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary time period. Which of these policies should Q purchase?
Term life
What advantage does the renewability feature give to a term policy?
The insured may extend the coverage period
How long does the coverage normally remain on a limited-pay life policy?
age 100
Under a Graded Premium policy, the premiums
are lower during the policy's early years
Variable Whole Life Insurance can be described as:
both an insurance and securities product
Under an Interest Sensitive Whole Life policy,
cash values are determined by interest rates
What kind of premium does a Whole Life policy have?
level
A(n) _________ term life policy is normally used when covering an insured's mortgage balance.
decreasing
A variable insurance policy:
does not guarantee a return on its investment accounts
All of these are characteristics of an Adjustable Life policy EXCEPT
face amount can be adjusted using policy dividends
Variable Life products require a producer to
hold a life Insurance license and a Securities license
Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy?
increase face amount
A Limited-Pay Life policy has:
premium payments limited to a specific number of years
The investment gains from a Universal Life Policy usually go toward
the cash value
The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is:
the cost
Under a Graded Premium Whole Life policy,
the premium increases each year during the early years of the contract and remains the same after that time
When is the face amount paid under a Joint Life and Survivor policy?
upon the death of the last insured
A policy that becomes a Modified Endowment Contract (MEC):
will lose many of its tax advantages
If a 10-Year Life policy contains a Renewability provision, the policy will renew
without evidence of insurability
If a 10-Year Term Life policy contains a Renewability provision, the policy will renew
without evidence of insurability
