Ch. 4: Types of life policies
An individual purchased a $100,000 Joint life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife received from the policy?
$100,000
An employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds
$50,000
The insured is also the policyowner of a whole life policy. What age must the insured attain in order to receive the policy's face amount?
100
A 20 year family Income policy with purchase effective April 1, 2001. The insured died four months later, on August 1, 2001. The beneficiary receives monthly income for
19 years and 8 months
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
A SEC registration
A Straight Life policy has what type of premium?
A level annual premium for the life of the insured
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 is incorrect regarding a $100,000 20 year level term insurance?
At the end, the policies cash value will equal $100,000
All of the following statements are correct regarding credit life insurance EXCEPT
Benefits are paid to the borrower's beneficiary.
What characteristics makes whole life permanent protection?
Coverage until death or age 100
Which of the following is NOT allowed in credit life insurance?
Creditor requiring that a debtor buys insurance from a certain insurer
Term policies are available as level, decreasing, and increasing. Which policy component fluctuates depending on the policy type?
Death benefit
An individual has just borrowed $10,000 From his bank on a five-year installment loan requiring monthly payments. What type of life insurance policy would be the best suited to the situation?
Decreasing term
W owns a policy in which she is covered as the bread-winner with permanent insurance and with decreasing term insurance in the form of a rider. What type of policy is this?
Family income policy
Which special policy combines Decreasing term insurance with whole life insurance to provide the insurance family with a monthly income upon the death of the insured, while maintaining permanent coverage at the end of the income payments?
Family income policy
A policy which pays monthly income upon the death of the breadwinner for a predetermined number of years after death, plus a lump sum at death, and combines level term and whole life is known as which policy?
Family maintenance
A young father would like a life insurance policy to provide coverage for all five family members at the lowest cost. Which type of policy would he most likely buy?
Family protection policy
Which rider, when attached to a permanent life insurance policy, provides an amount of insurances every family member?
Family term rider
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid
For 20 years or until death, whichever occurs first.
Which policy is characterized Buy a provision where the premiums are lower in the early years of the policy and increase overtime to a point where they become level for the remainder of the policy?
Graded premium whole life
Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?
Greatest
Annually renewable term policies provide a level death benefit for a premium that
Increases annually
What are the two components of a universal policy?
Insurance and cash account
An insured purchased a life insurance policy. The agent told him that depending upon the companies investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a
Interest-sensitive whole life
In Modified Life policies, what happens to the premium?
It is level at the beginning and increases after the first few years
Which statement is not true regarding a straight life policy?
Its premium steadily decreases over time, in response to its growing cash value.
A married couple owns a Permanent policy which covers both of their lives and paste the death benefit only upon the death of the first insured. Which policy is that
Joint life policy
If a life insurance policy increases Significantly in the face amount with the insured reaches a specified age, what type of policy is this?
Jumping juvenile policy
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?
Level term
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?
Limited pay whole life
An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?
Limited-Pay Life
The premium of a survivorship life policy compared with that if a joint life policy would be
Lower
One of the advantages of a family life insurance policy that provides coverage for children is that it
May be converted to permanent insurance for the children without requiring evidence of insurability
An insured and his spouse own a home. When the insured dies, the insurer pays the remaining balance on his home loan. Which type of life insurance provision/rider does this describe?
Mortgage redemption
Which of the life insurance policy generates immediate cash value?
Single premium
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 end of the insurance age 100 is called
Single premium whole life
Which of the following policies Would be classified as a traditional level premium contract?
Straight life
An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?
The insured may renew the policy for another 10 years, but at a higher premium rate.
Which of the following determines the cash value of a variable life policy?
The performance of the policy portfolio
The policy owner of a universal life policy may skip paying the premium and the policy will not lapse as long as
The policy contains sufficient cash value to cover the cost of insurance.
When regarding an indeterminate premium whole life policy
The premium can be raised up to the guaranteed maximum rate
In term policies, what happens to the premium throughout the term of the policy?
The premium remains level
Which of the following best defines target premium in a universal life policy?
The recommended amount to keep the policy in force throughout its lifetime
When the breadwinner that is insured by family policy days are covered under the policy?
They can convert their coverage to permanent life insurance without evidence of insurability
What is the purpose of establishing the target premium for a universal life policy?
To keep the policy in force
What kind of policy allows withdrawals or partial surrenders?
Universal Life
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
Which of the Following types of policies allows the policy owner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?
Universal Life allows the policy owner to ____
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?
Universal life
Which insurance policy would be considered interest sensitive?
Universal life
In a survivorship life policy, when does the insurer pay the DB?
Upon the last death
Variable Whole Life insurance is based on what type of premium?
Variable Whole Life insurance is based on what type of premium?
Which of the following types of life policies will provide permanent protection?
Whole life
When would a 20-pay whole life policy endow?
a limited pay whole life policy would endows for the face amount at age 100. the premium is completely paid off in 20 years.
What does "level" refer to in level term insurance?
face amount (death benefit)
An applicant wants to buy a life insurance policy in which he can count on receiving the same benefits as stated in the contract. Which type should he buy?
fixed
Both Universal Life and Variable Universal Life have a
flexible premium
What kind of policy does NOT typically require proof of insurability?
group insurance
A return of premium term life policy is written as what type of term coverage?
increasing
The type of term insurance that provides increasing death benefits as the insured ages is called
increasing term
If an agent wishes to sell variable life policies, what license must the agent obtain?
securities
Which of the following is called a second to die policy?
survivorship life
Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have a limited financial resources?
term
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?
the insured's premiums will be waived until she is 21.
All of the following are true about variable products EXCEPT
the premiums are invested in the insurer's general account
During partial withdrawal from a universal life policy, which portion will be taxed?
to interest
An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?
variable