Chapter 1 Exam: Life Policies

All of these insurance products require an agent to have proper FINRA securities registration in order to sell them, EXCEPT for:

Modified Whole Life

A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?

20-Pay Life accumulates cash value faster than Straight Life

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

The amount of coverage on a group credit life policy is limited to:

The insured's total loan value

Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n):

Third-party with no insurable interest

What type of insurance offers permanent life coverage with premiums that are payable for life?

Whole Life

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 statement is TRUE regarding a Variable Whole Life policy?

A minimum guaranteed Death benefit is provided

How long does the coverage normally remain on a limited-pay life policy?

Age 100

Which statement about a whole life policy is true?

Beneficiary may be changed only with the consent of the premium payor

All of these statements about Equity Indexed Life Insurance are correct, EXCEPT:

Cash value has a minimum rate of accumulation

Additional coverage can be added to a Whole Life policy by adding a(n):

Decreasing term rider

T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?

Renewable

Which of the following types of permanent life insurance policies offers the highest initial cash value?

Single premium

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

Which of the following Life insurance policies combine term insurance with an investment element?

Universal Life

A(n) ______ Life policy offers the owner investment in products such as money-market funds, longterm bonds and equities.

Variable

At what point does a Whole Life Insurance policy endow?

When the cash value equals the death benefit

If a 10-Year Term Life policy contains a Renewability provision, the policy will renew:

Without evidence of insurability

Which of these is an element of a Variable Life policy?

A fixed, level premium

A Universal Life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, cost of insurance, and the:

Expense charges

K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?

Modified Whole Life

Whole Life insurance policies are contractually guaranteed to provide each of the following EXCEPT:

Partial withdrawal features beyond a surrender charge period

K purchased a Life insurance policy in 1986 which paid 10% interest in the early years of the policy. Twenty years after the purchase, she received a notice from the insurer stating that the policy will soon terminate unless a much-higher premium is paid because of falling interest rates. This type of policy is known as a(n) _________ life policy.

Universal

What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?

Convertible Term

Which provision allows the policy owner to change a term life policy to a permanent one without providing proof of good health?

Conversion

Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?

Policy owner

What kind of life insurance product covers children under their parent's policy?

Term rider

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