chapter 2

Fixed annuities provide all of the following EXCEPT

hedge against inflation.

Equity index annuities

seek higher returns.

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 insured's age 100 is called

single premium whole life.

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

straight life

which of the following best describes annually renewable term insurance?

it is level term insurance.

the type of policy that can be changed from one that does not accumulate cash value to the one that does, is a

convertible term policy.

in a survivorship life policy, when does the insurer pay the death benefit?

upon the last death.

the main difference between immediate and deferred annuities is

when the income payments begin.

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 receive from the policy?

$100,000

An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)

equity indexed annuity.

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?

lower.

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

securities

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

securities.

which of the following is not true regarding the accumulation period of annuity?

it would not occur in a deferred annuity.

all other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?

lower.

which policy component decreases in decreasing term insurance?

face amount

which of the following is NOT true regarding a variable universal life policy?

The death benefit is fixed.

when an annuity is written, whose life expectancy is taken into account?

annuitant.

which of the following is a feature of variable annuity?

benefit payment amounts are not guaranteed.

which of the following is TRUE regarding the annuity period?

it may last for the lifetime of the annuitant.

all of the following are true regarding a decreasing term policy except.

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

which of the following is TRUE for both equity indexed annuities and fixed annuities.

they have a guaranteed minimum interest rate.

In a survivorship life policy, when does the insurer pay the death benefit?

upon the last death.

The president of a company is starting annuity and decides that his corporation will be the annuitant. Which of the following statements is true?

The annuitant must be a natural person.

What license or licenses are required to sell variable annuities?

both a life insurance license and a securities license.

what is an equity indexed annuity considered to be a fixed annuity?

it has a guaranteed minimum interest rate.

Why is an equity indexed annuity considered to be a fixed annuity?

it has guaranteed minimum interest rate.

which of the following is TRUE regarding the accumulation period of an annuity?

it is a period during which the payments into the annuity grow tax deferred.

which statement is not true regarding a straight life policy?

its premium decreases over time, in response to its growing cash value.

Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?

joint life.

which of the following is another term for the accumulation period of an annuity?

pay-in period

periodic payments of accumulated funds best describes

an annuity.

a lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?

immediate annuity

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

In an annuity, the accumulated money is converted into a stream of income during which time period?

annuitization period

which of the following products requires a securities license?

variable annuity

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.

which of the followings is TRUE for both equity indexed annuities and fixed annuities?

they have a guaranteed minimum interest rate.