Chapter 3 quiz
Term life policies most like to contain a renewable feature
10 year converitable term
a potential client that is 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
20 pay life accumulates cash value faster than straight life
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?
20,000 death benefit
What is call when a policyowner uses a life insurance as collateral for a bank loan
Collateral assignment
Misstatement of Age provision
Coverage will be adjusted to reflect the insured true age if a misstatement of age is discovered
Additional coverage can be added to a Whole Life policy by adding a(n)
Decreasing term rider
A policyowner may generate taxable income from
Accumulation interest
A whole life insurance policy owner does not have the right to designate a beneficary take a out a policy loan change the grace period assign the policy
Change the grace period
N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?
Claim will be denied because of lapse
P owns a 25,000 life policy that pays the face amount to him if he lives to age 70 or his beneficary if he dies before age 70 what kind policy is owned
Endowment at age 70
What is called a provision prevents an insurer from changing the terms of the contract with the policyowner by referring documents not found with in the policy itself
Entire Contract provision
What provision in a life insurance policy states the application is considered part of the contract
Entire contract provision
Is the settlement options involved the systematic liquidation of the death proceeds in the event insurance's death
Ex=Except interest only
When and insurer issues a policy that refused to cover certain risks
Exclusion
Which of the following Nonforfeiture option offers the highest death benefit
Extended term
d owns a whole life policy that was purchased 10 years ago if the premiuum payment suddenly stops and d takes no additional action which nonforfeit option will the insured likely to proceed with
Extended term
the purpose of _______________period clause is to avoid unintentional lapse of a life insurance policy
Grace
What type of policy covers two live and pays the face amount after the first one dies
Joint
which type of policy is considered to be overfunded as stated by the irs guidelines
Modified Endowment contract
P is the insured on partipating life policy P premium are waived due to a disabilty
P will received declared dividends
Nonforfeiture Options continue a build of cash
Reduced paid up
Allows the policyowner to have level premiums and to also choose from a selection of investment options
Variable life
Which of the following policies is characterized by flexiable premium and death benefit and allows the policyowner control of the investment aspenct of the plan
Variable universal life
S owns a life insurance policy with cash value that flucates according to the underlying investment performance of common stocks
Variable whole life
A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider
Waiver of premium
When is the face amount of whole life policy paid
When the insured dies or at the policy's maturity date, whichever happens first
Return of premium life policy is
Whole life and increasing term
What action wil an insurer take if and interest payment on a policy loan is not made on time
automatically add the amount of interest due to the loan balance
A company that owns a life insurance policy on one of it key employess may do all of the following except borrower against the cash value change the beneficary cancel the policy change the policy interest rate
change the policy interest rate
What kind of life insurance product covers children under their parent's policy?
child Term rider
s is cover by a whole life policy which insurance product can cover his children
children term rider
The incontestable clause allows an insurer to
contest a claim during the contestable period
combination of whole life ____________ term insurance referred as family income policy
decreasing
term life policy is normally used when covering an insured mortgage balance
decreasing
Credit life insurance is typically issued with which of the following types of coverage?
decreasing term
Variable insurance policy
does not guarantee a return on its investment accounts
Modified Endowment Contract (MEC)
exceeds the maxium amount of premium that can be paid into a policy and still have recognized as life insurance contract
Term insurance has which of the following characterics
expires at the end of the policy period
nonforfeiture clause
guaranteed values even if the policy has lapsed
who has the option to renew a renewable term policy
insurer
In a life insurance contract an insurance company promise to pay stated benefit is called
insuring clause
Divends paid from life policy are
issued by the insurer
Credit life insurance is
issued in an amount not to exceed the amount of the loan
K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable? Increaseing decreasing adjustable level
level
What kind of premium does whole life policy have
level
Accelerated death benefit
must have terminal illness to qualify
how does typical variable life policy investment account grows
mutual funds stocks and bonds
In a life insurance policy which provision states who may select policy options designate and name a beneficiary and be the recipient of any financial benefist from the policy
owners rights
Whole life insurance policies are contractly guaranteed to provide each of the following except
partial withdraw feature beyond a surrender charge period
A father who dies 3 years after purchasing a life insurance policy on his infant daughter can have the poicy premiums waived under which provision
payor provision
which of the following information is not required to be included in a whole life policy policy loan interest rate policy guaranteed divend table policy premium policy cash value table
policy guaranteed divend table
the advantage of reinstating an original life policy is
premiums are base on a younger age
Which of the following types of permanent life insurance policies offers the highest inital cash value single premium limited pay straight whole interest sentive
single premium
What type of life policy covers 2 lives and pays the face amount after the last one dies?
survivorship
Accumulated interest earned on dividends from and poliy
taxes as ordinary income
What type of life insurance are credited policies issued as
term
life insurance combine term insurance with an investment
universal life
In order to sell__________life policy a producer is required to register with FINRA
variable
Life insurance immediatly creates an estate uposn the death of the insured what policy is characterized by a guarantee minimum death benefit
variable life
Which policy requires an agent to register with NASD before selling
variable life
Is past due interst on a policy loan is added to the total debt
yes
which statement about whole life policy is true Beneficary may be changed only with the consent of premium payor death benefit can usually be adjusted cash value may be borrowed against premiums are flexiable
cash value may be borrowed against
Under an interest sensitive whole life policy
cash values are determined by interest rate
P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take?
Beneficary will be paid the death benefit
the option that provides an additional death benefit for a limited amount of time at the lowest possible cost
accidental death and dismemberment
P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?
accidental death and dismemberment clause
A policyowner may generate taxable income from which of the dividend options
accumulated interest
Term life rider offers the insured
additional life coverage
S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT type of life insurance s attained age divend amount used towards purchase beneficary age
beneficary age
Accidental death and dismemberment (AD&D) provision in a life insurance policy would pay
blinded in an accident
What benefit does the Payor Clause on juvenile life policy provide
premiums are waived if the payor become disabled
provisions that require proof of insurability after the policy has lapsed
reinstatement
A 15 year mortgage is best protected by what kind of policy
15 year decreasing term
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 maintance plan
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family maintance policy
What kind of life policy either pays the face value upon the death of the insured or when the insured reaches 100
Whole life
Under a graded premium the premiums are
are lower during the policy early years
Which provision allows the policyowners to change a term life policy to a permanent one without providing proof of good health modification conversion exchange adjustable
conversions
which of these types of policies may not have the automatic premium loan provision attacted to it Modified whole life 20 pay life decreasing term endowment
decreasing term
which type of policies may not have automatic premium loan provision attached
decreasing term
additional coverage can be added to a whole life policy by adding an
decreasing term rider
How are surrender charges deducted in a life policy with a rear-end loaded provision?
deducted when the policy is discontinued
What advantage does renewability feature give to term policy
extends coverage period
All of these characteristics of adjustable life policy except 1 adjust premiums 2adjustable premium period 3combination of term and whole life insurance 4 face can be adjusted using policy dividends
face can be adjusted using policy dividends
Which of these would be considered to a limited pay life policy 10 year renewabel and convertibale term life paid up at age of 70 straight whole life renewable term to age 100
life paid up at age 70
The accelerated death benefit provision is a life insurance policy is
living benefit
An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?
long term care
who benefits in investor orginated life insurance (ioli)
policy owner
M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the
policy proceeds
The consideration clause in a life insurance policy indicates that a policyonwers considerations consists of completed application and
premium
Which statement is correct regarding the premium paymentt schedule for whole life policies 1. premiums are payable throughout the insureds lifetime coverage last until death of the insured 2 premiums are payable for a set period/coverage expires at that point 3 premiums are payable until 65 coverage lasts a life time 4 a single premium is paid at time of the application coverage lasts until retirement
premiums are payable throughout the insureds lifetime coverage last until death of the insured
the provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called
reinstatement
J let life insurance policy lapse 8 months ago due to non payment she can reestablish coverage under which of the provision
reinstatement provision
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
What is advantage does the renewabilty feature give to a term policy
the insured my extended the coverage period
the amount of coverage on a group credit life policy is limited to
the insured total loan value
all of these statements about Equity indexed life are correct except 1. cash value has minimum rate of accumulation 2if the gain on the index goes beyon the policy minium reate of return the cash value willl mirror that of the index 3 the premiums can be lowered or raised based on ivestment performance 4 tied an equity index as the s&P 500
the premiums can be lowered or raised based on the investment performance
how does typical Variable policy investment account grow
through mutual funds stock bonds
The cash value in an _____ life policy may fluctuate to reflect changing assumptions regarding mortality cost interest and expense factors
universal
k purchased a life insurance policy in 1986 which paid 10% interest in the early years of the policy 20 years after the purchase she received a notice from the insurer stating that the policy will soon terminate unless much higer premium is paid because of falling interest rates
universal
An -----LIfe policy combines investment choices with a form of term coverage
variable universal
A life policy that contains a monthly mortality charge as well as self directed investment choices is
variable universal life policy
At what point does whole life insurance policy endow
when cash value equals the death benefit
what type of insurance offers permanent life coverage with premiums that are payable for
whole life
Y purcahses 100,000 worth of permanet protection on himself and 50,000 worth 10 year term coverage for his wife on the same policy what did purchase
whole life policy
if a 10 year term policy contains a renewabilty provision the policy will renew along with decrease premium at the option of the insurer only with eveidence of insurabilty with out eveidence of insurability
with out eveidence of insurability