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 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

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

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

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

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

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

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

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

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

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

Which policy requires an agent to register with NASD before selling

variable life

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

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

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 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 type of policies may not have automatic premium loan provision attached

decreasing term

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

The consideration clause in a life insurance policy indicates that a policyonwers considerations consists of completed application and

premium

the provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called

reinstatement

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

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

Is past due interst on a policy loan is added to the total debt

yes

A policyowner may generate taxable income from

Accumulation interest

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 kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?

Family maintance policy

S owns a life insurance policy with cash value that flucates according to the underlying investment performance of common stocks

Variable whole life

When is the face amount of whole life policy paid

When the insured dies or at the policy's maturity date, whichever happens first

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

Under an interest sensitive whole life policy

cash values are determined by interest rate

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

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

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

who has the option to renew a renewable term policy

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

Whole life insurance policies are contractly guaranteed to provide each of the following except

partial withdraw feature beyond a surrender charge period

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

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

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

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

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 type of life insurance are credited policies issued as

term

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

Life insurance immediatly creates an estate uposn the death of the insured what policy is characterized by a guarantee minimum death benefit

variable life