Chapter: Types of Life Policies

A straight life policy has what type of premium?

A level annual premium for the life of the insured

An Individual has just borrowed $10,000 from his bank on a 5- year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?

Decreasing term

Which of the following best describes annually renewable term insurance?

It is level term insurance

Which Universal Life option has a gradually increasing cash value and a level death benefit

Option A

All 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 NOT true regarding Equity Indexed Annuities?

They earn lower interest rates than fixed annuities

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

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

Upon the last death

When would a 20-pay whole life policy endow?

When the insured reaches age 100

Which of the following products will protect an individual from outliving his or her money?

Annuity

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 king of policy is it?

Limited-pay Life

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

Securities

A domestic insurer issuing variable contracts must establish one or more

Separate Accounts

Which type of life insurance policy generates immediate cash value?

Single Premium

Which two terms are associated directly with the way an annuity is funded?

Single payment or periodic payments

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

Variable life insurance is based on what kind of premium?

Level Fixed

Equity indexed annuities

Seek higher returns

Which of the following is TRUE regarding the annuity period?

It may last for the lifetime of the annuitant

An insured buys a 5- year level premium term policy with a face amount of $10,000. The policy also contains renew ability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?

It will increase b/c the insured will be 5 years older then when the policy was originally purchased

Which of the following determines the cash value of a variable life policy?

The performance of the policy portfolio

The equity in an equity index annuity is linked to....

An index like Standard & Poor's 500

During partial withdrawal from a universal life policy, which portion will be taxed?

Interest

A man purchased a $90,000 annuity with a single premium and began receiving payments 2 months after that. What type of annuity is it?

Immediate

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 return of premium term life policy is written as what type of term coverage?

Increasing

The death benefit under the Universal Life Option B

Gradually increases each year by the amount that the cash value increases.

All the following statements about equity index annuities are correct EXCEPT ...

The annuitant receives a fixed amount of return

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

Pay-in period

Fixed annuities provide all the following EXCEPT ...

Hedge against inflation