Exam FX Ch4

In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT

The type of investment.

All of the following statements are true regarding group insurance EXCEPT

Participants in the policy each receive a policy.

At age 30, an applicant wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit his needs?

Adjustable Life

What type of premium do both Universal Life and Variable Universal Life policies have?

Flexible

An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy?

She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan.

The policy-owner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

The death benefit can be increased by providing evidence of insurability.

An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT?

The insured may choose to convert to term or permanent individual coverage.

Which of the following would help prevent a universal life policy from lapsing?

Target premium

To sell variable life insurance policies, an agent must receive all of the following EXCEPT

SEC registration.

Which of the following best describes annually renewable term insurance?

It is level term insurance.

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

It will increase because the insured will be 5 years older than when the policy was originally purchased.

A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy

Required a premium increase each renewal.

All of the following are true regarding a decreasing term policy EXCEPT

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

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.

A Universal Life insurance policy has two types of interest rates that are called

Guaranteed and Current.

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

Option A

A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why?

The purpose of the group was to purchase life insurance.

Which of the following best defines target premium in a universal life policy?

The recommended amount to keep the policy in force throughout its lifetime

What is the purpose of establishing the target premium for a universal life policy?

To keep the policy in force

In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?

5

What characteristic makes whole life permanent protection?

Coverage until death or age 100

A Return of Premium term life policy is written as what type of term coverage?

Increasing

The type of term insurance that provides increasing death benefits as the insured ages is called

Increasing term.

Which of the following has the right to convert the existing term coverage to permanent insurance?

Policy-owner

All of the following are characteristics of group life insurance EXCEPT

Premiums are determined by the age, sex and occupation of each individual certificate holder.

Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources?

Term

Which of the following are generally NOT considered when underwriting group insurance?

The insureds' medical history

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

The performance of the policy portfolio

Which statement is NOT true regarding a Straight Life policy?

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

A domestic insurer issuing variable contracts must establish one or more

Separate accounts.

Which of the following is INCORRECT regarding a $100,000 20-year level term policy?

At the end of 20 years, the policy's cash value will equal $100,000.

What type of life insurance is most commonly used for group plans?

Annually renewable term

In a group life insurance policy, the employer may select all of the following EXCEPT

The beneficiary.

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

If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this?

Jumping juvenile policy

Variable Whole Life insurance is based on what type of premium?

Level fixed

Which type of life insurance policy generates immediate cash value?

Single Premium

All of the following entities regulate variable life policies EXCEPT

The Guaranty Association.

In which of the following cases will the insured be able to receive the full face amount from a whole life policy?

If the insured lives to age 100

What are the two components of a universal policy?

Insurance and cash account

An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?

The insured may renew the policy for another 10 years, but at a higher premium rate.

Which type of life insurance policy allows the policy-owner to pay more or less than the planned premium?

Universal life

Which of the following life insurance policies allows a policy-owner to take out a loan from the policy's cash value?

Variable universal life

Which of the following types of policies allows for a flexible premium and a variable investment component?

Variable universal life insurance

Which of the following is a key distinction between variable whole life and variable universal life products?

Variable whole life has a guaranteed death benefit.