Health and Life Insurance: Chapter 2
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
A Straight Life policy has what type of premium?
A level annual premium for the life of the insured.
Annually renewable term policies provide a level death benefit that
Increase annually
A married couple own 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
The form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of years is called
Life income with period certain.
Under a pure life annuity, an income is payable by the company
Only for the life of the annuitant.
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
SEC registration
The policyowner 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.
Who bears all of the investment risk in a fixed annuity?
The insurance company.
All of the following are true of an annuity owner EXCEPT
The owner must be the party to receive benefits.
What is the purpose of establishing the target premium for a universal life policy?
To keep the policy in force
In a survivorship life policy, when does the insurer pay the death benefit?
Upon the last death
The annuity period is...
annuitization period, liquidation period, pay-out period; time over which the sum that has been accumulated during the accumulation period is converted into a stream of income payments to the annuitant
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an
Interest-sensitive Whole Life.
Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive
Nothing; the payments will cease.
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?
Option B
Which of the following is another term for the accumulation period of an annuity?
Pay-in period
An insurance policy that only requires the 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 best describes what the annuity period is?
The period of time during which accumulated money is converted into income payments
The term "fixed" in a fixed annuity refers to all of the following EXCEPT
Death Benefit
The premium of a survivorship life policy compared with that of a joint life policy would be...
Lower.
The accumulation period
Pay-in Period
In an annuity, the accumulated money is converted into a stream of income during which time period?
Annuitization period
If an annuitant dies before annuitization occurs, what will the beneficiary receive?
Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount.
Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?
Fixed amount
Fixed annuities provide all of the following EXCEPT
Hedge against inflation
Which of the following is NOT true about a join and survivor annuity benefit option?
Payments stop after the first death among the annuitants.
Which of the following best describes a pure life annuity settlement option?
Pure life provides for as long as the annuitant is alive.
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 premium increase each renewal.
A domestic insurer issuing variable contracts must establish one or more
Separate accounts
Which of the following products requires a securities license?
Variable annuity
Which of the following is NOT one of the three types of term coverage based on what happens to the face amount during the policy term?
Renewable
Which two terms are associated directly with the way an annuity is funded?
Single payment or periodic payments
An insurance policy that only requires 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 is called "second-to-die" policy?
Survivorship life
Which of the following would help prevent a universal life policy from lapsing?
Target Premium
All of the following entities regulate variable life policies EXCEPT
The Guaranty Association
Which of the following is NOT true regarding the annuitant?
The annuitant cannot be the same person as the annuity owner.
All of the following statements about equity index annuities are correct EXCEPT
The annuitant receives a fixed amount of return.
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.
All of the following statements are true regarding installments for a fixed amount EXCEPT
The payment will stop when the annuitant dies.
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.
Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?
Depreciation Period.
Which statement is NOT true regarding a Straight Life Policy?
Its premium steadily decreased over time, in response to its growing cash value.
Which of the following policies would be classified as a traditional level premium contract?
Straight Life
Which of the following is called a "second-to-die" policy?
Survivorship Life
If the annuitant dies during the accumulation period, who will receive the annuity benefits?
The beneficiary
All of the following are True regarding the convertibility option under a term life insurance policy EXCEPT
Upon conversion, the death benefit of the permanent policy will be reduced by 50%
In a survivorship life policy, when does the insurer pay the death benefit?
Upon the last death.
Which of the following types of annuities will generally provide the highest monthly income?
Straight Life
Which of the following is TRUE regarding the premium in term policies?
The premium is level for the term of the policy.
Which of the following policies would be classified as a traditional premium contract?
Straight Life
Which of the following best describes what the annuity period is?
The period of time during which accumulated money is converted into income payments.
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?
Universal Life
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid
For 20 years or until death, whichever occurs first.
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT
It is a life contingency option.
A couple receives a set amount of income from their annuity. When the wife dies, the husband no longer receives annuity payments. What type of annuity did the couple buy?
Joint Life
Which of the following is a feature of variable annuity?
Benefit payment amounts are not guaranteed.
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
An agent selling variable annuities must be registered with
FINRA
What does "level" refer to in level term insurance?
Face Amount
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
A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, payments stop. What settlement option did they select?
Joint and survivor
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
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be...
Adjusted to the insured's age at the time of renewal.
What is another name for interest-sensitive whole life insurance?
Currant assumption life
Why is an equity indexed annuity considered to be a fixed annuity?
It has a guaranteed minimum interest rate.
All of the following statement are true regarding installments for a fixed period annuity settlement option EXCEPT
It is a life contingency option.
Which of the following best describes annually renewable term insurance?
It is level term insurance.
Your client is planning to retire. She has accumulated $100,000 in a retirement annuity and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend
Straight life
When would a 20-pay whole life policy endow?
When the insured reaches age 100
The LEAST expensive first-year premium is found in which of the following policies?
Annually Renewable Term
Which of the following features of the Indexed whole life policy is NOT fixed?
Cash value growth
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.
Which policy component decreases in decreasing term insurance?
Face amount
Annually renewable term policies provide a level death benefit for a premium that..
Increases annually.
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.
What license are required to sell variable annuities?
Both a life insurance license and a securities license.
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option?
It does not guarantee that the entire principal amount will be paid out.
Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated?
Annuity certain
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.
Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?
Greatest
The minimum interest rate on an equity indexed annuity is often based on
An index like Standard & Poor's 500.
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option?
It does not guarantee that the entire principle amount will be paid out.
Which of the following is NOT true regarding the accumulation period of an annuity?
It would not occur in a deferred annuity.
Which of the following is an example of a limited-pay life policy?
Life Paid-up at Age 65