LI: Chapter 2 Questions

What happens when a policy is surrendered for its cash value?

Coverage ends and the policy cannot be reinstated.

Regarding the free-look provision, the insurance company

Must allow the policyowner to return the policy for a full refund.

Which of the following riders is often used in business life insurance policies when the policyowner needs to change the insured under the policy?

Substitute insured rider (change of insured rider)

Which of the following best describes what the annuity period is?

The period of time during which accumulated money is converted into income payments

All of the following are TRUE regarding the convertibility option under a term life insurance policy

Upon conversion, the premium for the permanent policy will be based upon attained age. Evidence of insurability is not required. Most term policies contain a convertibility option.

Which nonforfeiture option has the highest amount of insurance protection?

extended term

collateral assignment is the

partial and temporary transfer of rights.

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 A

interest-sensitive whole life

variable whole life insurance is based on what type of premium

level fixed

Absolute assignment is the

complete and permanent transfer of ownership rights

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?

payor benefit

When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all of the premiums paid. Which rider is attached to the policy?

Return of premiu

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.

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

When an annuity is written, whose life expectancy is taken into account?

annuitant

Which of the following is NOT typically excluded from life policies?

Death due to plane crash for a fare-paying passenger

Which statement is true regarding a Straight Life policy?

The face value of the policy is paid to the insured at age 100. It usually develops cash value by the end of the third policy year. It has the lowest annual premium of the three types of Whole Life policies.

Which two terms are associated directly with the premium?

level or flexible

The premium of a survivorship life policy compared with that of a joint life policy would be

lower

Which nonforfeiture option provides coverage for the longest period of time?

reduced paid-up

to sell variable life ins policies, an agent must receive

securities license, life insurance, FINRA

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

single payment or periodic payments

when would a 20-pay whole life policy endow

when the insured reaches age 100

If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy?

The death benefit will be smaller.

which is a feature of a variable annuity

benefit payment amounts are not guaranteed

the term "fixed" in a fixed annuity refers to all of the following

guaranteed rate of interest equal annuity payments amount and length of payments

Who bears all of the investment risk in a fixed annuity?

insurance company