Life insurance policies

Interest earned on the withdrawn cash value

During partial withdrawal from a universal life policy, what portion, if any, will be taxed?

Decreasing term

An individual has just borrowed $10,000 on a 5-year note from his bank. The note is due in installments. What type of life insurance policy would be best suited to this situation?

Single premium whole life

Q: What type of whole life insurance policies only requires a payment of premium at its inception, and in addition to providing insurance protection for the life of the insured, endows at the insured's age 100?

Annually renewable term

Group life insurance policies are written as what type of insurance?

The premium is based on the average age of the insureds

How is the premium determined in a joint life insurance policy?

Whole life

If an insured terminates membership in group life insurance, to what type of insurance can the insured convert the coverage?

Decreasing term

What type of life insurance is best suited to cover a mortgage?

Convertible term

What type of life insurance policy can be changed from a policy with no cash value to one that generates cash value?

Term

What type of life insurance policy offers pure death protection?

Premium payment mode

Q: What is the major difference between the most common types of whole life policies: Straight Life, Limited Payment and Single premium

Limited-payWhole life

Q: What type of life insurance policy is Life Paid-up at Age 65?

When the insured reaches age 100

Q: When would a 20-pay whole life policy endow?

Age 100

Whole life policies provide protection until the insured reaches what age?

20-year level term

A policy states that it will pay a specified face amount if the insured dies during the 20 year premium-paying period and nothing if death occurs after the 20 year period. What type of policy is this?

Universal life

Between adjustable life and universal life policies, which one provides more flexibility to the policyowner?

Limited-pay whole life

Q: A whole life policy that requires that the policyowner only pays premiums for a specified number of years is known as what kind of policy

Group's purpose, size, financial strength and turnover

What are the characteristics of the group that underwriters will consider before issuing a group life policy?

Face amount

What does "level" refer to in level term insurance?

Cash value is paid to the policyowner

What happens to the cash value when a whole life insurance policy matures?

Tax deferred

Regarding taxation, how does the cash value of a universal life policy accumulate?

Evidence of insurability is not required

What is the main advantage of converting from group life insurance to individual coverage?

The full death benefit

Whole life insurance policies mature when the insured reaches the age of 100. If the owner of a whole life policy (the insured) dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?

There is no cash value to borrow against

Why are policy loans not available on term insurance?

The employer (also known as the sponsor of the group)

Who owns a group life insurance contract?

Cash value and death benefit

Q: In variable universal life insurance, to what policy component does the term 'variable' refer?

To prevent the policy from lapsing

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