Life Insurance Policies

Who is entitled to the cash values in a life insurance policy?

policyowner

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

100 years old

The death protection component of Universal Life Insurance is always

Annually Renewable Term

Who owns a group life insurance contract?

The employer (aka the spnsor of the group)

Why are policy loans not available on term insurance?

There is no cash value to borrow against

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

To prevent the policy from lapsing

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 the insured's death, whichever occurs first

In order to qualify for conversion from 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 years

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

Require a premium increase each renewal

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may

Require evidence of insurability

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

the cash value is paid to the policyowner

An adjustable life policyowner can change what?

the coverage period

Which of the following is NOT true regarding a Variable Universal Life policy?

the death benefit is fixed

In term policies, what happens to the premium throughout the term of the policy?

the premium remains level

What is a level premium?

the premium that does not change throughout the life of a policy

All of the following are characteristics of a group life insurance plan EXCEPT

there is a requirement to prove insurability on the part of the participants

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

1) Groups purpose 2) Size 3) financial strength 4) turnover

All of the following could own group life insurance EXCEPT

A group needing low cost life insurance because they must be formed for other reasons than purchasing insurance

A Straight Life policy has what type of premium?

A level annual premium for the life of the insured

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 most likely fits his needs?

Adjustable Life

How are the variable annuities regulated?

By state and federal agencies

What are the licensing requirements for someone who sells variable universal life insurance?

Life insurance and securities

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 suited to this situation?

Decreasing term

The death benefit in a variable universal life policy

Depends on the performance of a separate account

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

Evidence of insurability is not required

What policy component must decrease in decreasing term insurance?

Face amount

When an employee terminates coverage under a group insurance policy, coverage continues in force?

for 31 days

What type of policy is typically issued without proof of insurability from the insured

Group policy

What are the two types of interest rates for universal life policies?

Guaranteed and current

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

What are the two components of a Universal policy

Insurance and cash account

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

Which statement is NOT true regarding a Straight Life Policy

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

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. What policy is that?

Joint Life policy

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

Which of the following is an example of a limited-pay life policy

Life paid up to age 65

Your clients 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

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?

Lower

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

Option A

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

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the the insured, and matures at the insured's age 100 is called

Single premium whole life

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

What type of life insurance policy offers pure death protection

Term policy

What elements of an adjustable life policy can be changed by the policyowners?

The amount and payment period of the premium, the face amount, and the period before protection

What is an annually renewable term (ART)

The benefits remains level and the policy can be renewed each year, but the premium increases usually according to age

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

Which of the following Life Insurance policies would be considered interest sensitive

Universal Life

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 (Level Death Benefit option)

In what type of life insurance policies can the policyowner skip premium payments without the policy lapsing?

Universal life

In a joint life policy, when is the death benefit paid?

Upon the first death

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

When does an adjustable life policy accumulate cash value?

When the premiums paid are more than the cost of the policy

What type of life insurance policy provides permanent protection?

Whole life

What is a lapse?

a policy termination due to nonpayment of premium

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?

single premium whole life

What is cash value?

the actual value of the insurance policy

What is endow in life insurance?

to have the cash value of a whole life policy reach the contractual face amount