Life Insurance Primerica
An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died. What amount would his beneficiary receive as a settlement?
$200,000
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined and the cash value fell to $10,000. If the insured dies, how much will be paid out?
$50,000
A Straight Life policy has what type of premium?
A level annual premium for the life of the insured
Which of the following documents delivered to the policy owner includes information about premium amounts, cash values, surrender values, and death benefits for specific policy years?
A policy summary
For variable products, underlying assets must be kept in
A separate account
The minimum interest rate on an equity indexed annuity is often based on
An index like Standard & Poor's 500
The death protection component of Universal Life Insurance is always
Annually Renewable Term
A Universal Life insurance policy is best described as a/an
Annually Renewable Term policy with a cash value account
When an annuity is written, whose life expectancy is taken into account?
Annuitant
In an annuity, the accumulated money is converted into a stream of income during which time period?
Annuitization period
Which of the following best describes fixed-period settlement option?
Both the principle and interest will be liquidated over a selected period of time
Which of the following features of the Indexed Whole Life policy is NOT fixed?
Cash value growth
All of the following are duties and responsibilities of producers at the time of application EXCEPT
Change any incorrect statement on the application by personally initialing next to the corrected statement (must be initialed by the applicant)
If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to
Charge a higher premium
An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?
Conditional
When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is
Conditional
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?
Consideration
Representations are written or oral statements made by the applicant that are
Considered true to the best of the applicant's knowledge
What characteristic makes whole life permanent protection?
Coverage until death or age 100
An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type is it?
Deferred
The death benefit in a variable universal life policy
Depends on the performance of a separate account
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
What does "level" refer to in level term insurance?
Face amount
Which policy component decreases in decreasing term insurance?
Face amount
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
The death benefit under the Universal Life Option B
Gradually increases each year by the amount that the cash value increases
Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?
Greatest
Fixed annuities provide all of the following EXCEPT
Hedge against inflation
A man purchased a $90,000 annuity with a single premium and began receiving payments 2 months after that. What type of annuity is it?
Immediate
Life income joint and survivor settlement option guarantees
Income for 2 or more recipients until they die
A Return of Premium term life policy is written as what type of term coverage?
Increasing
What are the two components of a universal policy?
Insurance and cash account
During partial withdrawal from a universal life policy, which portion will be taxed?
Interest
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 issue at the time. This policy is a/an
Interest-sensitive Whole Life
Why is an equity indexed annuity considered to be a fixed annuity?
It has a guaranteed minimum interest rate
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
Which of the following is TRUE regarding the accumulation period of an annuity?
It is a period of time during which the payments into the annuity grow tax deferred
Which best describes annually renewable term insurance?
It is level term insurance
Which of the following best describes annually renewable term insurance?
It is term level insurance
Which of the following is true about the premium on the children's rider in a life insurance policy?
It remains the same no matter how many children there are
Which statement is NOT true regarding a Straight Life Policy?
It's premium steadily decreases over time, in response to its growing cash value
Which statement is NOT true regarding a Straight Life policy?
It's 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. Which policy is that?
Joint Life Policy
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called
Joint and survivor
Which of the following settlement options is known as straight life?
Life income
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?
Life income with period certain
What are the licensing requirements for someone who sells variable universal life insurance?
Life insurance and securities
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
The premium of a survivorship life policy compared with that of a joint life policy would be
Lower
If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer?
Lump sum
Which Universal Life option has a gradually increasing cash value and a level death benefit?
Option A
An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. This dividend option is called
Paid-up additions
An insured has a continuous premium whole life policy. She would like the policy dividends to pay off her policy sooner than would have been possible otherwise. What dividend option could she use?
Paid-up option
Which option is being utilized When the insurer Accumulates dividends at interest and uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?
Paid-up option
Which of the following is another term for the accumulation period of an annuity?
Pay-in period
Which will be included in a policy summary?
Premium amounts and surrender values
Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a
Premium receipt
The policyowner pays for her life insurance annually. Until now, she has collected a non taxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would she use?
Reduction of premium
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 the premiums paid. Which rider is attached to the policy?
Return of premium
Equity indexed annuities
Seek higher returns
Which of the following best details the underwriting process for life insurance?
Selection, classification, and rating of risks
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT
Signed waiver of premium
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 of 100 is called
Single premium whole life
Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option?
Size of each installment
Which of the following is a risk classification used by underwriters for insurance?
Standard
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
Which of the following would help prevent a universal life policy from lapsing?
Target premium
The interest earned on policy dividends is
Taxable
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
All of the following entities regulate variable life policies EXCEPT
The Guaranty Association
Which of the following is true regarding variable annuities?
The annuitant assumes the risk on investment
Which of the following is NOT true regarding the annuitant?
The annuitant cant be the same person as the annuity owner
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which is true?
The annuitant must be a natural person.
If the annuitant dies during the accumulation period, who will receive the annuity benefits?
The beneficiary
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?
The beneficiary will only receive payments of the interest earned on the death benefit
The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?
The beneficiary will receive the greater of the money paid into the annuity or the cash value.
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
The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for the rest of her life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT:
The insured's age at death
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT
The interest is not taxable since it remains inside the insurance policy
All of the following are true regarding a decreasing term policy EXCEPT
The payable premium amount steadily declines throughout the duration of the contract
Which of the following determine the cash value of a variable life policy?
The performance of the policy portfolio
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 policy owner of a Universal Life Policy may skip paying the premium and the policy will not lapse as long as
The policy contains sufficient cash value to cover the cost of insurance
Which of the following is TRUE regarding the premium in term policies?
The premium is level
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 TRUE about nonforfeiture values?
They are required by state law to be in the policy
Which of the following is NOT true regarding Equity Indexed Annuities?
They earn lower interest rates than fixed annuities
Which of the following is TRUE for both equity and annuities and fixed annuities?
They have a guaranteed minimum interest rate
Which of the following is TRUE for both equity indexed annuities and fixed annuities?
They have a guaranteed minimum interest rate
Why should the producer personally deliver the policy when the first premium has already been paid?
To help the insured understand all aspects of the contract
What is the purpose of establishing the target premium for a universal life policy?
To keep the policy in force
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?
Unilateral
What kind of policy allows withdrawals or partial surrenders?
Universal Life
Which type of life insurance policy allows the policy owner to pay more or less than the premium?
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
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
Which of the following types of policies will provide permanent protection?
Whole life
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant
With the policy