Types of Life Insurance Policies
The following are features of the Indexed Universal Life EXCEPT A - Policy's cash value is dependent on the performance of the equity index. B - Sale of this product requires a securities license. C - Flexible premium. D - Adjustable death benefit.
B
The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as AThe next month's premium is sufficient to cover both the current premium amount and the skipped amount. BThe policy contains sufficient cash value to cover the cost of insurance. CThe previous premium payments were high enough to create an excess of premium. DThe policyowner cannot skip premiums without the policy lapsing.
B
To sell variable life insurance policies, an agent must receive all of the following EXCEPT A - A life insurance license. B - SEC registration. C - FINRA registration. D - A securities license.
B
Which of the following best defines target premium in a universal life policy? A - The corridor of insurance B - The recommended amount to keep the policy in force throughout its lifetime C - The maximum amount the policyowner may pay on a policy D - The minimum amount to make sure the policy is annually renewable
B
Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated? A - Those who have no history of claims B - Those who have been insured under the plan for at least 5 years C - Those who have worked in the company for at least 3 years D - Those who have dependents
B
Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value? A - Decreasing term life B - Variable universal life C - Increasing term life D - Credit term life
B
Which of the following would help prevent a universal life policy from lapsing? A - Corridor of insurance B - Target premium C - Face amount D - Adjustable premium
B
A Straight Life policy has what type of premium? A - A decreasing annual premium for the life of the insured B - A variable annual premium for the life of the insured C - A level annual premium for the life of the insured D - An increasing annual premium for the life of the insured
C
What does "level" refer to in level term insurance? A - Cash value B - Interest rate C - Face amount D - Premium
C
All of the following are characteristics of group life insurance EXCEPT A - Amount of coverage is determined according to nondiscriminatory rules. B - Individuals covered under the policy receive a certificate of insurance. C - Certificate holders may convert coverage to an individual policy without evidence of insurability. D - Premiums are determined by the age, sex and occupation of each individual certificate holder.
D
The LEAST expensive first-year premium is found in which of the following policies? A - Increasing Term B - Decreasing Term C - Level Term D - Annually Renewable Term
D
The insured is also the policyowner of a whole life policy. What age must the insured attain in order to receive the policy's face amount? A - 65 B - 70 1/2 C - 90 D - 100
D
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 A - Until the policyowner reaches age 65. B - For at least 20 years. C - Until the policyowner's age 100, when the policy matures. D - For 20 years or until death, whichever occurs first.
D
Which of the following is INCORRECT regarding a $100,000 20-year level term policy? A - The policy premiums will remain level for 20 years. B - If the insured dies before the policy expired, the beneficiary will receive $100,000. C - The policy will expire at the end of the 20-year period. D - At the end of 20 years, the policy's cash value will equal $100,000.
D
Which of the following is a key distinction between variable whole life and variable universal life products? A - Variable universal life is regulated solely through FINRA. B - Variable whole life allows policy loans from the cash value. C - Variable universal life has a fixed premium. D - Variable whole life has a guaranteed death benefit.
D
Which of the following policies would be classified as a traditional level premium contract? A - Adjustable Life B - Universal Life C - Variable Universal Life D - Straight Life
D
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? A - Universal Life - Option B B - Equity Indexed Universal Life C - Variable Universal Life D - Universal Life - Option A
D
Which of the following types of policies allows for a flexible premium and a variable investment component? A - Guaranteed issue variable life insurance B - Variable whole life insurance C - Whole life insurance D - Variable universal life insurance
D
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? A - Corridor option B - Variable option C - Option A D - Option B
D
Which statement is NOT true regarding a Straight Life policy? A - The face value of the policy is paid to the insured at age 100. B - It usually develops cash value by the end of the third policy year. C - It has the lowest annual premium of the three types of Whole Life policies. D - Its premium steadily decreases over time, in response to its growing cash value.
D
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? A - Variable whole life B - Decreasing term C - Straight whole life D - Universal life
D
Which policy component decreases in decreasing term insurance? A - Face amount B - Cash value C - Dividend D - Premium
A
All of the following could own group life insurance EXCEPT A - A group needing low-cost life insurance. B - A group sponsored by an employer. C - An alumni group. D - A debtor group.
A
In a single employer group plan, what is the name of the policy issued to the employer? A - Certificate of authority B - Master contract C - Certificate of insurance D - Employer-insurer contract
B
If an agent wishes to sell variable life policies, what license must the agent obtain? A - Adjuster B - Surplus Lines C - Personal Lines D - Securities
D
Which of the following elements in an Indexed Universal Life policy is tied to an index? A - Death benefit B - Face amount C - Premiums D - Cash values
D
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 A - Required a premium increase each renewal. B - Built cash values. C - Required proof of insurability every year. D - Decreased death benefit at each renewal.
A
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? A - Joint Life Policy B - Survivorship Life Policy C - Second-to-Die D - Family Income Policy
A
Which of the following is an example of a limited-pay life policy? A - Level Term Life B - Straight Life C - Life Paid-up at Age 65 D - Renewable Term to Age 70
C
Which of the following statements about group life is correct? A - The group sponsor receives a Certificate of Insurance. B - The policy can be converted to an individual term insurance policy. C - The cost of coverage is based on the ratio of men and women in the group. D - The premiums are higher than in an individual policy because there is no medical exam.
C
Which of the following types of policies will provide permanent protection? A - Term life B - Group life C - Whole life D - Credit life
C
Concerning Juvenile Life insurance, which of the following statements is INCORRECT? A - Juvenile Life is classified as any life insurance purchased by a minor. B - Usually a parent or guardian is the applicant for insurance on the life of a minor. C - It can be a limited premium payment policy. D - Juvenile Life is classified as any life insurance written on the life of a minor.
A
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? A - Joint Life B - Decreasing Term C - Whole Life D - Ordinary Life
A
An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? A - The insured would not need to prove insurability for a conversion policy. B - The insured may convert coverage to an individual policy within 31 days. C - The premium for individual coverage will be based upon the insured's attained age. D - The insured may choose to convert to term or permanent individual coverage.
D
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? A - The death benefit can be increased by providing evidence of insurability. B - The death benefit cannot be increased. C - The death benefit can be increased only when the policy has developed a cash value. D - The death benefit can be increased only by exchanging the existing policy for a new one.
A
The type of term insurance that provides increasing death benefits as the insured ages is called A - Increasing term. B - Flexible term. C - Interest-sensitive term. D - Age-sensitive term.
A
Variable Whole Life insurance is based on what type of premium? A - Graded B - Level fixed C - Increasing D - Flexible
B
In a survivorship life policy, when does the insurer pay the death benefit? A - Upon the last death B - Upon the first death C - Half at the first death, and half at the second death D - If the insured survives to age 100
A
What type of premium do both Universal Life and Variable Universal Life policies have? A - Flexible B - Level fixed C - Decreasing D - Increasing
A
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? A - Limited pay whole life B - Interest-sensitive whole life C - Life annuity with period certain D - Increasing term
A
All of the following are true about variable products EXCEPT A - Policyowners bear the investment risk. B - The premiums are invested in the insurer's general account. C - The minimum death benefit is guaranteed. D - The cash value is not guaranteed.
B
If the owner of a whole life policy who is also 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? A - The face amount minus the premiums that would have been collected until the insured reached the age of 100 B - A full death benefit C - A death benefit equal to the cash value of the policy D - 50% of the death benefit
B
The premium of a survivorship life policy compared with that of a joint life policy would be A - Half the amount. B - Lower. C - Higher. D - As high.
B
What is the purpose of establishing the target premium for a universal life policy? A - To pay up the policy faster B - To cover all policy expenses C - To keep the policy in force D - To accumulate cash value faster
C
Which Universal Life option has a gradually increasing cash value and a level death benefit? A - Term insurance B - Option B C - Option A D - Juvenile life
C
Which of the following is called a "second-to-die" policy? A - Juvenile life B - Joint life C - Survivorship life D - Family income
C
A Universal Life insurance policy has two types of interest rates that are called A - Option A and Option B. B - Fixed and Variable. C - Minimum and Target. D - Guaranteed and Current.
D
An Adjustable Life policyowner can change which of the following policy features? A - The mortality expense B - The investment account C - The insured D - The coverage period
D