Types of Life Policies

What type of premium do both Universal Life and Variable Universal Life policies have? A. Flexible B. Level fixed C. Decreasing D. Increasing

A. Flexible Variable Universal Life, like universal life itself, has a flexible premium that can be increased or decreased as the policy owner chooses, as long as there is enough value in the policy to fund the death benefit

Which of the following types of insurance policies is most commonly used in credit life insurance? A. Equity indexed life B. Decreasing term C. Increasing term D. Whole life

B. Decreasing term Credit insurance is a special type of coverage written to insure the life of a debtor and pay off the balance of a loan in the event of the death of a debtor. It is usually written in decreasing term insurance.

Which of the following is INCORRECT regarding a 100,000 20-year level term policy? A. The policy premium 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 cash value will equal 100k

D. At the end of 20 years, the cash value will equal 100k Term policies do not accumulate cash value, all other statements are true

What kind of policy issues certificates of insurance to insureds? A. Individual Insurance B. Non-qualified annuity C. Any Insurance D. Group Insurance

Group Insurance

A Return of Premium term life policy is written as what type of term coverage? A. Decreasing B. Renewable C. Level D. Increasing

Increasing Return of premium (ROP) life insurance is an increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid.

What type of life insurance generates immediate cash value? A. Continuous premium B. Single premium C. Level Term D. Decreasing Term

Single Premium

Which component increases in the increasing term insurance? A. Death benefit B. Cash value C. Interest on the proceeds D. Premium

A. Death Benefit Increasing term features level annual premiums and a death benefit that increases each year over the duration of the policy term.

A policy will pay death benefit 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? A. Ordinary life policy B. Limited pay whole life C. Level term D. Term to specified age

Level term A 20 year term policy is written to provide a level death benefit for 20 years

Which of the following is an example of a limited pay whole life policy? A. Renewable Term to Age 70 B. Level Term Life C. Straight Life D. Limited Pay-up At age 65

Limited Pay-up At age 65

Which of the following is TRUE regarding an intermediate premium whole life policy? A. The premium can be raised up to a guaranteed maximum rate B. The premium is lower in the first year of the policy; then it is gradually raised each year. C. The premium is level throughout the life of a policy D. The premium is usually higher in the first few years of a policy

The premium can be raised up to a guaranteed maximum rate

Which of the following would not cause the death benefit to increase? A. Cost of Living Rider B. Accidental Death Rider C. Payor Benefit Rider D. Guaranteed Insurability Rider

C. Payor Benefit Rider Payor Benefit Rider does not increase the Death Benefit; it only pays the premium if the payor is disabled or dies. With Guaranteed Insurability Rider, the policyowner can increase DB at specified ages or events, i.e. marriage or birth of a child; Cost of Living Rider increases DB to keep pace with inflation; in Accidental Death Rider, if the insured dies from an accident, DB is a multiple of the Face Amount.

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

Lower Survivorship life is much the same as Joint Life in that it insurers two or more lives for a premium that is based on a joint age. The major difference is that survivorship pays on the last death rather than the first death. Since the death benefit is not paid until the last death, the joint life expectancy is in a sense extended, resulting in a lower premium.

A man decided to purchase a $100,000 Annually Renewable Life Insurance Policy to provide additional protection until his children finishes college. He discovered that his policy A. Decreased death benefit at each renewal B. Required a premium increase each renewal C. Built cash values D. Required proof of insurability every year

Required a premium increase each renewal

Which of the following best defines target premium in a universal life policy? A. The maximum amount the policy owner may pay on a policy B. The minimum amount to make sure the policy is renewable C. The corridor of insurance D. The recommended amount to keep the policy in force throughout it's life

The recommended amount to keep the policy in force throughout its lifetime

Which of the following would help prevent the universal life policy from lapsing ? A. Adjustable premium B. Corridor of insurance C. Target premium D. Face amount

C. Target premium The target premium is a recommended amount that should be paid on a policy in order to cover the costs of insurance protection and to keep the policy in force throughout its lifetime

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 the policy expenses C. To keep the policy in force D. To accumulate cash value faster

C. To keep the policy in force

Which of the following is called "second to die" policy? A. Juvenile Life B. Joint Life C. Survivorship Life D. Family Income

C. Survivorship Life Survivorship Life (also referred to as second to die or last survivor policy) is much the same as joint life in that it insurers two or more lives for a premium that is based on a joint age

The initial amount of credit life insurance may NOT exceed A. An amount set by a statue and adjusted regularly for inflation B. The borrowers monthly income C. The borrowers annual income D. The amount repaid under the contract

D. The amount re-paid under the contract. The initial amount of credit life insurance may not exceed the total amount repayable under the contract of indebtedness

An employer offers group life insurance to its employees for the amount of 10,000. Which of the following is true? A. The cost of coverage payed by the employer is tax deductible by the employees B. The cost of coverage is a deductible expense by the employer. C. The value of the insurance will be deducted from the employees' compensation D. The cost of coverage paid by the employer is taxed to the employees

The cost of coverage is a deductible expense by the employer

The policy owner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as A. The previous premium payments were high enough to create an excess of premium. B. The policy owner cannot skip premiums without policy lapsing. C. The next months premium is sufficient to cover both the current and future premium amount and the skipped amount. D. The policy contains sufficient cash value to cover the cost of insurance

The policy contains sufficient cash value to cover the cost of insurance

Which of the following can not be changed in an Adjustable Life Policy? A. Length of coverage B. Premium C. Amount of Insurance D. The type of Investment

Type of investment

A universal life insurance policy has two types of interest rates that are called A. Fixed and Variable B. Minimum and Target C. Guaranteed and Current D. Option A and Option B

Guaranteed and Current

All of the following are true regarding convertibility option under a term life policy EXCEPT: A. Most term policies contain a convertibility option B. Upon conversion, the premium for the permanent policy will be based upon attained age C. Upon conversion, the death benefit of the permanent policy will be reduced by 50% D. Evidence of insurability is not required

C. Upon conversion, the death benefit of permanent policy will be reduced by 50%

What is another name for interest sensitive whole life insurance? A. Current assumption life B. Variable life C. Term life D. Adjustable life

Current assumption life Interest-sensitive whole life, also referred to as current assumption life, is a whole life policy that provides a guaranteed death benefit at age 100.

Which of the following Life Insurance policies would be considered interest sensitive? A. Adjustable Life B. Whole Life C. Increasing Term D. Universal Life

Universal Life As well as being a flexible premium policy, universal life is also an interest sensitive policy. The insurer credits the cash value in the policy with a current (non guaranteed) interest rate and backs the cash value with a contract (lower guaranteed) rate of interest.

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 of withdrawal and the insurer charges a fee. What type of policy does the insured most likely have? A. Adjustable life B. Term life C. Limited pay D. Universal life

Universal Life Universal life policies allows for policyholders to withdraw a limited portion of the policy's cash value. Each withdrawal, however, is usually charged, and the amount and frequency of withdrawals are usually limited.