Types of life policies Questions
An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy? Nothing $50,000 $100,000 $200,000
$100,000
Before he died, an annuitant had received $12,500 in monthly benefits from his $25,000 straight life annuity. He was also the insured under a $50,000 paid-up whole life policy that named his wife as primary beneficiary. Considering both contracts, how much will the annuitant's spouse receive in benefits? $50,000 $62,500 $75,000 Nothing
$50,000
A straight-life policy has what type of premium? An increasing annual premium for the life of the insured A decreasing annual premium for the life of the insured A variable annual premium for the life of the insured A level annual premium for the life of the insured
A level annual premium for the life of the insured
The LEAST expensive first-year premium is found in which of the following policies? Level Term Annually Renewable Term Increasing Term Decreasing Term
Annually Renewable Term
In an annuity, the accumulated money is converted into a stream of income during which time period? Conversion period Annuitization period Payment period Amortization period
Annuitization period
Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated? Variable annuity Annuity Certain Fixed annuity Refund life
Annuity certain
Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated? Variable annuity Annuity certain Fixed annuity Refund life
Annuity certain
What license or licenses are required to sell variable annuities? Only a securities license No license is required Both a life insurance license and a securities license Only a life insurance license
Both a life insurance license and a securities license
What is another name for interest-sensitive whole life insurance? Current assumption life Variable life Term life Adjustable life
Current assumption life
The term "fixed" in a fixed annuity refers to all of the following EXCEPT Equal annuity payments Amount and length of payments Death benefit Guaranteed rate of interest
Death benefit
An indivdiual has just borrowed $10,000 from this bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? Variable life Universal life Whole life Decreasing term
Decreasing term
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? Decreasing term Variable life Universal life Whole life
Decreasing term
Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income? Annuitization period Pay-out period Liquidation period Depreciation period
Depreciation period
If an annuitant dies before annuitization occurs, what will the beneficiary receive? Cash value of the plan Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount Either the amount paid into the plan or the cash value of the plan, whichever is the lesser amount Amount paid into the plan
Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount
If an annuitant dies before annuitization occurs, what will the beneficiary receive? Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount Either the amount paid into the plan or the cash value of the plan, whichever is the lesser amount Amount paid into the plan Cash value of the plan
Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount
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 Variable Annuity Flexible Annuity Immediate Annuity
Equity Indexed Annuity
An agent selling variable annuities must be registered with Department of insurance The Guaranty Association SEC FINRA
FINRA
An agent selling variable annuities must be registered with Department of insurance The guaranty association SEC FINRA
FINRA
An individual has been making periodic payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it? Flexible premium Immediate Deferred Fixed
Fixed
Fixed annuities provide all of the following EXCEPT Future income payments Hedge against inflation Equal monthly payments for life Minimum guaranteed rate of interest
Hedge against inflation
A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits? Flexible payment annuity Deferred interest annuity Immediate annuity Variable annuity
Immediate annuity
Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be? Installments for a fixed amount Installments refund Cash refund Installments for a fixed period
Installments for a fixed period
What are the two components of a universal policy? Separate account and policy loans Insurance and cash account Insurance and investments Mortality cost and interest
Insurance and cash account
Why is an equity indexed annuity considered to be a fixed annuity? It has a fixed rate of return It is not tied to an index like the S&P 500 It has a guaranteed minimum interest rate It has modest investment potential
It has a guaranteed minimum interest rate
Which of the following is TRUE regarding the accumulation period of an annuity? It is also referred to as the annuity period It is a period of time during which the beneficiary receives income It is limited to 10 years It is a period during which the payments into the annuity grow tax deferred
It is a period during which the payments into the annuity grow tax deferred
Which of the following best describes annually renewable term insurance? It requires proof of insurability at each renewal Neither the premium nor the death benefit is affected by the insured's age It provides an annually increasing death benefit It is level term insurance
It is level term insurance
Which statement is NOT true regarding a Straight Life policy? Its premium steadily decreases over time, in response to its growing cash value The face value of the policy is paid to the insured at age 100 It usually develops cash value by the end of the third policy year It has the lowest annual premium of the three types of Whole Life policies
Its premium steadily decreases over time, in response to its growing cash value
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? Ordinary Life Joint Life Decreasing Term Whole Life
Joint Life
A married couple owns a permanent policy that covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that? Survivorship Life Policy Second-to-Die Family Income policy Joint Life Policy
Joint Life Policy
A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, payments stop. What settlement option did they select? Joint and survivorship Joint Straight life Family income
Joint and survivorship
A couple receives a set amount of income from their annuity. When the wife dies, the husband no longer receives annuity payments. What type of annuity did the couple buy? Life with period certain Joint limited annuity Joint life Joint and survivor
Joint life
Variable Whole Life insurance is based on what type of premium Increasing Flexible Graded Level fixed
Level fixed
Which of the following is an example of a limited-pay life policy? Renewable Term to Age 70 Level Term Life Straight Life Life Paid-up at Age 65
Life Paid-up at Age 65
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? Life annuity with period certain Increasing term Limited pay whole life Interest-sensitive whole life
Limited pay whole life
The premium of a survivorship life policy compared with that of a joint life policy would be As high Half the amount Lower Higher
Lower
Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive Nothing; the payments will cease Guaranteed minimum benefit The amount paid into the annuity The remainder of the principal
Nothing; the payments will cease
A man decided to purchase a $100,00 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy Decreased death benefit at each renewal Required a premium increase each renewal Built cash values Required proof of insurability every year
Required a premium increase each renewal
Which two terms are associated directly with the way an annuity is funded? Immediate or deferred Renewable or convertible Single payment or periodic payments Increasing or decreasing
Single payment or periodic payments
Which two terms are associated directly with the way an annuity is funded? Increasing or decreasing Immediate or deferred Renewable or convertible Single payment or periodic payments
Single payment or periodic payments
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 and is called Single premium whole life Modified Endowment Contract (MEC) Level term life Graded premium whole life
Single premium whole life
Which of the following policies would be classified as a traditional level premium contract? Universal Life Variable Universal Life Straight Life Adjustable Life
Straight Life
Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend Life income with period certain Installment refund Joint and survivor Straight life
Straight life
Which of the following is called a "second-to-die" policy? Family income Juvenile life Joint life Survivorship life
Survivorship life
Which of the following is TRUE regarding variable annuities? The funds are invested in the company's general account The company guarantees a minimum interest rate A person selling variable annuities is required to have only a life agent's license The annuitant assumes the risks on investment
The annuitant assumes the risks on investment
Which of the following is NOT true regarding the annuitant? The annuitant's life expectancy is taken into consideration for the annuity The annuitant receives the annuity benefits The annuitant must be a natural person The annuitant cannot be the same person as the annuity owner
The annuitant cannot 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 of the following statements is true? A corporation can be an annuitant as long as the beneficiary is a natural person The contract can be issued without an annuitant The annuitant must be a natural person A corporation can be an annuitant as long as it is also the owner
The annuitant must be a natural person
The annuitant dies while the annuity is still in the accumulation stage. Which of the following is TRUE? The owner's estate will receive the money paid into the annuity The insurance company will retain the cash value and pay back the premiums to the owner's estate The money will continue to grow tax-deferred until the liquidation period, and them will be paid to the beneficiary The beneficiary will receive the greater of the money paid into the annuity or the cash value
The beneficiary will receive the greater of the money paid into the annuity or the cash value
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 only by exchanging the existing policy for a new one The death benefit can be increased by providing evidence of insurability The death benefit cannot be increased The death benefit can be increased only when the policy has developed a cash value
The death benefit can be increased by providing evidence of insurability
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 must provide evidence of insurability to renew the policy The insured may only covert the policy the another term policy The insured may renew the policy for another 10 years at the same premium rate
The insured may renew the policy for another 10 years, but at a higher premium rate
Which of the following determines the cash value of a variable life policy? The policy's guarantees The premium mode The performance of the policy portfolio The company's general account
The performance of the policy portfolio
Which of the following policies would have an IRS-required corridor or gap between the cash value and the death benefit? Equity Indexed Universal Life Variable Universal Life Universal Life - Option A Universal Life - Option B
Universal Life - Option A
In a survivorship life policy, when does the insurer pay the death benefit? Half at the first death, and half at the second death If the insured survives to age 100 Upon the last death Upon the first death
Upon the last death
Which of the following products requires a securities license? Fixed annuity Equity indexed annuity Deferred annuity Variable annuity
Variable annuity
Which of the following is a key distinction between variable whole life and variable universal life products? Variable universal life is regulated solely through FINRA Variable whole life allows policy loans from the cash value Variable universal life has a fixe premium Variable whole life has guaranteed death benefit
Variable whole life has guaranteed death benefit
The main difference between immediate and deferred annuities is How the annuity is purchased The number of insureds The amount of each payment When the income payment begin
When the income payment begin