Types of Life Policies Questions

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 period

During partial withdrawal from a universal life policy, which portion will be taxed?

Interest

Why is an equity indexed annuity considered to be a fixed annuity?

It has a guaranteed minimum interest rate.

All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT

It is a life contingency option

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 best describes annually renewable term insurance?

It is level term insurance.

To sell variable life insurance policies, an agent must receive all of the following EXCEPT

SEC registration

Which of the following types of annuities will generally provide the highest monthly income?

Straight life

All of the following entities regulate variable life policies EXCEPT

The Guaranty Association Variable life insurance is regulated by both the state and federal government, as well as the Insurance Department, and the SEC,

Which of the following is NOT true regarding the annuitant?

The annuitant cannot be the same person as the annuity owner. While they don't have to be, the annuitant and annuity owner are often the same person. The annuitant is the person who receives benefits or payments from the annuity and for whom the annuity is written. Since the annuitant's life expectancy is taken into consideration, the annuitant must be a natural person.

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?

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 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 by providing evidence of insurability.

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

Which statement is NOT true regarding a Straight Life policy?

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

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

Life Paid-up at Age 65

A domestic insurer issuing variable contracts must establish one or more

Separate accounts

Which type of life insurance policy generates immediate cash value?

Single Premium

Which of the following policies would be classified as a traditional level premium contract?

Straight Life

All of the following statements about equity index annuities are correct EXCEPT

The annuitant receives a fixed amount of return.

Who bears all of the investment risk in a fixed annuity?

The insurance company

Which of the following determines 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.

Which of the following statements is correct regarding a whole life policy?

The policyowner is entitled to policy loans.

Which of the following is TRUE regarding the premium in term policies?

The premium is level for the term of the policy.

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

To keep the policy in force.

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

What kind of policy allows withdrawals or partial surrenders?

Universal life

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?

Universal life

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 full death benefit

Which of the following products will protect an individual from outliving their money?

annuity

Which of the following is INCORRECT regarding a $100,000 20-year level term policy?

at the end of 20 years, the policy's cash value will equal $100,000

What is another name for interest-sensitive whole life insurance?

current assumption life

Fixed annuities provide all of the following EXCEPT

hedge against inflation Provides: Minimum guaranteed rate of interest, Future income payments, and Equal monthly payments for life

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

Which of the following is NOT a type of whole life insurance?

level term Whole Life Policies: Straight Life, Limited Payment, and Single Premium

The form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of years is called

life income with period certain

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 premium payments will cease at her age 65, but coverage will continue to her death or age 100

An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?

limited-pay life

The policyowner 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

All of the following are true about variable products EXCEPT

the premiums are invested in the insurer's general account

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?

100

For variable products, underlying assets must be kept in

A separate account

Which of the following products provides income for a specified period of years or for life, and protects a person against outliving their money?

An annuity

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

Which of the following is a feature of a variable annuity?

Benefit payment amounts are not guaranteed

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.

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

An agent selling variable annuities must be registered with

FINRA

What does "level" refer to in level term insurance?

Face amount

Which policy component decreases in decreasing term insurance?

Face amount

What type of premium do both Universal Life and Variable Universal Life policies have?

Flexible

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 what time period?

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

In which of the following cases will the insured be able to receive the full face amount from a whole life policy?

If the insured lives to age 100.

Annually renewable term policies provide a level death benefit for a premium that

Increases annually

A Return of Premium term life policy is written as what type of term coverage?

Increasing

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.

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

If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a

Joint life annuity

A policy will pay the 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?

Level term

The premium of a survivorship life policy compared with that of a joint life policy would be

Lower

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B

Which of the following is another term for the accumulation period of an annuity?

Pay-in period

Which of the following has the right to convert the existing term coverage to permanent insurance?

Policyowner

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

Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value?

Variable universal life

Which of the following types of policies allows for a flexible premium and a variable investment component?

Variable universal life insurance

Which of the following is a key distinction between variable whole life and variable universal life products?

Variable whole life has a guaranteed death benefit.

Which of the following best describes a pure life annuity settlement option?

pure life provides payments for as long as the annuitant is alive

Which of the following is NOT one of the three types of term coverage based on what happens to the face amount during the policy term?

renewable 3 Types: Increasing, Decreasing, and Level

When would a 20-pay whole life policy endow?

when the insured reaches age 100