types of policies

If an agent wishes to sell variable lfie polices, what license must the agent obtian

Securities

face amount

The amount of benefit stated in the life insurance policy

Which of the following is True regarding the premium in term policies

The premium is level

ANnuitant

ones who life expectancy is longer will have a smaller income installment

Beneficiary

the person who receives annuity assets

A Straight life policy has what type of premium.

A level annual premium for the life of the insured

Cash value

A policy's savings element or living benefit

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

Straight life

Basic whole life policy. pays the premium from the time the policy is issued until the insured's death or age 100. LOWEST ANNUAL PREMIUM

policy owner options

Can convert from term to whole life and vise versa

The type of policy that can be changed from one that does not accumulate cash value to the one that does is a

Convertible term policy

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income

Depreciation period

Insurance companies

Generally reserve the initial returns for themselves but pay the excess to the annuitant

A man purchased a $90,000 annuity with asingle premium and began receiving payments 2 months after that. What type of annuity is it?

Immediate

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

Increases annually

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

Option A

Level Death benefit option death benefit remains level while the cash value gradually increases. IF this corridor is not maintained the policy is no longer defined as life insurance for tax purposes and consequently loses most of the tax advantages taht have been associated with life insurance

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

special features

Most term policies are renewable, convertible, or both

Immediate annuity

Purchased with a single lump sum payment and provides inome payment that start within one year from the date of purchase. most commonly known as a single premium immediate annuity

Which of the following is NOT one of the three basic types of coverages that are available, based on how the face amount changes during the policy term

Renewable

Variable annuity

Serves as a hedge against inflation. the annuitant may receive different rates of return on the funds that are paid into the annuity.

Which of the followign is True regarding variable annuities

The annuitant assumes teh risk on investment

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

Living benefits

The policyowner can borrow against the cash value while the policy is in effect or can receive the cash value when the policy is surrendered.

Owner

The purchaser of the annuity contract, but not necessarily the one who receives the benefits. the owner has all of the rights. names the beneficiary and surrendering the annuity. may be a corporation, trust, or other legal entity

3 characteristics of Variable annuity

Underlying investment the payment that the annuitant makes into the variable annuity. the seperate account is not part of the insurance company own investment protifolio.

What kind of policy allows withdrawals or partial surrenders

Universal Life

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

in a survivor ship life policy, when does the insurer pay the death benefit

Upon the last death

term

regardless of type the premium is level throughout the term. only the amount of the death benefit may fluctuate, upon selling renewing or converting the term policy, teh premium is figured at attained age

Accumulation units

similar to buying shares in a mutual fund. converted to annuity units.

Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be

Adjusted to teh insured's age at the time of the renewal

Agents selling variable life insuance must

Be registered with FINRA have a securities license be licensed by the state to sell life insurance

Fixed annuities provide all of the following EXCEPT

Hedge against inflation

variable life insurance

a contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance

qualified plan

a retirement plan that meets IRS guidelines for receiving favorable tax treatment

License requirement

a variable annuity is considered security and is regulated by the securities exchange comminsion in addition to state insurance regulations. an agent selling variable annuities must hold a securities license in addition to a life insuance license. agents or companies that sell variable annuities must also be properly registered with FINRA

indexed annuities

are fixed annuities that invest on a relatively aggressive basis to aim for higher returns. Like a fixed annuity, the indexed annuity has a guaranteed minimum interest rate

Limited-pay policies

are well suited for those insured who do not want to pay premiums beyond a certain point of time.

Level premium

based on the issue age; therefore, it remains the same throughout the life of the policy

nonforfeiture values

benefits ina life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses

Periodic payments

can either level premium or flexible premium

Variable universal life insurance

combines whole life with the flexible premium of universal life and investment component of variable life Has flexible premium that can be increased, decreased or skipped as long as there is enough value in the policy to fund the death benefit Increasing and decreasing the amount of insurance cash withdrawals or policy loans

Fixed life insurance

contracts tht offer guaranteed minimum or fixed benefits

liquidation of an estate

converting a person's net worth into a cash flow

20 pay life

coverage is completely paid for in 20 years and life paid up at 65 this type of polciy has a shorter premium-paying period than straight life insurance, so the annueal premium will be higher.

what characteristic makes whole life permanent protection

coverage until death or age 100

Cash value

created by the accumulation of premium. cash values are credited to the policy on a regular basis and have a guaranteed interest rate.

Joint life

is a single policy that is designed to insure two or more lives. can be term or permanent. premium is less with joint. more common as joint whole life

Single Premium whole life

is designed to provide a level death benefit to the insured's age 100 for a one-time, lump-sum payment. The policy is completely paid-up after one premium and generates immediate cash.

Term insurance

is temporary protection only provides coverage for a specific period of time. provide for the greatest amount of coverage for the lowest premium. usually a maximum age

Level Term insurance

is the most common type of temporary protection purchased. the word level refers to the death benefit that does not change throughout the life of the policy

Interest Rate

issuing insurance company does not guarantee a minimum interest rate

Annuitant

person who reveives benefits or payments from the annuity, whole life expectancy is taken into consideration and for whome the annuity is written. the annuitant and the contract owner do not need to be the same person, but most often they are.

Convertible

provides the policyowner with the right to convet the policy to a permanent insurance policy without evidence of insurability.

Nonforfeiture value

the cash value does not accumulate until the third policy year and it grows tax deferred

Indexed whole life

the cash value is dependent upon the performance of the equity index. classified on whether the policyowner or the insurer assumes the inflation risk. if it is policyower the premiums increase with the face amount. if it is insurer the premiums remain level

Endow

the cash value of a whole life policy has reached the contractual face amound

Attained age

the insured's age at the time the policy is issued or renewed

Joint average age

what the premium is based on that is between the ages of the insureds. death benefit is paid upon the first death only

Which of the following types of policies will provide permanent protection

whole life

retirement income

why Annuities are generally purchased sometimes purchased to fund or help fund a college education.

the insured is also a policyowner of a whole life policy. What are must the insured attain in order to receive the policy's cace amount

100

Which of the following best describes annually renewable term insurance

It is level term insurance

Which of the following is NOT true regarding the accumulation period of an annuity

It would not occur in a deferred annuity

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 100 is called

Single premium whole life

all of the following are true regarding a decreased term policy EXCEPT

The payable premium amount steadily declines throughout the duration of the contract

Level benefit payment amount

WIth fixed annuities the annuitant knows the exact amount of each payment received from teh annuity during the annuity period. the purchasing power that they afford may be eroded over time due to inflation

Renewable-

allows the policyowner the right to renew the coverage at the expiration date without evidence of insurability. will be based on insured's current age.

The annuity period

also known as the annuitization period, liquidation period, or pay-out period, is the time during which the sum that has been accumulated during the accumulation period is converted into a stream of income payments to the annuitant. The annuity period may last for the lifetime of the annuitant or for a specified period, which could be longer or shorter

securities

financial instruments that may trade for value

Fixed annuity

guaranteed miniumum rate of interest to be credited to the pruchase payment income payments that do not vary from one payment to the next the insurance company guarantees the specified dollar amount for each payment and the length of the period of payments as determined by the settlement option chosen by the annuitant

policy maturity

in life policies, the time when the face value is paid out

adjustable life options

increases or decrease the premium or the premium-paying period increase or decrease the face amount change the period of protection

Variable whole life

is a level, fixed premium, investment-based product. Like traditional forms of life insurance, these policies have fixed premiums abd a guaranteed miniuum death benefit. The cash value of the policy is not guaranteed and fluctuates with the performance of the portfolia.

target premium

is a recommended amount that should be paid on a policy in order to cover the cost of insurance protectoin adn to keep the policy in force throughout its lifetime

Death benefit

teh death benefit is guaranteed and also remains level for life

Minimum premium

the amount needed to keep the policy in force for the current year. Paying the minimum will make th epolicy perform as an annually renewable term product

annuity income amounnt is based upon 4 things

the amount of premium paid or cash value accumulated the frequency of the payment the interest rate the annuitant's age and gender

All of the following entities regulate variable life policies EXCEPT

the guaranty association

Insurance component

the insurance component of a universal life policy is always annually renewable term insurance

pure Death protection

IF the insured dies during this term the policy pays the death benefit to the beneficiary if the policy is canceled or expires prior to the insured's death, nothing is payable at the end of the term there is no cash value or other living benefits

annuity

a contract that provides income for a specified period of years or for life. protects a person against outliving his or her money.

Decreasing term

a level premium and a death benefit that decreases each year over the duration of the policy term. commonly purchased to insure the payment of a mortgage or other debts. usually convertible however not usually renewable.

Option B

Increaing death benefit option the annual increase in cash value so thta the death benefit gradually increases each year by teh amount that the cash value increases. At any point in time the total death benefit will alway be equal to the face amount of the policy plus the current amount of cash value.

Which Universal Life option has a gradually increasing cash value and a level death benefit

Option A

suitability

a requirement to determine if an insurance product is appropriate for a customer

accumulation period(pay-in period)

is the period of time over which the owner makes payments into an annuity. Furthermore, it is the period of time during which the payments earn interest on a tax-deferred baseis

Annuity period ( annuitization period, Liquidation period, or pay-out period)

is the time during which the sum that has been accumulated during the accumulation period is converted into a stream of income payments ot eh annuitant. The annuity period may last for the lifetime of the annuitant or for a specified period

All other factors being equal what would the premium be like in a survivor ship life policy as compared to the premium in a joint life policy

lower

whole life products

permanent lfie insurance is a general term used to refer to various forms of life insurance policies that build cash value and reamin in effect the entire life of the insured as long as the premium is paid.

Adjustable life

provide the policyowner with the best of both worlds. AN adjustable life policy can assume the form of either term insuance or permanent insurance. the insured typically determines how much coverage is needed and the affordable amount of premium. the insurer will then detemine the appropriate type of insuance to meet the insured's needs.

Deferred annuity

the income payment begin sometime after one year from the date of purchase. either a single lump sum or through periodic payments. Can very from year to year. the longer teh annuity is deferred, the more flexibility for payment of premiums it allows

level premium

the premium that does not change throughout the life of the policy

Whole life insurance

lifetime protection, and includes a savigns element stops at 100. premiums are usually higher

Limited-

pay whole life is designed so thta the premiums for coverage will be completely paid-up well before age 100.

Survivorship life

pays on the last death lower premium used to offset the liability of the estate tax

Universal Life(flexible premium adjustable life)

policyowner has the flexibility to increase the aount of premium paid into the policy and to later decrease it again. May even skip paying a premium and the policy will not lapse as long as there is sufficient cahs value

Annually renewable term

is the purest form of term insurance .the death benefit remains level. and the policy may be guaranteed to be renewable each year without proof of insurability, but the premiums increases annually according to the attained age, as the probability of death increases

Partial withdrawal

may be a charge for each withdrawal usually a limit as to how much and how often a withdrawal may be made. may be taxed

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 would help prevent a universal life policy from lapsing

Target premium

A buy-sell

is a business continuation agreement that determines what will be done with the business in the event that an owner dies or become disabled

Return of premium

paid if the death occurs within a specified period of time or if the insured outlives the policy term not taxable

Suitability

the producer's responsibility to evaluate the consumer's suitability information, which includes the following age, income, financial situation and financial experience, needs and objectives, intended use of annuity, risk tolerance and tax status.

Interest-sensitive whole life(current assumption life)

whole life policy that provides a guaranteed death benefit to age 100. added benefit of current interest rates allow for either greater cash value accumulation or a shorter premium paying period

deferred

withheld or postponed until a specified time or event in teh future

Structured settlements

would take on teh form of a court settlement arising from a civil law suit or it may take on the form of the income tat is provided to the winner of a state lottery. Basic function of an annuity is that of liquidation a principal sum, regardless of how it was accumulated