Xcel Chapter 4
EQUITY INDEX WHOLE LIFE
80 to 90% of premium is invested in TRADITIONAL FIXED INCOME SECURITIES and the remainder of the premium is invested in contracts tied to a stipulated STOCK INDEX
FAMILY TERM rider
A ... allows BOTH SPOUSE AND CHILD to be ADDED to the primary's coverage.
A life insurance contract which ACCUMULATES CASH values HIGHER than the IRS will allow
A Modified Endowment Contract (MEC) is best described as
UNIVERSAL life
A PARTIAL SURRENDER is allowed in which of the following life policies?
JUVENILE Insurance
A PAYOR BENEFIT rider waives the premium ONLY in connection with
LIMITED PAY POLICY
A PERMANENT LIFE insurance policy where the policyowner PAYS PREMIUM for a SPECIFIED NUMBER OF YEARS is called
LIMITED PAY policy
A PERMANENT life insurance policy where the policyowner pays PREMIUMS for a SPECIFIED number of years is called a
Variable life insurance
A SECURITIES LICENSE is required for a life insurance producer to sell
VARIABLE life insurance
A SECURITIES licence is required for a life insurance producer to sell
LIMITED PAYMENT insurance
A life insurance policy that has PREMIUMS FULLY PAID UP WITHIN a STATED PERIOD is called
lifetime protection
A limited payment whole life policy provides
Adjustable Life (premium and face amount)
A policyowner may change two policy features on what type of life insurance?
FIXED SURRENDER VALUE
All of these are characteristics of a universal life insurance policy EXCEPT
A NONFORFEITURE option can be used to INCREASE the death benefit
All of these are valid options for an ADJUSTABLE life policy EXCEPT
When a WHOLE life policy is SURRENDERED, INCOME TAXES may be OWED
All of these statements concerning WHOLE life insurance are FALSE EXCEPT
PARTIAL SURRENDER
Allows the INTEREST-SENSITIVE life policyholder to WITHDRAW the policy's CASH VALUE INTEREST-FREE.
PARTIAL SURRENDER
An INTEREST-SENSITIVE life insurance policyowner may be able to WITHDRAW the policy's CASH VALUE INTEREST FREE. The provision that allows this is called
Pre-death distributions are typically taxable
Failing to meet the seven-pay test results in
The FACE AMOUNT and PREMIUM will remain CONSTANT over the 10-year period
Krissa purchases a 10-year TERM life insurance policy that has a death benefit of $200,000. Which of these statements is TRUE?
EQUAL the FACE AMOUNT of the policy
Level premium permanent insurance accumulates a reserve that will eventually
WHOLE LIFE POLICY
PREMIUM is paid up after 20 years
LIMITED PAYMENT INSURANCE
PREMIUMS are FULLY PAID UP within a stated period.
Separate accounts investments
Premium payments for a Universal Life policy are NOT used for
Modified whole life polices
Premiums that are LOWER than typical whole life premiums during the first few years and then HIGHER than typical thereafter
hedge against inflation
The securities component of INDEX WHOLE LIFE insurance is considered an effective
PRE-DEATH distributions will become taxable
The tax consequence of a MODIFIED ENDOWMENT contract is
TERM, WHOLE, and UNIVERSAL life insurance
The types of life insurance generally used to cover KEY employee indemnification are
The FACE AMOUNT
What does the word "LEVEL" in Level Term describe?
a NONFORFEITURE option can be used to increase the death benefit
What is NOT an option in an ADJUSTABLE life policy?
The gap between the TOTAL DEATH BENEFIT and the policy's CASH VALUE
What is the corridor in universal life insurance policy?
REDUCED DEATH BENEFIT PREPAYMENT
What is the primary feature of a VIATICAL settlement?
Death benefit
What would NOT be subject to income tax under the MODIFIED ENDOWMENT CONTRACT (MEC)?
LEVEL PREMIUMS
When a DECREASING term policy is purchased, it contains a DECREASING DEATH BENEFIT and
INCOME TAXES MAY BE OWED
When a WHOLE LIFE policy is SURRENDERED...
UNIVERSAL life
Which insurance policy allows for PARTIAL SURRENDER?
Term life
Which of following does NOT build cash value?
SEPARATE ACCOUNT INVESTMENTS
Which of the following are the PREMIUM PAYMENTS for UNIVERSAL life policy NOT used for?
SEPARATE account INVESTMENT
Which of the following are the PREMIUM PAYMENTS for a UNIVERSAL life policy NOT used for?
FAMILY TERM insurance rider
Which of these riders will PAY A DEATH BENEFIT if the INSURED'S SPOUSE dies?
Family term insurance rider
Which of these riders will pay a death benefit if the insured's spouse dies?
WHOLE life policy with PREMIUMS PAID UP after 20 years
Which of these would be the best example of a LIMITED PAY life insurance policy?
a FLEXIBLE PREMIUM SCHEDULE
Which policy feature makes a UNIVERSAL life policy different from a WHOLE life policy?
The SHORTER the PAYMENT PERIOD, the HIGHER the PREMIUM
With a WHOLE LIFE POLICY...