Am Pro Chapter 15

Which policy would you recommend to a husband and wife who want to buy just one Life Insurance covering both, and want the policy to pay when the first spouse dies? Select one: a.Joint Life b.Family Life c.Term Life d.Survivorship Life

If we want only one policy, the only choice in the list is the Joint Life policy. It covers both spouses with only one policy. It pays when the first spouse dies (unlike a Survivorship Life policy which pays only upon the death of the second spouse). The correct answer is: Joint Life

A "Last to Die" policy is known as a: Select one: a.Survivorship Life Policy b.Long Term Care Policy c.Term Life Policy d.Joint Life Policy

Survivorship Life Policy

A Family Maintenance Policy: Select one: a.Involves Decreasing Term. b.Requires a securities license to sell. c.Is a combination of Whole Life and Term. d.Combines Increasing Term and Whole Life.

"Is a combination of Whole Life and Term" is the "best" answer. Although we know that the Term Policy is really a Level Term Policy, it is perfectly correct to say that a Family Maintenance Policy is a combination of Whole Life and Term. This typical of what test writers love to do. They know that you are inclined not to mark this answer because it isn't perfect, even though it is "best" among the four choices. I remember that the Family Maintenance Policy "maintains" the family's lifestyle. So, it provides Whole Life for its primary coverage but uses Level Term to "maintain" the family's income level regardless of how many kids are still living at home when the breadwinner dies. Remember that it is the Family Income Policy that includes Whole Life and Decreasing Term - it will pay a smaller amount each year if the main breadwinner dies while kids are still living at home. The correct answer is: Is a combination of Whole Life and Term.

A Survivor policy is most often used: Select one: a.to provide for a surviving spouse. b.for estate planning purposes.

"for estate planning purposes" is the correct answer - this is used to pay estate taxes. And, I didn't mention in the video that this will be a whole life policy (not term) and the surviving spouse (Nancy) continues to pay the premium until her death. With a Joint Life policy, there are no other premiums to be paid when Jack dies. Both Survivorship Life and Joint Life will use whole life policies, not Term policies. The correct answer is: for estate planning purposes.

A "First to Die" policy is known as a: Select one: a.Long Term Care Policy b.Joint Life Policy c.Term Life Policy d.Survivorship Life Policy

A "First to Die" policy is used to cover both spouses with one policy. It will pay when the first spouse dies. This is to be contrasted with the Survivorship Life policy which also covers both spouses but only pays when the second spouse dies (primary use to pay estate taxes that only apply when the second spouse dies). And, new points: The surviving spouse (Nancy) no longer has to continue paying the premiums after Jack dies. Also, Nancy will want this to be a whole life policy, rather than a term policy that could expire before Jack's death.And, another new point, an Insurer will charge more for a Joint Life policy than a Survivorship Life policy because (all things being equal), the couple will make more payments with a Survivorship Life policy. The surviving spouse will continue to make payments under a Survivorship Life policy. The correct answer is: Joint Life Policy

Jeremy is interested in purchasing a policy that will pay a lump sum upon his death and provide a stable monthly income for ten years. What should Jeremy purchase? Select one: a.A 10-Year Family Maintenance Policy. b.A Family Policy. c.A 10-Year Family Income Policy. d.A Whole Life policy.

A 10-Year Family Maintenance Policy will "maintain" the family's standard of living by paying a level amount until the last of kids is out of the nest. Thus, it uses a Level Term rider. The correct answer is: A 10-Year Family Maintenance Policy.

Joyce and Scott are a married couple and have three children, ages 5, 7, and 9. Scott wants a whole life policy on himself, no insurance on Joyce, and extra coverage to pay the money needed for Joyce to finish raising the children to age 23 if Scott dies young. Joyce wants to be able to count on having the same amount of money no matter how many of the children are still living at home if Scott dies young. What do you recommend? Select one: a.A Family Income Policy. b.A Survivorship Life Policy. c.A Family Maintenance Policy. d.A 10 year term Policy.

A Family Maintenance Policy will pay the same level death benefit on Scott and provide extra money for Joyce to "maintain" a level lifestyle no matter how many children are still in the nest when Scott dies. Nice choice! However, with a Family Income Policy, the amount Joyce will receive will be reduced each year. The correct answer is: A Family Maintenance Policy.

Paula and Sam are an older married couple. If either dies, the other spouse will inherit the other's substantial assets without any death tax. However, when the second spouse dies, the estate may face a huge death tax. What type of insurance should Paula and Sam purchase to pay the death tax due when the second spouse dies? Select one: a.A Survivorship Life policy. b.A Joint Life policy. c.A Term Life policy on Sam with a Spouse's Term Rider on Paula. d.A Whole Life policy on Sam with a Spouse's Term Rider on Paula.

A Survivorship Life policy pays only when the second spouse dies. (Remember, Survivorship and Second both begin with the letter "s") Survivorship Life is used to pay the estate tax which only is applied upon the death of the second spouse. The correct answer is: A Survivorship Life policy.

Which type of insurance is most likely used for either a Joint Life policy or a Survivorship Life policy? Select one: a.Increasing Term b.Whole Life c.Term d.Decreasing Term

Both the Joint Life and the Survivorship Life policies are always Whole Life. There is no way Nancy would let me buy a Joint Life policy as term insurance because I could die AFTER the term policy expires. This is one situation where Term Insurance would not be appropriate. The correct answer is: Whole Life

A "Family Policy" provides: Select one: a.Equal coverage for all family members. b.Different coverages on different family members.

Different coverages on different family members.

A Family Maintenance policy combines a Whole Life policy with: Select one: a.Level Term b.Decreasing Term c.Increasing Term d.Variable Life

Level Term

Which of the following would permit an Insured's wife to purchase life insurance? Select one: a.Guaranteed Insurability Rider b.Other Insured's Rider c.Spouse's Rider d.Payor Benefit Rider

Spouse's Rider

Sandra and Charles want to purchase a policy that will automatically cover newborns at no extra cost. Which policy should they choose? Select one: a.A Family Maintenance Policy b.A Family Policy c.A Joint Life Policy d.A Family Income Policy

New Point: The only policy in the list which provides any coverage for family members is the Family Policy. It covers the main breadwinner with a whole life policy but offers smaller convertible term policies for the spouse and children. There is no extra cost for policies if newborns come along. The underwriters already have that possibility factored into the premium. The correct answer is: A Family Policy

Bill and his wife June are very successful doctors. They are worried about estate taxes. They should: Select one: a.Purchase a Survivorship Life policy for the amount of estate taxes they expect will be due when they die. b.Purchase a Joint Life policy for the amount of estate taxes they expect will be due when they die.

Purchase a Survivorship Life policy for the amount of estate taxes they expect will be due when they die. They want a whole life policy that will pay when the second dies. That is when the death tax will kick in. New Point: Because the surviving spouse continues to pay the premium after death of the first spouse, these policies are cheaper (all things considered) than a Joint Life Policy. The correct answer is: Purchase a Survivorship Life policy for the amount of estate taxes they expect will be due when they die.

Which of the following life policies pays only on the death of the second spouse? Select one: a.Joint life b.Survivorship life

See 15-2, Line 19. Survivorship Life (Last to Die) pays only after the second spouse does. It is primarily used to pay the up to 40% federal death tax that applies when the second spouse transfers the estate to the children. The correct answer is: Survivorship life

Which of the following presents the greater risk for an insurance company and thus would require a higher premium (all things being equal)? Select one: a.Joint life b.Survivorship life

See Page 15-2. The Insurer collects more money under Survivorship Life because the second spouse continues to pay premiums even after the death of the first spouse. Such is not the case with a Joint Life policy. Thus, the Joint Life policy has more risk because the Insurer collects fewer premium payments than it would under a Survivorship Life policy. The correct answer is: Joint life

Which choice may provide coverage for all the family members in a single policy? Select one: a.A Family Maintenance Policy b.A Family Policy c.A Family Income Policy d.A Joint Life Policy

The Family Policy provides a whole life policy on the breadwinner and smaller convertible term policies on the spouse and children - everyone is covered in "one" policy. New Point: And any newborns are covered without any additional premium charge. The correct answer is: A Family Policy

Which is correct regarding a Family Policy? Select one: a.The death benefit is the same for each family member. b.Each family member receives a Whole Life policy. c.The death benefits are provided using Term policies for all family members. d.The policy consists of a Permanent policy on the breadwinner and Term policies for the other family members.

The policy consists of a Permanent policy on the breadwinner and Term policies for the other family members is correct. If new kiddies come along, they are covered at no extra premium. The correct answer is: The policy consists of a Permanent policy on the breadwinner and Term policies for the other family members.

Which statement regarding childrens' policies under a Family Policy is true? Select one: a.They are Increasing Term policies. b.They are convertible Term policies. c.They are Decreasing Term policies. d.They are convertible Whole Life policies.

They are convertible Term policies.

A Family Maintenance Policy is a combination of which of the following? Select one: a.Whole Life and Decreasing Term b.Whole Life and Level Term c.Life Insurance and an Annuity d.Whole Life and Adjustable Life

Whole Life and Level Term