Ch 2

A policy states that it will pay a specified face amount 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?

20-year level term

What happens to the cash value when a whole life insurance policy matures?

Cash value is paid to the policyowner

What type of life insurance is best suited to cover a mortgage?

Decreasing term

If the annuitant dies before the annuitization period starts, what will the beneficiary receive?

Either the amount paid into the annuity or the cash value, whichever is greater

What type of annuity credits it's interest based upon an index such as S&P 500?

Equity indexed annuity

What annuity settlement option provides income payments to the annuitant for the duration of his or her life, and also guarantees payment for a specified number of years?

Life income with period certain

With a single premium deferred annuity, when will the annuity payments become available?

No sooner than 1 year after the annuity purchase

Can a business or a corporation be an annuitant?

No, an annuitant must always be a natural person

What are the death benefit options in universal life policies?

Option A - level death benefit, and Option B - increasing death benefit

What type of whole life insurance policy generates immediate cash value?

Single premium whole life

What type of annuity is suitable for someone who wants to select the benefit option that will pay the largest amount only for as long as the annuitant lives?

Straight life

What type of life insurance policy offers pure death protection?

Term

Whole life insurance policies mature when the insured reaches the age of 100. If the owner of a whole life policy (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?

The full death benefit

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

To prevent the policy from lapsing

In what type of life insurance policies can the policyowner skip premium payments without the policy lapsing?

Universal Life

The death protection component of a universal life policy is expressed as what type of coverage?

annually renewable term