CH 2

Which policy component decreases in decreasing term insurance?

Face amount

The death benefit under the universal life option B

Gradually increases each year by the amount that the cash value increases

When an annuity is written, whose life expectancy is taken into account ?

Annuitant

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

Straight life

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

It has a guaranteed minimum interest rate

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?

The full death benefit

Which of the following best describes what the annuity period is

The period of time during which accumulated money is converted into income payments

An insured has a life 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 this ?

Limited pay life

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

Which of the following is not true regarding an annuity certain

Benefits stop at the annuitant's death.

Variable whole life insurance is based on what type of premium ?

Level fixed

For variable products, underlying assets must be kept in

A separate account

The LEAST expensive first year term premium is found in which of the following policies ?

Annually renewable term

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

Annuity

Which of the following incorrect regarding a $100,000 20 year level term policy

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

What characteristic makes whole life permanent protection

Coverage until death or age 100

What is another name for interest sensitive whole life insurance ?

Current assumption life

The term "fixed" in a fixed annuity refers to all of the following EXCEPT

Death benefit

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

A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits

Immediate annuity

A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?

Immediate annuity

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

What are the two components of a universal policy

Insurance and cash account

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

Interest

Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option?

It does not guarantee that the entire principle amount will be paid out

Which of the following best describes annually renewable term insurance ?

It is level term insurance

A couple receives a set amount of income from their annuity. When the wife dies, the husband no longer receives annuity payments. What type of annuity did the couple buy?

Joint Life

A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, payments stop. What settlement option did they select?

Joint and survivor

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, its called a

Joint life annuity

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

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

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

Life Paid-up at Age 65

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

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

Lower

Under a pure life annuity, an income is payable by the company

Only for the life of the annuitant

Your client is planning to retire. She has accumulated $100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent, you should recommend

Straight life

Which of the following would help prevent a universal life policy from lapsing ?

Target premium

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 terms best describes the coverage provided by term policies, as compared to any other form of protection

greatest

An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an

interest-sensitive whole life

A domestic insurer issuing variable contracts must establish one or more

separate accounts

In a survivorship life policy, when does the insurer pay the death benefit

Upon the last death

All of the following entities regulate variable life policies EXCEPT

The Guaranty Association

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.

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

The annuitant receives a fixed amount of return

The policy owner 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.

Which of the following is not true regarding a variable universal life policy

The death benefit is fixed .

Which type of life insurance policy allows the policyowner to pay more or less that the planned premium ?

Universal life

The main difference between immediate and deferred annuities is

when the income payments begin

Which of the following types of policies will provide permanent protection

whole life

An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?

100,000

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

Option A

Which option first universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured

Option B

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

SEC registration

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

Variable whole life has a guaranteed death benefit

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

Universal Life

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

The policyowner is entitled to policy loans

A man decided to purchase a $100,000 Annually renewable term life policy to provide additional protection until protection until his children finished college. He discovered that his policy

Required a premium increase each renewal

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

All of the following are true regarding a decreasing term policy except

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

What kind of policy allows withdrawals or partial surrenders?

Universal life

Which of the following determines the cash value of a variable life policy

The performance of the policy portfolio

What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitant's life and ceases at the annuitant's death?

Pure life

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

Pure life provides payments for as long as the annuitant is alive.