Ch2 VA state and health

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 his client? A) Increasing term insurance B) Limited pay whole life insurance C) 10-year endowment D) Life annuity, period certain

B) Limited pay whole life insurance

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy? A) Lower B) Higher C) As high D) Half the amount

A) Lower Survivorship Life is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age. The major difference is that survivorship life pays on the last death rather than upon the first death. Since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life

Periodic payments of accumulated funds best describes A) An annuity B) A survivorship life policy C) A universal life policy D) A group policy

A) An annuity

In comparison with other primary types of term insurance sold, what kind of premium does level term have? A) Highest B) Most inconsistent C) Lowest D) Most level

A) Highest

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid A) For 20 years. B) Until the policyowner's age 100, when the policy matures. C) For 20 years or until death, whichever occurs first. D) Until the policyowner's age 65.

C) For 20 years or until death, whichever occurs first.

Which of the following statements is correct regarding Adjust Life? A) Evidence of insurability may be required when insurance is increased. B) It is a form of variable annuity. C) It is most appropriate for people who purchase insurance at older ages. D) The type of coverage may be changed only if the new form of coverage has decreasing premiums

A) Evidence of insurability may be required when insurance is increased.

In a survivorship life policy, when does the insurer pay the death benefit? A) Upon the first death B) Half at the first death, and half at the second death C) If the insured survives to age 100 D) Upon the last death

D) Upon the last death

The three main differences between fixed and variable annuities include all of the following EXCEPT A) Mortality B) Interest Rate C) Underlying Investment D) License Requirements

A) Mortality

Which of the following would NOT be true regarding a $100,000 20 year level term policy? A) At the end of 20 years, the policys cash value will equal $100,000 B) The policy premiums will remain level for 20 years C) If the insured dies before the policy expired, the beneficiary will receive $100,000 D) The policy will expire at the end of the 20 year period

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

If the annuitant dies during the accumulation period, who will receive the annuity benefits? A) Beneficiary B) Owner C) Insurance company D) Estate

A) Beneficiary

Adjustable life can be best described as which of the following? A) An annuity. B) A form of life insurance that allows changes on the policy face amount, premium mode and amount, and period of protection. C) Term coverage that cannot be converted into permanent insurance. D) A permanent life insurance policy that generates immediate cash value.

B) A form of life insurance that allows changes on the policy face amount, premium mode and amount, and period of protection.

Which is the correct comparison between survivorship life and traditional joint life policy? A) The premiums for both are determined by a combined general health rating. B) Joint life pays a death benefit on the first death, while Survivorship Life pays on the last death. C) A traditional joint life policy has a lower premium that a Survivorship Life policy. D) Joint life policies can cover more than two individuals, while Survivorship Life is limited to two.

B) Joint life pays a death benefit on the first death, while Survivorship Life pays on the last death.

Which entity regulates variable life policies? A) Commissioner of Insurance B) Only the state government C) Only the Insurance Department D) Both State government and the Insurance Department

D) Both State government and the Insurance Department

What does "level" refer to in level term insurance? A) Premium B) Cash Value C) Interest rate D) Face amount

D) Face amount

Why is an equity indexed annuity considered to be a fixed annuity? A) It has a guaranteed minimum interest rate. B) It has modest investment potential C) It has a fixed rate of return D) It is not tired to an index like the S&P 500

A) It has a guaranteed minimum interest rate.

Which of the following is true regarding variable annuities? A) The annuitant assumes the risks on investment. B) The funds are invested in the company's general account C) The company guarantees a minimum interest rate D) A person selling variable annuities is required to have only a life agent's license.

A) The annuitant assumes the risks on investment.

In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT A) The type of investment B) The length of coverage. C) The premium D) The amount of insurance

A) The type of investment

Which of the following is a feature of a variable annuity? A) Securities license is not required. B) Benefit payment amounts are not guaranteed. C) Payments into the annuity are kept in the company's general account. D) Interest rate is guaranteed.

B) Benefit payment amounts are not guaranteed. Under a variable annuity, the issuing insurance company does not guarantee a minimum interest rate or the benefit payment amounts. The annuitant's payments into the annuity are invested in the insurer's separate account. Agents selling variable annuities are required to have a securities license in addition to their life agent's license.

Equity Indexed Whole Life is policy with what kind of index as its investment feature? A) Consumer Price B) Equity C) Consumer investment D) Universal

B) Equity

The type of term insurance that provides increasing death benefits as the insured ages is called A) Age-sensitive term. B) Increasing term. C) Flexible term. D) Interest-sensitive term.

B) Increasing term.

Which of the following pairs would best describe the coverage and the premium (respectively) provided by term policies, as compared to any other form of protection? A) Longest-lasting; lowest B) Greatest; lowest C) Least; highest D) Most comprehensive; highest

B) Greatest; lowest

Which of the following is an example of a limited-pay life policy? A) Straight Life B) Life Paid-up at Age 65 C) Renewable Term to Age 70 D) Level Term Life

B) Life Paid-up at Age 65

Which of the following determines the cash value of a variable life policy? A) The premium mode B) The performance of the policy portfolio C) The company's general account D) The policy's guarantees.

B) The performance of the policy portfolio

Which of the following products requires a securities license? A) Deferred annuity B) Variable annuity C) Fixed annuity D) Equity Indexed annuity

B) Variable annuity

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 it? A) Industrial Life B) Graded Premium Life C) Limited-pay Life D) Variable Life

C) Limited-pay Life

At age 30, a man wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit his needs? A) Decreasing Term B) Adjustable Life C) Single Premium Whole Life D) Modified Life

B) Adjustable Life

An agent selling variable annuities must be registered with A) SEC B) FINRA C) DOI D) MGA

B) FINRA

Which of the following is NOT true regarding Equity Index Annuities? A) They are less risky than variable annuities. B) They earn lower interest rates than fixed annuities. C) The insurance company keeps a percentage of the returns. D) They have guaranteed minimum interest rates.

B) They earn lower interest rates than fixed annuities.

Which of the following is a similarity between equity indexed annuities and fixed annuities? A) They invest on a conversion basis. B) They have a guaranteed minimum interest rate. C) The insurance company keeps no more than 2% of the returns. D) Both are considered to be more risky than variable annuities.

B) They have a guaranteed minimum interest rate.

An Adjustable Life policyowner can A) Change the investment account. B) Change the insured C) Change the coverage period. D) Change the mortality experience.

C) Change the coverage period.

If an annuitant dies before annuitization occurs, what will the beneficiary receive? A) Amount paid into the plan B) Cash value of the plan C) Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount D) Either amount paid into the plan or the cash value of the plan, whichever is the lesser amount

C) Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount

Which of the following is true regarding a level term insurance policy? A) Death benefit is paid out to the beneficiary if the insured dies after the premium paying period ends. B) It provides temporary protection C) The premium remains level, but the death benefit could be increased or decreased. D) It charges the lowest premiums of all term insurance policies

B) It provides temporary protection

Which of the following best describes annually renewable term insurance? A) It provides annually increasing death benefit. B) It is a level term insurance C) It requires proof of insurability at each renewal. D) Neither the premium nor the death benefit is affected by the insured's age.

B) It is a level term insurance

Which of the following is true regarding the premium in term policies? A) Only level term policy has a level premium. B) In increasing term policies the premium will increase as the death benefit increases. C) Decreasing term policy will have a decreasing premium. D) The premium in any type of term policy is usually level.

D) The premium in any type of term policy is usually level

While the annuity is still in the accumulation stage, the annuity owner is killed in a car accident. Which of the following is true? A) The beneficiary will receive either money paid into the annuity or the cash value, whichever is greater B) Because the annuitzation period has not started, the owner's estate will receive the money paid into the annuity or the cash value, whichever is greater. C) The insurance company will retain 25% of the money paid into the annuity, while the beneficiary will receive the remaining 75% D) The money will continue to grow tax-deferred until the the liquidation period. at which time the owner's beneficiary will receive income payments

A) The beneficiary will receive either money paid into the annuity or the cash value, whichever is greater

They equity in an equity index annuity is linked to A) the Insurance company's general account investments. B) An index like Standard & Poor's 500. C) The returns from the insurance company's separate account. D) The annuitant's individual stock portfolio.

B) An index like Standard & Poor's 500.

When an annuity is written, whose life expectancy is taken into account? A) Owner B) Annuitant C) Beneficiary D) Life expectancy is not a factor when writing an annuity

B) Annuitant

An individual has just borrowed $10,000 from his bank on a 5-year note. What type of life insurance policy would be best suited to this situation? A) Whole life B) Decreasing term C) Variable life D) Universal life

B) Decreasing term

Which of the following would be considered a disadvantage of term insurance? A) If the insured dies during the term, the policy pays only the accumulated cash value. B) If the insured dies after the end of the term, there is no death benefit to the beneficiary. C) The policy provides the smallest amount of coverage for the highest premium D) It cannot be renewed or converted to a permanent policy

B) If the insured dies after the end of the term, there is no death benefit to the beneficiary

If an agent wishes to sell variable life policies, what license must the agent obtain? A) Personal Lines B) Securities C) Adjuster D) Surplus Lines

B) Securities

An insured has a variable life policy with a $100,000 face amount. At one time, the cash value exceeded $100,000 and was worth $150,000. During this time, the policy face amount was increased to $150,000. In the following year, the cash value took a significant decline and was worth only $70,000. What was the policy's face amount adjusted to? A) $70,000 B) $80,000 C) $100,000 D) $150,000

C) $100,000

An insured owns a 20-year Return of Premium term life policy. If the insured is still alive after 20 years, the premiums will refunded A) Minus the insurer's cost of coverage. B) As taxable income. C) In full as nontaxable income. D) For the cash value only.

C) In full as nontaxable income.

Donald purchased a Life Insurance policy from company A. The agent told Donald that depending upon the company's investments and expense factors, the cash values could be more or less that those shown in the policy at issue time. Donald's policy is a/an A) Annual Renewable Term. B) Adjustable Life. C) Interest-sensitive Whole Life. D) Credit Life.

C) Interest-sensitive Whole Life.

A married couple owns a permanent policy which covers both of their lives and pays the face amount of the policy only upon the death of the first. Which policy is that? A) Family Policy B) Family Income Policy C) Joint Life Policy D) Survivorship Life Policy

C) Joint Life Policy Joint life policies cover the lives of two insureds; rates are blended. Upon the death of the first insured, the policy ends.

Which one of the following is not one of the three basic types of coverage's that are available, based on how the face amount changes during the policy term? A) Level B) Increasing C) Renewable D) Decreasing

C) Renewable

A man decided to purchase a $100,000 Annually Renewable Term life policy to provide additional protection until his children finished college. He discovered that his policy A) Required proof of insurability every year. B) Decreased death benefit at each renewal. C) Required a premium increase each renewal. D) Built cash values.

C) Required a premium increase each renewal.

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? A) A corporation can be an annuitant as long as it is also the owner. B) A corporation can be an annuitant as long as the beneficiary is a natural person. C) The contract can be issued without an annuitant. D) The annuitant must be a natural person.

D) The annuitant must be a natural person.