Chapter 12 - Life Insurance Policies

Which of the following best depicts the cash value in a Universal Life policy? A. The cash is guaranteed for five years B. The cash is backed by an insurer with Guaranty funds C. It is funded by the FDIC D. The insurer of the policy credits the cash value with the current interest rate

D. The insurer of the policy credits the cash value with the current interest rate

What type of insurance protection is most often used with Credit Life?

Decreasing Term

In regard to the underwriting of an Adjustable Life policy, what may not be changed without extra underwriting?

Insured individual

Mr. Ken is an agent that wants to sell Variable annuities. In order to do this what state exam must Ken pass?

Life and Variable

Group Life insurance is frequently offered as a ____________ of a person's earnings.

Percentage

Life Insurance policy that has a cash value element is which type of policy?

Permanent

Which of the most common types of Whole Life policies has the lowest premium?

Straight Life

What type of policy covers two or more lives and pays on the last to die?

Survivorship

Jeff and Judy have a Life insurance policy. Three years ago Jeff died and their policy didn't pay. Later on, Judy died in a car accident and their policy's death benefit was paid to their beneficiary. This describes what type of policy?

Survivorship or Second to Die Policy

What is the purpose of a target premium?

To cover the cost of the insurance and to keep the policy in force

Separate accounts are associated with what kind of insurance policy?

Variable Universal

The cost of group insurance is based on the ____________ _____ of the group and the __________ of men to women.

average age, ratio

An association must be active for __ years.

2

How many members are required for a Labor Union's Plan?

25

In a Whole Life Insurance policy, which of the following describes it cash value? A. The cash value is greatest at the end of the policy period, and the insurance protection is greatest at the start of the policy B. The cash value and insurance protection are always the same C. The cash value and insurance protection are the greatest at the beginning of the policy period D. The cash value is greatest in the first five years of the policy

A. The cash value is greatest at the end of the policy period, and the insurance protection is greatest at the start of the policy

From the following descriptions, which one would be a good example of a Limited Pay Life insurance policy? A. Whole Life insurance policy where the premiums are paid up after 20 years B. Term Life insurance policy where premiums are paid up after 10 years C. Whole Life insurance policy where the premiums are paid out over a 10 year period of time D. Term insurance covering a mortgage

A. Whole Life insurance policy where the premiums are paid up after 20 years

What type of policy can be switched from Term to Permanent coverage without adding, lapsing or exchanging the existing policy?

Adjustable Life

A Single Premium policy generates a cash value ____________.

Immediately

A Variable Life policy has many elements. Which of the following is found in a Variable Life policy? A. Return rates are guaranteed B. It has a fixed level premium C. An insurer takes on the risk of the policy D. A Variable Life policy owner has no investment risk

B. It has a fixed level premium

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

B. The type of investment

Mary's Modified Life policy has like features of which policy? A. Limited Pay B. Increasing Term C. Graded Premium D. Survivorship Life

C. Graded Premium

The joint and survivor Life insurance settlement option has many characteristics. Which of the following statements is false? A. Two or more recipients may be paid B. Funds continue until the last beneficiary dies C. Installment amounts are larger as compared to single life income option D. Age of beneficiaries is a factor in the payment amounts

C. Installment amounts are larger as compared to single life income option

Sue wants to increase the death benefit in her Adjustable Life policy? Which of the following would apply? A. Sue only needs to pay a higher premium B. Sue will need to use her cash value to increase her benefit C. Sue will need to show proof of insurability D. Sue will continue to pay her premiums

C. Sue will need to show proof of insurability

Which of the following describes a Whole Life policy? A. It is paid in a lump sum B. It is paid up to a certain age C. It matures at age 65 D. It requires an insured to pay the premium for life and endows at age 100

D. It requires an insured to pay the premium for life and endows at age 100