Chapter 2

Which of the following is TRUE regarding the annuity period?

It may last for the lifetime of the annuitant

An insured has a life insurance 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?

Limited-Pay Life

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

Annually renewable

What does "level" refer to in level term insurance?

Face amount

The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as

The policy contains sufficient cash value to cover the cost of insurance.

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

The policyowner is entitled to policy loans

All of the following are true of an annuity owner EXCEPT

The owner must be the party to receive benefits.

Which of the following is not a term for the period of time during which the annuitant or the beneficiary receives income?

Depreciation period

The type of policy that can be changed from one that does not accumulate cash value to the one that does, is a

convertible term policy

A Return of Premium term life policy is written as what type of term coverage?

increasing

The policyowner 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.

Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be

Adjusted to the insured's age at the time of renewal

Which of the following types of policies allows for a flexible premium and a variable investment component?

Variable universal life insurance

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

Required a premium increase each renewal.

What characteristic makes whole life permanent protection?

Coverage until death or age 100