Chapter 2 Quiz Types of Policies
The premium of a survivorship life policy compared with that of a joint life policy would be
lower
If an agent wishes to sell variable life policies, what license must the agent obtain
securities
Which of the following is TRUE regarding variable annuities
The annuitant assumes the risks on investment
Which of the following is NOT true regarding the annuitant
The annuitant cannot be the same person as the annuity owner.
When would a 20-pay whole life policy endow?
When the insured reaches age 100
The LEAST expensive first-year premium is found in which of the following policies
annually renewable term
Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated
annuity certain
All of the following information about a customer must be used in determining annuity suitability EXCEPT
beneficiary's age
Which of the following features of the indexed whole life policy is NOT fixed
cash value growth
An agent selling variable annuities must be registered with
FINRA
Which of the following products provides income for a specified period of years or for life, and protects a person against outliving the money
An annuity
When an annuity is written, whose life expectancy is taken into account?
Annuitant
Which of the following is NOT fundable by annuities
Death benefits
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation
Decreasing term
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
Annually renewable term policies provide a level death benefit for a premium that
Increases annually
Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be
Installments for a fixed period
What are the two components of a universal policy
Insurance and cash account
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT
It is a life contingency option.
Which of the following is TRUE regarding the accumulation period of an annuity
It is a period during which the payments into the annuity grow tax deferred.
Which statement is NOT true regarding a straight life policy
Its premium steadily decreases over time, in response to its growing cash value.
A married couple's retirement annuity pays them $250 per month. The husband dies and the 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
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 NOT a type of whole life insurance
Level term
Which of the following is an example of a limited-pay life policy
Life Paid-up at Age 65
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
Under a pure life annuity, an income is payable by the company
Only for the life of the annuitant
Which Universal Life option has a gradually increasing cash value and a level death benefit?
Option A
An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase
Payments for 15 years
Which of the following is NOT true about a joint and a survivor annuity benefit option
Payments stop after the first death among the annuitants.
Which of the following best describes a pure life annuity settlement option
Pure life provides payments for as long as the annuitant is alive.
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
SEC registration
Which type of life insurance policy generates immediate cash value
Single Premium
Which two terms are associated directly with the way an annuity is funded?
Single payment or periodic payments
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 is called a "second-to-die" policy
Survivorship life
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
All of the following entities regular variable life policies EXCEPT
The guaranty association
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 determines the cash value of a variable life policy
The performance of the policy portfolio
Which of the following best describes what the annuity period is
The period of time during which accumulated money is converted into income payments
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.
An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it?
deferred
What type of premium do both Universal Life and Variable Universal Life policies have?
flexible
Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection
greatest
A return of premium term life policy is written as what type of term coverage
increasing
Who bears all of the investment risk in a fixed annuity?
insurance company
Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources
term
All of the following are true regarding a decreasing term policy EXCEPT
the payable premium amount steadily declines throughout the duration of the contract
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
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined, and the cash value fell to $10,000. If the insured dies, how much will be paid out
$50,000
The insured is also the policyowner of a whole life policy. What age must the insured attain in order to receive the policy's face amount
100
In an annuity, the accumulated money is converted into a stream of income during which time period
Annuitization period
Which of the following is INCORRECT regarding a $100,000 20-year level term policy
At the end of 20 years, the policy's cash value will equal $100,000.
Which of the following is a feature of a variable annuity
Benefit payment amounts are not guaranteed
Which of the following is NOT true regarding an annuity certain
Benefits stop at the annuitant's death.
What characteristic makes a whole life permanent protection
Coverage until death or age 100
Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?
Joint Life
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
The annuitant dies while the annuity is still in the accumulation stage. Which of the following is TRUE?
The beneficiary will receive the greater of the money paid into the annuity or the cash value.
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.
Which of the following statements is correct regarding a whole life policy
The policyowner is entitled to policy loans
Which of the following best defines target premium in a universal life policy
The recommended amount to keep the policy in force throughout its lifetime
Which of the following is NOT true regarding Equity indexed annuities
They earn lower interest rates than fixed annuities.
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?
Universal Life
What kind of policy allows withdrawals or partial surrenders?
Universal Life
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT
Upon conversion, the death benefit of the permanent policy will be reduced by 50%
In a survivorship life policy, when does the insurer pay the death benefit
Upon the last death
Which of the following products requires a securities license
Variable annuity
Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value
Variable universal life
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
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
A domestic insurer issuing variable contracts must establish one or more
separate accounts
