Chapter 3 - Life Insurance Policies - Provisions, Options and Riders

Which of the following statements about universal life insurance is NOT true?

Universal life insurance normally has a minimum guaranteed cash value for duration of the policy

When would evidence of insurability be required for a person already covered with a variable universal life policy?

When the death benefit is increased

Rick owns a variable universal life policy and chooses a variable death benefit option. What will typically happen to the death benefit as a result of this selection?

Fluctuate with changes in the cash account

How long does one premium payment cover in a single premium whole life policy?

Full life of the policy

What type of premiums are associated with individual mortgage protection life insurance policies?

Level premiums

Laura added a children's rider to her life insurance policy. What type of coverage was added?

Level term

Which statement regarding universal life insurance is correct?

Partial withdrawals cannot be made from the policy's cash value

Which of the following would NOT be a reason for purchasing life insurance on a child's life?

Provide benefits for the child if the parents die

Assets that back the non-guaranteed values of variable life insurance products are held in which account?

Separate account set up by the insurer

What is the face amount of a $50,000 graded death benefit life insurance policy when the policy is issued?

Under $50,000, but increases annually until fully insured

What is a juvenile life insurance policy? Coverage normally sold as a term rider A life policy that covers the parents of a minor A life policy that covers the life of a minor A life policy that covers the lives of both the parents and their children

A life policy that covers the life of a minor

When does the insured stop making payments under a thirty-payment whole life policy?

At the time of death or 30 years after the policy's inception, whichever comes first

Which statement regarding the cash value of a whole life insurance policy is correct?

Available to the policyowner when policy has been surrendered

Which of these is NOT considered a type of limited payment whole life insurance?

Endowment at age 70

Which statement concerning a decreasing term life policy is accurate?

Face amount decreases over the policy period

All of these are considered features of whole life insurance EXCEPT

Initial premium is lower than for an equivalent amount of term insurance

Which statement regarding an adjustable life insurance policy is NOT true?

Policy loans are not permitted

Which of these policies is considered a whole life policy?

Single premium life

All of these statements concerning group credit life insurance are false EXCEPT

The face amount is based on the outstanding loan balance

Under an adjustable life insurance policy, which of the following may NOT be changed without further underwriting?

The person insured

Which type of life insurance policy allows a policyowner the choice of investments along with flexible premium payments?

Variable universal life

An individual who purchases a modified life insurance policy expects

an improvement in future income

Which action will trigger a penalty tax on premature distributions from a modified endowment contract (MEC)?

policy loans

What typically changes at the re-entry option date found in some term life policies?

premium

A material change in a modified endowment contract (MEC) results in

the seven pay test, adjusted for cash value