Chapter 3 part 1 test
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?
$20,000 death benefit
Which of the following types of term life policies most likely contains a renewability feature
10 year convertible term
G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income?
10 years
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?
20-Pay Life accumulates cash value faster than Straight Life
J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?
20-pay life
What type of policy would offer a 40 year old a quick us accumulation of cash value?
20-pay life
Y purchased $100,000 worth of permanent protection on himself and $50,000 worth of 10-year Term coverage for his wife on the same policy. Which of these policies did Y purchase?
A Whole Life Policy with an Other Insured Rider
What kind of life insurance products covers children under their parents policy?
A term rider
Which of the following types of policies pay a benefit of the insured goes blind
AD&D
Which statement about a whole life policy is true
Cash value may be borrowed against
Which of the following features of a group term, life policy enables an individual to leave the group and continue his or her insurance, without providing evidence of insurability
Conversion privilege
When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
Conversion provision
A universal life policy is sometimes referred to as an unbundled life policy because he the owner can see the interest earned, expense charges, and the
Cost of insurance
Credit life insurance is typically issued with which of the following types of coverage
Decreasing term
What type of life policy has a death benefit that adjusts periodically and his written for a specific period of time?
Decreasing term
Which of these types of policies may not have the automatic, premium loan provision attached to it
Decreasing term
F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?
Decreasing term policy
P owns a $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own?
Endowment at age 70
S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?
Equity index insurance
Term insurance has which of the following characteristics?
Expires at the end of the policy period
What does a face amount plus cash value policy pay upon the insured's death
Face amount plus the policies cash value
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance Policy
What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?
Family Maintenance Policy
Which of these needs is satisfied by Adjustable Life insurance?
Insured's need for flexible premiums
What type of life policy covers two lives and pays the face amount after the first one dies
Joint Life Policy
K, age 45, and his wife, age 43, have three children. They purchase a Family Policy that covers K's wife to age 65. All of these situations will pay a death benefit EXCEPT
K's wife dies at age 66
An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager?
Key Person Life Policy
D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?
Level term
Which of these would be considered a limited pay life policy
Life Paid-Up at Age 70
Life insurance that covers an insured's whole life with level premiums paid over a limited time is called
Limited pay
life insurance that covers an insurers whole life with the level premiums paid over a limited time is called
Limited pay life
When a life insurance policy exceeds certain IRS table values, the result would create which of the following?
Modified Endowment Contract (MEC)
J is issued a Life Insurance policy with a death benefit of $100,000. She pays $600 per year in premium for the first 5 years. The premium then increases to $900 per year in the sixth year, and remains level thereafter. The policy's death benefit also remains at $100,000. Which type of Life Insurance policy is this?
Modified Premium Life
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for
Modified Whole Life
K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?
Modified Whole Life
Which of these life products is NOT considered interest-sensitive?
Modified Whole Life
Which type of policy is considered to be overfunded, I started by IRS guidelines
Modified endowment contract
A father who dies within three years after purchasing a life insurance policy on his infant daughter can have a policy premium waved under which provision
Payor provision
Which of the following information is not required to be included in a whole life policy?
Policy's guaranteed dividend table
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
Policyowner
Which is true concerning a variable universal life policy
Policyowner controls where the investment will go and selects the amount of the premium payment
Which of these characteristics is consistent with a straight life policy
Premiums are payable for as long as there is insurance coverage in force
Which statement is correct regarding the premium payment schedule for a whole life policy
Premiums are payable throughout the insureds lifetime/coverage lasts until death of the insured
Which of the following actions is not possible with a universal life policy?
Premiums may be applied as a credit against income tax
Which of the following types of permanent life insurance policies, offer, and the highest initial cash value
Single Premium
T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?
Ten-Year Endowment
Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary time period. Which of these policies should Q purchase?
Term life
What type of life insurance gives the greatest amount of coverage for a limited period of time
Term life
Call licensure and sometimes referred to as straight life. What does the word straight indicate when? Using this phrase
The duration of premium payments
All of these statements are equity index Life insurance are correct, except.
The premiums can be lowered or raised based on investment for performance
What type of life insurance incorporates flexible premiums and an adjustable death benefit?
Universal Life
Which of the following life insurance policies combine term insurance with an investment element
Universal Life
A _______ life policy offers the owner investment in products, such as money market funds, long-term bonds in
Variable
Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?
Variable Life
Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?
Variable Life
Which of the following policies is characterized by a flexible premium in death benefit and allows the policy owner control of the investment aspect of the plan
Variable Universal Life
S owns a life insurance policy with cash values that fluctuate according to the underlying investment performance of common stocks. Which of these policies does S own?
Variable Whole Life
A life policy with a death benefit and cash value that can fluctuate according to the performance of its underline investment portfolio is referred to ass
Variable life
Life insurance immediately crates an estate upon the death of an insured. which of the following police's is characterized by guaranteed minimum death benefit
Variable life
An ___ ___ life policy combines investment choices with a form of term coverage
Variable universal
A life policy that contains a monthly mortality charge as well as self-directed investment choices is called a(n)
Variable universal life policy
At what point does a whole life insurance policy endow
When the cash value equals the death benefit
When is the face amount of a whole life policy paid?
When the insured dies or at the policy's maturity date, whichever happens first
What type of insurance offers permanent live coverage with premiums that are payable for life
Whole life
If a 10-Year Term Life policy contains a Renewability provision, the policy will renew
Without evidence of insurability
Variable Whole Life Insurance can be described as
both an insurance and securities product
The investment gains from universal life policy usually go towards
cash value
Under an interest sensitive whole life policy
cash values are determined by interest rates
Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?
conversion
The Combination of Whole Life and _____ Term insurance is referred to as a Family Income Policy
decreasing
Additional coverage can be added to a whole life policy by adding
decreasing term rider
All of these are characteristics of an Adjustable Life policy EXCEPT
face amount can be adjusted using policy dividends
Which of the following actions require a policy owner to provide proof of insurability in an adjustable life policy
increase face amount
Who has the option to renew a renewable term policy?
insured
Credit Life Insurance is
issued in an amount not to exceed the amount of the loan
K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?
level
What kind of premium does a Whole Life policy have?
level
Whole Life insurance policies are contractually guaranteed to provide each of the following EXCEPT
partial withdrawal features beyond a surrender charge period
A Limited-Pay Life policy has
premium payments limited to a specified number of years
T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?
renewable
What type of life insurance are credit policies issued as?
term
The amount of coverage on a group credit life policy is limited to
the insured's total loan value
Under a Graded Premium Whole Life policy,
the premium increases each year during the early years of the contract and remains the same after that time
Under a Renewable Term policy,
the renewal premium is calculated on the basis of the insured's attained age
Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n):
third-party with no insurable interest
K purchased a Life insurance policy in 1986 which paid 10% interest in the early years of the policy. Twenty years after the purchase, she received a notice from the insurer stating that the policy will soon terminate unless a much-higher premium is paid because of falling interest rates. This type of policy is known as a(n) _________ life policy.
universal
In order to sell a ____ life policy, a producer is required to register with the financial industry regulatory authority (FINRA)
variable
A life insurance policy that provides a policy owner with cash value along with a level face amount is called
whole life
What kind of life policy either pays the face value upon the death of the insured or when the insured reaches 100
whole life
A 15-year mortgage is best protected by what kind of life policy?
15-year decreasing term
Which of these is an elements of a variable life policy
A fixed, level premium
K is shopping for a permanent life insurance policy that will offer her the MOST protection per dollar of annual premium. Which of these policies best fits her needs?
Straight life
What type of policy covers two people and he's a pirate need that other los insured
Survivorship
What advantage does the renewability feature give to a term policy
The insured may extend the coverage period
I life policy that contains a monthly mortality charge, as well as self-directed investment choices is called
Variable universal life policy
A variable insurance policy
does not guarantee a return on its investment accounts
When is the face amount paid under a Joint Life and Survivor policy?
upon death of the last insured
A term life insurance policy matures
upon the insured's death during the term of the policy
Term Life Policies that have the ability to be converted to permanent coverage may do so during a specific time period. This conversion period
varies according to the contract
A policy that becomes a modified endowment contract
will lose many of its tax advantages
How does a typical variable life policy investment account gross
There are mutual funds, stocks, bonds