Chapter 3

Which statement is NOT true regarding a Straight Life policy?

Its premium steadily decreases over time, in response to its growing cash value.

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

Variable universal life insurance

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.

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid

For 20 years or until death, whichever occurs first.

Which of the following best describes annually renewable term insurance?

It is level term insurance

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

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

Annually renewable term

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?

Universal Life - Option A

All of the following statements are TRUE concerning Debtor Groups EXCEPT

The amount of insurance on the life of any debtor may exceed the greater of the scheduled or actual amount of unpaid indebtedness to the creditor.

Which of the following features of the Indexed Whole Life policy is NOT fixed?

cash value growth

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

All of the following are characteristics of a group life insurance plan EXCEPT

There is a requirement to prove insurability on the part of the participants.

Which of the following is INCORRECT concerning a noncontributory group plan?

The employees receive individual policies

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 option for universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B