Chapter 3 Policy Provision

A convertible term life insurance policy may be converted _____ time(s) for a permanent life policy based on the original or attained age.

1

Which of the following traditional whole life policies has the lowest first-year annual premium?

40-pay life The longer the premium paying period, the lower the premium. A Limited Pay Life policy of 40 years would have a lower premium than a 30-pay, 20-pay, or 10-pay life policy.

Which of the following situations will require proof of insurability? A Variable Whole Life insurance as the cash values grow due to favorable separate account investment earnings B Adjusting the face amount up on a Universal Life insurance policy with Option A death benefit selected C Current Assumption Whole Life when the interest crediting is so favorable that the insurer adds a corridor of protection to keep the policy from endowing D Universal Life insurance with Option B death benefit as the cash values grow due to additional premium payments and favorable interest rate crediting

Adjusting the face amount up on a Universal Life insurance policy with Option A death benefit selected

Which of the following is a true characteristic of a Variable Universal Life policy

As long as there is sufficient cash value to cover policy expenses when due, the insured is not required to pay the planned premium

If the cash value of a traditional whole life policy equals the face amount, what is that referred to?

D The policy's endowment

With a Variable Life Policy, which of the following is guaranteed?

Death benefit

When the life insurance policy's cash value equals the face amount of the policy and the proceeds are paid to the policyowner, this is known as the policy's _________.

Endowment

The investor must do all of the following in a STOLI/IOLI transaction, except: A Change the policy ownership and beneficiary designations B Pay for the policy they acquire from the policyowner C Keep paying policy premiums until the insured dies, and then file a claim D Fill out the application for life insurance on behalf of the insured

Fill out the application for life insurance on behalf of the insured

All of the following riders will waive the premiums in the event of a disability, except: A Waiver of Premium B Waiver of Monthly Deduction C Guaranteed Insurability D Payor Benefit Good Job!

Guaranteed Insurability

Which of the following riders can be used to cover the life of an additional insured who is an unrelated business partner?

Nonfamily rider

Life insurance protection for a specified period of time is provided by what type of policy?

Term

A Universal Life insurance policy is similar to a Whole life policy in which of the following ways?

They are both supported by the insurer's general account

How long would a policyowner have to pay premiums on a term life policy to age 65 that was taken out at age 35?

To the earlier of the insured's death, or to age 65

An insured dies within the time limit of an Increasing Term Rider and the beneficiary receives the face amount plus the value of all paid premiums. Which rider is attached to the policy? A Waiver of Premium B Return of Cash Value C Term to age 100 D Return of Premium

With a Return of Premium Rider, if the insured dies within the period of the term, the beneficiary receives the death benefit of the Whole Life Policy and, through an increasing term rider, the equivalent of the premiums paid on the Whole Life Policy. Return of Premium

If Alvin purchases a Variable Universal Life Policy with a face amount of $250,000, and chooses death benefit Option B, upon his death the amount of the benefit payable to the beneficiary would be _________ if the policy had $25,000 in cash values. A Nothing

$275,000

All of the following are true in general about riders, except: A A rider can modify conditions of the policy by expanding or decreasing its benefits B Riders are optional C Riders typically are available for an additional premium D All riders are provided for as long as the policy is in effect

All riders are provided for as long as the policy is in effect

What is required to add a nonfamily member to a life insurance policy under a term rider?

Insurable interest

Which of the following life insurance policies is ideally suited for estate planning purposes?

Joint and Survivor

A married couple wants to make sure that if either of them dies, the survivor has enough funds to maintain their standard of living but want to accomplish this in the most economical way. Which of the following recommendations is best suited to accomplish their goal?

Purchase a Joint life policy Joint Life pays on the death of the first insured. It is less expensive than buying two separate policies.

A(n)________ is an added benefit attached to a life insurance policy for which an additional premium is generally paid.

Rider

Mary decides to convert her Term Policy to permanent protection. Which of the following statements is true regarding the conversion?

She may convert without evidence of insurability

All of the following are TRUE regarding a Waiver of Premium Rider, except: A The insurer foregoes the premium should the insured be disabled B In a Whole Life policy, cash values continue to build C There is usually a 6 month period before premiums are waived D The insured must repay the unpaid premiums

The insured must repay the unpaid premiums

All of the following are reasons why a new policy issued through a term conversion costs more, except: A The new policy was issued at the attained age B The insured's health has changed for the worse C The new policy is permanent D The new policy has cash values

The insured's health has changed for the worse

If an insured is concerned about being unable to pay the premiums on his or her whole life policy in the event of a total disability, which of the following riders should be added to the policy? A Disability Income Benefit B Waiver of Cost of Insurance C Payor Benefit D Waiver of Premium

Waiver of Premium