Chapter 3: Types of Insurance Policies
which statement bout whole life policy is true
cash value may be borrowed against
which of the following types of term life policies most likely contain a renewability feature
10 year convertible term
STOLI is when a person purchases life insurance to sell to a
3rd party with insurable interest
a limited pay life policy has
premium payments limited to a specified number of years
Which of these characteristics is consistent with a straight life policy
premiums are payable for as long as coverage in force
which of the following is not possible with a universal life policy
premiums may be applied as a credit against income tax
what type of life insurance gives the greatest amount of coverage for a limited period of time
term life
what kind of life insurance product covers children under their parents policy
term rider
the most important factor to consider when determining whether to convert to term insurance at the insureds attained age or the original age is
the cost
WHOLE LIFE INSURANCE IS SOMETIMES REFREED TO AS STRAIGHT LIFE. WHAT DOES STRAIGHT LIFE INDICATE WHEN USING THIS PHRASE
the duration of payment periods
a universal life policy is sometimes refered to an unbundled life policy because an owner can see the interest earned cot of insurance and
the expense charges
the amount of coverage on a group credit life policy is limited
the insured total loan value
which of the following is considered an element of a variable life policy
underlying equity investment
the cash value in a ________ life policy may fluctuate to reflect changing assumptions regarding mortality cost, interest and expense factors
universal
when is the face amount paid under a joint life and survivor policy
upon death of last insured
a term life policy matures
upon the insured death during the term of the policy
how long does coverage normally remain on a limited pay life policy
Age 100
under an interest sensitive whole life policy
Cash values are determined by interest rates
what kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evident of insurability
Convertible term
What type of life policy has a death benefit that adjusts periodically and is written for a specific period od time
Decreasing term
F needs life insurnance 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 his beneficiary if he dies before age 70- what kind of policy is this
Endowment at age 70
what kind of life insurance policy pays a specified monthly income to a beneficiary for years and then pays a lump sum benefit at the end of that 30 years
Family Maintenance Policy
P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of 20,000 at the end of the 20 year period
Family Maintenance policy
what kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies
Family Maintenance policy
which of these needs is satisfied by adjustable life insurance
Insureds need for flexible premiums
K is looking to purchase renewable term insurance. which these types of term insurance may be renewable
Level
life insurance that covers an insured whole life with 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
MEC: Modified Endowment Contract
which type of policy is considered to be overfunded as stated by IRS
Modified Endowment Contract MEC
J issued a life insurance policy with a death benefit of 100,000. she pays 600 a year in premium for the first 5 years. the premium increases to 900 per year the 6th year and remains level after. the policy death benefit remains the same. which type of life insurance is this
Modified premium life
All of these insurance types require FINRA except
Modified whole life
a father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision
Payor Provision
which statement is correct regarding the premium payment schedule for whole life policies
Premiums are payable throughout the insureds lifetime/ coverage lasts until death of insured
T has a term policy that allows him to continue the coverage after the expiration of the policy periods. what type of term coverage is this
Renewable
which of the following types of permanent life insurance policies offers the highest in cash value
Single premium
what type of life insurance gives the greatest amount of coverage for a limited period of time
Term life
The investment gains from a Universal Life Policy usually go toward
The cash value
K purchased a life insurance 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
Universal
in order to sell a ________ life policy, a producer is required to register with the financial industry regulatory authority
Variable
variable life insurance can be described as
both an insurance and securities product
S is covered by a whole life policy. which insurance product can cover his children
child term rider
which of the following features a group of a group term life policy enables an individual to leave the group and continue his or her insurance without evidence of insurability
conversion privilege
a _____ term policy is normally used when covering an insured mortgage balance
decreasing
A variable insurance policy
does not guarantee a return on investment accounts
Variable life products require a producer to
hold a life insurance license and a securities license
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
which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death
joint life
which type of life policy covers 2 lives and pays face amount after first one dies
joint life
what kind of premium does a whole life policy have
level
which of these would be considered limited pay life policy
life paid up at age 70
What type of policy would offer a 40 year old the quickest accumulation of cash value
20 pay life
K buys a policy where the premium stays fixed for the first five years. the premium increase in year 6 and stays level, all while death benefit remains the same. What kind of policy is this
Modified whole life
what type of policy covers 2 people and pays upon the death of the last insured
survivorship
what kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100
whole life
what type of insurance offers permanent life coverage with premiums payable for life
whole life
N is 40 year old applications who would like to retire at age 70. he is looking to buy a insurance policy with level premiums permanent protection and paid up at retirement. which should N purchase
30 year pay life
What type of life insurance are credit policies issues as
term
q Ould like to purchase 100,000 of perm protection on his wife and 50,000 term coverage on himself under the same policy. what kind of policy should q purchase
whole life with other insured rider
a policy that becomes an Modified endowment contract
will lose many of its tax advantages
if a 10 year life policy contains a renewability provision, the policy will renew
without evidence of insurability
if a 10 year term life policy contains a renewability provision, the policy will renew
without evidence of insurability
K is shopping for a permanent life insurance policy that will offer her the most protection per dollar of annual premium. which these policies best fits her need
Straight life
a life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is refered to as
Variable Life
Which of the following policies is characterized by a flexible premium and death benefit and allows the policy control of the investment aspect of the plan
Variable Universal Life
which of these types of life insurance allows the policy owner to have level premiums to also choose from a selection of investment options
Variable life
Y purchased 100,000 of permanent protection on himself at 50,000 worth of a 10 year term coverage for his wife of the same policy. Which policy did Y purchase
Whole Life policy with an other shared rider
All of these characteristics o an adjustable life policy except
face amount can be adjusted using policy dividends
Which of these is an element of variable life policy
fixed level premium
whole life insurance policies are contractually guaranteed to provide each of the following except
partial withdrawal features beyond a surrender charge period
How does a typical Variable Life Policy investment account grow?
through mutual funds stocks and bonds
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 funs long term bond and equities
variable
a _______ life policy combines investment choices with a form of term coverage
variable universal
G purchased a family income policy at 40 . the policy has a 20 year rider period G were to die at age 50, how long would Gs family receive an income
10 years
J is a 35 year old 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
which of the following types of policies pays a benefit if the insured goes blind
AD&D
which of these is not interest sensitive
Modified whole life
which of these statements describe a MEC
exceeds the max amount of premium that can be paid into a policy and still have it recognized as a insurance contract
what does a face amount plus cash value policy pay upon insured death
face amount + Cash value
an architect firm would stand to lose a lot of money in the event of the death of its project manager. which type of policy should th firm purchase on its project manager
key person insurance
K age 45 and his wife 43, have 3 children. they purchase a family policy that covers K wife until age 65. all of these situations would pay a death benefit except
ks wife dies at 66
d needs life insurance that provides coverage for only a limited amount of time while paying the lowest possible premium , what kind of policy is needed
level term
under a graded premium whole life policy
the premium increase each yer during early years then remains the same after tht time
life insurance immediately creates an estate upon the death of an insured. which of the following policy is characterized by a guaranteed minimum death benefit
Variable
which policy requires an agent to register with the NASD before selling
Variable Life
a life insurance policy that provides a policy owner with cash value along with a level amount is called
Whole Life
which statement is true regarding a variable whole life policy
a minimum guaranteed death benefit is provided
under a graded premium policy the premiums
are lower during policy early years
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 the owner can see the interest earned expense charges and the
cost of insurance
all of these statements about equity indexed insurance are correct except
the premiums can be lowered or raise based on investment performance
Under a Renewable term policy
the renewal premium is calculated on a basis of insured attained age
which of the following life insurance policies combine term insurance with an investment element
universal
S, age 40, is looking to buy a life insurance policy that will allow for increases or decreases in coverage as his needs change. The policy is best suited is.
universal life
what type of life insurance incorporates flexible premiums and adjustable death benefit
universal life
A life policy that contains a monthly mortality charge as well as self directed investment choices is called
variable universal life policy
term life policies that have the ability to be converted to permanent coverage may do so during a specific period time period. this conversion period
varies according to contract
at what point does a whole life insurance policy endow
when the csh value equals the death benefit
When is the face amount of a whole life policy paid
when the insurance dies or at policy maturity date-whichever happens first
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
10 year endowment
a 15 year mortgage is best protected by what kind of life policy
15 year decreasing term
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 faster than straight life
k pays 20,000, 20 year endowment policy for 10 years and dies in an accident. how Much will the insurance company pay the benficary
20,000 death benefit
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 of risk. which product would S be advised to purchase
Equity index insurance
a company that owns a life insurance policy on one of its key employees may do all of the following except
change the policy interest rate
the combination of whole lie & ________ term insurance is referred to as a family income policy
decreasing
Credit Life insurance is typically issued with which of the following types of coverage
decreasing term
Which of these types of policies may not have the automatic premium loan provision attached to it
decreasing term
additional coverage can be added to a whole life policy by adding
decreasing term rider
term insurance has which of the following characteristics
expires at the en d of the policy period
which of the following actions require a policy owner to provide proof of insurance in adjustable life policy
increase of face amount
which of the following info is not required to be included in a whole life policy
policys guaranteed dividend table
What type of policy covers 2 people and pays upon the death of the insured
survivorship
who benefits in IOLI when the insured dies
the policy owner
which is true concerning a variable universal life policy
the policy owner controls where the investment will go and selects the amount of premium amount paid