Chapter 4: Life Insurance Policies
Which type of life insurance policy is best suited for paying off the outstanding balance of a 30-year mortgage in the event of the insured's death?
30-year decreasing term
Which of these is NOT an advantage of term life insurance?
A cash benefit will be provided of the insured is alive at the end of the policy period.
Which of these is NOT considered a type of limited payment whole life insurance?
Endowment at age 70
Which of these statements accurately portrays an adjustable life insurance policy?
Policy can alternate between forms of term and whole life insurance.
Which statement regarding an adjustable life insurance policy is NOT true?
Policy loans are not permitted
How are level term policies able to provide level premiums?
Premiums are averaged over the term of the policy.
A "premature" distribution from a modified endowment contract (MEC) incurs a penalty tax of
10%
Which of the following combinations best describes a universal life insurance policy?
A flexible premium deposit fund and a monthly renewable term insurance policy.
An individual who purchases a modified life insurance policy expects?
An improvement in future income
Group credit life insurance is typically a form of?
Decreasing term insurance
A policy owner has just borrowed from a life insurance policy's cash value. Which of these statements is true?
In the event of death, the loan amount is deducted from the policy proceeds.
All of these are considered features of whole life insurance EXCEPT?
Initial premium is lower than for an equivalent amount of term insurance.
(Blank) is NOT an accurate statement regarding universal life insurance?
Policy loans are not permitted.
Which of the following is a TRUE statement regarding universal life insurance?
Policy states how much of each premium is used towards company expenses.
Which of the following could be a future use of the cash value that builds in a recently-purchased whole life insurance policy?
Provide supplemental income in 35 years.
How does a continuous premium whole life policy differ from a limited payment whole life policy?
The time period in which premiums will be paid
Which statement regarding a single premium life insurance policy is NOT correct?
Additional premiums may be required under certain conditions.
Which statement regarding universal life insurance is correct?
Cash value accumulations have a guaranteed minimum interest rate.
The proceeds of a credit life insurance policy are typically paid to the?
Lender
Which type of life insurance policy allows a policy owner the choice of investments along with flexible premium payments?
Variable universal life
When can a life insurance policy be issued WITHOUT the insured's consent?
When a parent purchases a policy on the life of a minor child.