Chapter 4 quiz
When a policyowner exchanges a term policy for a whole life policy without providing proof of good health
Conversion provision
X is covered by a whole life policy. Which insurance product can cover his children?
Child term rider
What type of policy is considered by the IRS guidlines to be overfunded
Modified Endowment Contract
Life insurance policy with X per year for a premium payment the first 5 years, but at the beginning of the 6th year the premium will increase to Y but will remain level thereafter. the face amount will remain the same throughout the entire life of the policy
Modified Premium Life
When applied to whole life insurance, the word "straight" denotes:
The duration of premium payments
What is the underlying concept regarding level premiums?
The early years are charged more than what is needed
X chooses a monthly premium payment mode on his whole life insurance policy. What is correct in doing so?
The gross premium is higher on a monthly payment mode as compared to being paid annually
The amount of coverage on a group credit life policy is limited to:
The insured's total loan value
X is the insured and Y is the sole beneficiary on a life insurance policy. Both die in an accident where X dies before Y. Under the common disaster provision, what is true?
The proceeds will be payable to X's estate if Y dies within a specified time
What insurance products require an agent to have proper FINRA securities registration in order to sell them
Variable Life, Variable Annuity, Universal Variable Life
What policy combines investment choices with a form of term coverage
Variable Universal Life
What type of life policy contains a monthly mortality charge as well as self-directed investment choice
Variable Universal Life
What type of life insurance allows the policyowner to have level premiums and choose from a selection of investment options
Variable life
What is the premium payment schedule for whole life policies
premiums are payable throughout the insured's lifetime. coverage lasts until death of insured
The investment gains from a universal life policy usually go toward
the cash value
Under a renewable term policy
the renewal premium is calculated on insured's attained age
X is 40 wants to retire at 70, he's looking to buy a life insurance policy with LEVEL PREMIUMS, PERMANENT PROTECTION, and be PAID-UP at retirement. What should X get?
Limited pay whole life or 30 pay life
Which of these statements made by the producer would be correct about a whole life policy that will accumulate cash value at a faster rate in the early years of the policy?
20-pay life accumulates cash value faster than straight life
What type of policy pays a benefit if the insured goes blind
Accidental Death and Dismemberment
How long does coverage normally remain on a limited-pay life policy?
Age 100
What is true regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary?
All proceeds are income tax free in the year they are recieved
Whole life insurance policies are contractually guaranteed to provide each of the following
Cash Value that will ultimately replace the death benefit, premiums that remain fixed for the life of the policy, nonforfeiture options
What is true about a whole life policy and Cash value?
Cash value may be borrowed against
What type of policy has a death benefit that adjusts periodically and is written for a specific period of time?
Decrease Term
X buys a $10,000 Life policy that will pay the FACE AMOUNT to her if she lives to age 65, OR to her Beneficiary if she dies before age 65. What type of policy did X get?
Endowment at age 65
What is untrue regarding the federal income tax treatment of life insurance
Entire cash surrender value is taxable
Policy that will yield greater gains than bonds, but will protect the principal with a minimal level or risk.
Equity Index Insurance
A life insurance policy that will pay a stated monthly income to beneficiaries for a pre-selected period (10's of years) after the insured dies and a lump some is also paid at the end of that pre-selected period
Family Maintenence Policy
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenence Policy
What special need would a policy owner require with an adjustable life insurance policy?
Flexible premiums
Quarterly premium payments increase the annual cost because:
Interest to the insurer is decreased while the administrative costs are increased
What policy covers 2 lives and pays the face after the first one dies
Joint Life
What settlement pays a stated amount to an annuitant, but no residual value to a beneficiary?
Life income
What life product's not considered interest-sensitive?
Modified whole life
Which of these is not an element of life insurance premiums
Morbidity rate
What is possible with a Universal Life policy?
Policy's cash value may be used to pay premiums, Face amount may be adjusted, Premium payments may be made at unscheduled times
X is covered by an accidental death and dismemberment policy that has an irrevocable beneficiary. What action will the insurance company take if X requests a change of beneficiary
Request of change will be refused
X gets his wife(Y) a Permanent protection policy and himself term coverage under the same policy. What kind of policy does X have.
Whole Life policy with other insured rider
A life insurance policy that provides a policyowner with cash value along with a level face amount is called:
Whole life
Family Income Policy
Whole life and Decreasing Term
a whole life insurance policyowner doesn't wish to continue making premium payments. What enables the policyowner to sell the policy for more than its cash value
life settlement contract
A life policy that fluctuates according to the performance of it's underlying investment portfolio is referred to as:
Variable life policy
