Colorado Life - Types of Life Policies
An individual buys a flexible premium deferred life annuity with 20 year period certain. What would his beneficiary receive if he died 5 years after beginning the annuity phase? A) Payments for 15 years B) Payments for 20 years C) Payments for life D) Nothing
A) Payments for 15 years
The term ___ refers to all of the following - Amount and length of payments - Guaranteed rate of interest - Equal annuity payments
"fixed" in a fixed annuity
For variable products, underlying assets must be kept in A) A separate account. B) A revenue account. C) A money market account. D) A general account.
A) A separate account.
A Universal Life Insurance policy is best described as a/an A) Annually Renewable Term policy with a cash value account. B) Variable Life with a cash value account. C) Whole Life policy with two premiums: target and minimum. D) Flexible Premium Variable Life policy.
A) Annually Renewable Term policy with a cash value account.
When an annuity is written, whose life expectancy is taken into account? A) Annuitant B) Beneficiary C) Life expectancy is not a factor when writing an annuity. D) Owner
A) Annuitant
What type of premium do both Universal Life and Variable Universal Life policies have? A) Flexible B) Level fixed C) Decreasing D) Increasing
A) Flexible
The death benefit under the Universal Life Option B A) Gradually increases each year by the amount that the cash value increases. B) Decreases by the amount that the cash value increases. C) Increases for the first few years of the policy, and then levels off. D) Remains level.
A) Gradually increases each year by the amount that the cash value increases.
The death benefit under the Universal Life Option B (2) A) Gradually increases each year by the amount that the cash value increases. B) Decreases by the amount that the cash value increases. C) Increases for the first few years of the policy, and then levels off. D) Remains level.
A) Gradually increases each year by the amount that the cash value increases. (2)
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? A) It does not guarantee that the entire principal amount will be paid out. B) It is a life contingency option. C) The beneficiary receives the remainder of the principal amount upon the annuitant's death. D) Payments can be made in installments and as a single cash refund.
A) It does not guarantee that the entire principal amount will be paid out.
Which of the following is an example of a limited-pay life policy? A) Level Term Life B) Straight Life C) Life Paid-up at Age 65 D) Renewable Term to Age 70
C) Life Paid-up at Age 65
All of the following are true regarding a decreasing term policy EXCEPT A) The payable premium amount steadily declines throughout the duration of the contract. B) The death benefit is $0 at the end of the policy term. C) The contract pays only in the event of death during the term and there is no cash value. D) The face amount steadily declines throughout the duration of the contract.
A) The payable premium amount steadily declines throughout the duration of the contract.
All of the following statements are true regarding installments for a fixed amount EXCEPT A) The payments will stop when the annuitant dies. B) Value of the account and future earnings will determine the time period for the benefits. C) This option pays a specific amount until the funds are exhausted. D) The annuitant may select how big the payments will be.
A) The payments will stop when the annuitant dies.
Which of the following determines the cash value of a variable life policy? A) The performance of the policy portfolio B) The company's general account C) The policy's guarantees. D) The premium mode
A) The performance of the policy portfolio
Which of the following statements is correct regarding a whole life policy? A) The policyowner is entitled to policy loans. B) Cash values are not guaranteed. C) The policy premium is based on the attained age. D) The death benefit may increase or decrease during the policy period.
A) The policyowner is entitled to policy loans.
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT A) Upon conversion, the death benefit of the permanent policy will be reduced by 50%. B) Evidence of insurability is not required. C) Most term policies contain a convertibility option. D) Upon conversion, the premium for the permanent policy will be based upon attained age.
A) Upon conversion, the death benefit of the permanent policy will be reduced by 50%.
Which of the following products requires a securities license? A) Variable annuity B) Fixed annuity C) Equity Indexed annuity D) Deferred annuity
A) Variable annuity
Which of the following products requires a securities license? (2) A) Variable annuity B) Fixed annuity C) Equity Indexed annuity D) Deferred annuity
A) Variable annuity (2)
Which of the following types of policies allows for a flexible premium and a variable investment component? A) Variable universal life insurance B) Guaranteed issue variable life insurance C) Variable whole life insurance D) Whole life insurance
A) Variable universal life insurance
Which of the following types of policies allows for a flexible premium and a variable investment component? (2) A) Variable universal life insurance B) Guaranteed issue variable life insurance C) Variable whole life insurance D) Whole life insurance
A) Variable universal life insurance (2)
The death protection component of Universal Life Insurance is always A) Decreasing Term B) Annually Renewable Term C) Whole Life D) Adjustable Life
B) Annually Renewable Term
Which of the following features of the Indexed Whole Life policy is NOT fixed? A) Policy period B) Cash value growth C) Premium D) Death benefit
B) Cash value growth
What characteristic makes whole life permanent protection? A) Living benefits B) Coverage until death or age 100 C) Guaranteed death benefit D) Guaranteed level premium
B) Coverage until death or age 100
The term "fixed" in a fixed annuity refers to all of the following EXCEPT A) Amount and length of payments B) Death benefit C) Guaranteed rate of interest D) Equal annuity payments
B) Death benefit
What does "level" refer to in level term insurance? A) Interest rate B) Face amount C) Premium D) Cash value
B) Face amount
Fixed annuities provide all of the following EXCEPT A) Future income payments. B) Hedge against inflation. C) Equal monthly payments for life. D) Minimum guaranteed rate of interest.
B) Hedge against inflation.
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? A) Payments can be made in installments and as a single cash refund. B) It does not guarantee that the entire principal amount will be paid out. C) It is a life contingency option. D) The beneficiary receives the remainder of the principal amount upon the annuitant's death.
B) It does not guarantee that the entire principal amount will be paid out.
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option? (2) A) Payments can be made in installments and as a single cash refund. B) It does not guarantee that the entire principal amount will be paid out. C) It is a life contingency option. D) The beneficiary receives the remainder of the principal amount upon the annuitant's death.
B) It does not guarantee that the entire principal amount will be paid out. (2)
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT A) The insurer determines the amount for each payment. B) It is a life contingency option. C) It will pay the benefit only for a designated period of time. D) The payments are not guaranteed for life.
B) It is a life contingency option.
Which of the following is TRUE regarding the accumulation period of an annuity? A) It is limited to 10 years. B) It is a period during which the payments into the annuity grow tax deferred. C) It is also referred to as the annuity period. D) It is a period of time during which the beneficiary receives income
B) It is a period during which the payments into the annuity grow tax deferred.
Which of the following is NOT true regarding the accumulation period of an annuity? A) It is also known as the pay-in period. B) It would not occur in a deferred annuity. C) It is the period during which the annuity payments earn interest. D) It is the period over which the owner makes payments into an annuity.
B) It would not occur in a deferred annuity.
Which statement is NOT true regarding a Straight Life policy? A) It has the lowest annual premium of the three types of Whole Life policies. B) Its premium steadily decreases over time, in response to its growing cash value. C) The face value of the policy is paid to the insured at age 100. D) It usually develops cash value by the end of the third policy year.
B) Its premium steadily decreases over time, in response to its growing cash value.
Which of the following is NOT a type of whole life insurance? A) Limited payment B) Level term C) Single premium D) Straight life
B) Level term
An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it? A) Graded Premium Life B) Limited-pay Life C) Variable Life D) Adjustable Life
B) Limited-pay Life
An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it? (2) A) Graded Premium Life B) Limited-pay Life C) Variable Life D) Adjustable Life
B) Limited-pay Life (2)
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy A) Decreased death benefit at each renewal. B) Required a premium increase each renewal. C) Built cash values. D) Required proof of insurability every year.
B) Required a premium increase each renewal.
Which of the following would help prevent a universal life policy from lapsing? A) Corridor of insurance B) Target premium C) Face amount D) Adjustable premium
B) Target premium
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? A) The death benefit can be increased only by exchanging the existing policy for a new one. B) The death benefit can be increased by providing evidence of insurability. C) The death benefit cannot be increased. D) The death benefit can be increased only when the policy has developed a cash value.
B) The death benefit can be increased by providing evidence of insurability.
The death protection component of Universal Life Insurance is always A) Adjustable Life B) Decreasing Term C) Annually Renewable Term D) Whole Life
C) Annually Renewable Term
Which of the following is a feature of a variable annuity? A) Interest rate is guaranteed. B) Securities license is not required. C) Benefit payment amounts are not guaranteed. D) Payments into the annuity are kept in the company's general account.
C) Benefit payment amounts are not guaranteed.
What license or licenses are required to sell variable annuities? A) Only a securities license B) No license is required C) Both a life insurance license and a securities license D) Only a life insurance license
C) Both a life insurance license and a securities license
What type of premium do both Universal Life and Variable Universal Life policies have? A) Decreasing B) Increasing C) Flexible D) Level fixed
C) Flexible
A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits? A) Flexible payment annuity B) Deferred interest annuity C) Immediate annuity D) Variable annuity
C) Immediate annuity
A Return of Premium term life policy is written as what type of term coverage? A) Renewable B) Level C) Increasing D) Decreasing
C) Increasing
During partial withdrawal from a universal life policy, which portion will be taxed? A) Principal B) Loan C) Interest D) Cash value
C) Interest
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT A) The payments are not guaranteed for life. B) The insurer determines the amount for each payment. C) It is a life contingency option. D) It will pay the benefit only for a designated period of time.
C) It is a life contingency option.
Which of the following best describes annually renewable term insurance? A) Neither the premium nor the death benefit is affected by the insured's age. B) It provides an annually increasing death benefit. C) It is level term insurance. D) It requires proof of insurability at each renewal.
C) It is level term insurance.
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client? A) Life annuity with period certain B) Increasing term C) Limited pay whole life D) Interest-sensitive whole life
C) Limited pay whole life
Under a pure life annuity, an income is payable by the company A) For a guaranteed period of time, whether or not the annuitant survives to the end of that period. B) For as long as either the annuitant or a named beneficiary is alive. C) Only for the life of the annuitant. D) Until the principal and interest are exhausted.
C) Only for the life of the annuitant.
Which Universal Life option has a gradually increasing cash value and a level death benefit? A) Term insurance B) Option B C) Option A D) Juvenile life
C) Option A
If an agent wishes to sell variable life policies, what license must the agent obtain? A) Surplus Lines B) Personal Lines C) Securities D) Adjuster
C) Securities
If an agent wishes to sell variable life policies, what license must the agent obtain? (2) A) Surplus Lines B) Personal Lines C) Securities D) Adjuster
C) Securities (2)
Which of the following is TRUE regarding variable annuities? A) The company guarantees a minimum interest rate. B) A person selling variable annuities is required to have only a life agent's license. C) The annuitant assumes the risks on investment. D) The funds are invested in the company's general account.
C) The annuitant assumes the risks on investment.
All of the following statements about equity index annuities are correct EXCEPT A) The interest rate is tied to an index such as the Standard & Poor's 500. B) They invest on a more aggressive basis aiming for higher returns. C) The annuitant receives a fixed amount of return. D) They have a guaranteed minimum interest rate.
C) The annuitant receives a fixed amount of return.
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? A) The death benefit can be increased only when the policy has developed a cash value. B) The death benefit can be increased only by exchanging the existing policy for a new one. C) The death benefit can be increased by providing evidence of insurability. D) The death benefit cannot be increased.
C) The death benefit can be increased by providing evidence of insurability.
Who bears all of the investment risk in a fixed annuity? A) The beneficiary B) The annuitant C) The insurance company D) The owner
C) The insurance company
All of the following are true about variable products EXCEPT A) The cash value is not guaranteed. B) Policyowners bear the investment risk. C) The premiums are invested in the insurer's general account. D) The minimum death benefit is guaranteed.
C) The premiums are invested in the insurer's general account.
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? A) Equity Indexed Universal Life B) Variable Universal Life C) Universal Life - Option A D) Universal Life - Option B
C) Universal Life - Option A
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have? A) Term life B) Limited pay C) Universal life D) Adjustable life
C) Universal life (2)
The main difference between immediate and deferred annuities is A) The number of insureds. B) The amount of each payment. C) When the income payments begin. D) How the annuity is purchased.
C) When the income payments begin.
The insured is also the policyowner of a whole life policy. What age must the insured attain in order to receive the policy's face amount? A) 65 B) 70 1/2 C) 90 D) 100
D) 100
The minimum interest rate on an equity indexed annuity is often based on A) The returns from the insurance company's separate account. B) The annuitant's individual stock portfolio. C) The insurance company's general account investments. D) An index like Standard & Poor's 500.
D) An index like Standard & Poor's 500.
Which of the following is INCORRECT regarding a $100,000 20-year level term policy? A) The policy premiums will remain level for 20 years. B) If the insured dies before the policy expired, the beneficiary will receive $100,000. C) The policy will expire at the end of the 20-year period. D) At the end of 20 years, the policy's cash value will equal $100,000.
D) At the end of 20 years, the policy's cash value will equal $100,000.
What is another name for interest-sensitive whole life insurance? A) Variable life B) Term life C) Adjustable life D) Current assumption life
D) Current assumption life
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? A) Variable life B) Universal life C) Whole life D) Decreasing term
D) Decreasing term
Which policy component decreases in decreasing term insurance? A) Cash value B) Dividend C) Premium D) Face amount
D) Face amount
An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium? A) It will remain the same for the new 5-year term. B) It will decrease for the new 5-year term since the insured is now a lesser risk to the company. C) It will increase each year during the next 5 years as the face amount increases each year. D) It will increase because the insured will be 5 years older than when the policy was originally purchased.
D) It will increase because the insured will be 5 years older than when the policy was originally purchased.
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? A) Term to specified age B) Ordinary life policy C) Limited pay whole life D) Level term
D) Level term
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? (2) A) Term to specified age B) Ordinary life policy C) Limited pay whole life D) Level term
D) Level term (2)
The form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of years is called A) Life income with refund. B) Joint and survivorship. C) Joint life annuity. D) Life income with period certain.
D) Life income with period certain.
Which of the following best describes a pure life annuity settlement option? A) Pure life guarantees that all the proceeds will be paid out. B) Benefits are paid for a fixed period of time, specified when the policy begins to pay. C) Pure life provides payments for as long as both the annuitant and the spouse are living. D) Pure life provides payments for as long as the annuitant is alive.
D) Pure life provides payments for as long as the annuitant is alive.
Which of the following is TRUE regarding variable annuities? A) The funds are invested in the company's general account. B) The company guarantees a minimum interest rate. C) A person selling variable annuities is required to have only a life agent's license. D) The annuitant assumes the risks on investment.
D) The annuitant assumes the risks on investment.
Which of the following is NOT true regarding the annuitant? A) The annuitant's life expectancy is taken into consideration for the annuity. B) The annuitant receives the annuity benefits. C) The annuitant must be a natural person. D) The annuitant cannot be the same person as the annuity owner.
D) The annuitant cannot be the same person as the annuity owner.
All of the following are true regarding a decreasing term policy EXCEPT A) The death benefit is $0 at the end of the policy term. B) The contract pays only in the event of death during the term and there is no cash value. C) The face amount steadily declines throughout the duration of the contract. D) The payable premium amount steadily declines throughout the duration of the contract.
D) The payable premium amount steadily declines throughout the duration of the contract.
All of the following statements are true regarding installments for a fixed amount EXCEPT A) Value of the account and future earnings will determine the time period for the benefits. B) This option pays a specific amount until the funds are exhausted. C) The annuitant may select how big the payments will be. D) The payments will stop when the annuitant dies.
D) The payments will stop when the annuitant dies.
All of the following are true about variable products EXCEPT A) The minimum death benefit is guaranteed. B) The cash value is not guaranteed. C) Policyowners bear the investment risk. D) The premiums are invested in the insurer's general account.
D) The premiums are invested in the insurer's general account.
Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount? A) Flexible life B) Variable life C) Adjustable life D) Universal life
D) Universal life
Which of the following types of policies allows for a flexible premium and a variable investment component? A) Guaranteed issue variable life insurance B) Variable whole life insurance C) Whole life insurance D) Variable universal life insurance
D) Variable universal life insurance
Which of the following is a key distinction between variable whole life and variable universal life products? A) Variable universal life is regulated solely through FINRA. B) Variable whole life allows policy loans from the cash value. C) Variable universal life has a fixed premium. D) Variable whole life has a guaranteed death benefit.
D) Variable whole life has a guaranteed death benefit.
Which of the following types of policies will provide permanent protection? A) Credit life B) Term life C) Group life D) Whole life
D) Whole life
___ provide all of the following - Future income payments. - Equal monthly payments for life. - Minimum guaranteed rate of interest.
Fixed annuities
The following features of the ___ is fixed - Policy period - Premium - Death benefit
Indexed Whole Life policy
The following is true regarding the ___ - It is a life contingency option. - The beneficiary receives the remainder of the principal amount upon the annuitant's death. - Payments can be made in installments and as a single cash refund.
Life with Guaranteed Minimum annuity settlement option
The following is true regarding the ___ - Payments can be made in installments and as a single cash refund. - It is a life contingency option. - The beneficiary receives the remainder of the principal amount upon the annuitant's death.
Life with Guaranteed Minimum annuity settlement option
Under ___ the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases.
Option B
Statements are true regarding a ___ - It has the lowest annual premium of the three types of Whole Life policies. - The face value of the policy is paid to the insured at age 100. - It usually develops cash value by the end of the third policy year.
Straight Life policy
The following is true regarding the ___ - It is also known as the pay-in period. - It is the period during which the annuity payments earn interest. - It is the period over which the owner makes payments into an annuity.
accumulation period of an annuity
All of the following are TRUE regarding the ___ - Evidence of insurability is not required. - Most term policies contain a convertibility option. - Upon conversion, the premium for the permanent policy will be based upon attained age.
convertibility option under a term life insurance policy
All of the following are true regarding a ___ - The death benefit is $0 at the end of the policy term. - The contract pays only in the event of death during the term and there is no cash value. - The face amount steadily declines throughout the duration of the contract.
decreasing term policy
All of the following are true regarding a ___ (2) - The death benefit is $0 at the end of the policy term. - The contract pays only in the event of death during the term and there is no cash value. - The face amount steadily declines throughout the duration of the contract.
decreasing term policy (2)
All of the following statements about ___ are correct - The interest rate is tied to an index such as the Standard & Poor's 500. - They invest on a more aggressive basis aiming for higher returns. - They have a guaranteed minimum interest rate.
equity index annuities
All of the following statements are true regarding installments for a ___ - The insurer determines the amount for each payment. - It will pay the benefit only for a designated period of time. - The payments are not guaranteed for life.
fixed period annuity settlement option
Variable universal life, like universal life itself, has a ___ that can be increased or decreased as the policyowner chooses, as long as there is enough value in the policy to fund the death benefit.
flexible premium
All of the following statements are true regarding ___ - Value of the account and future earnings will determine the time period for the benefits. - This option pays a specific amount until the funds are exhausted. - The annuitant may select how big the payments will be.
installments for a fixed amount
All of the following statements are true regarding ___ (2) - Value of the account and future earnings will determine the time period for the benefits. - This option pays a specific amount until the funds are exhausted. - The annuitant may select how big the payments will be.
installments for a fixed amount (2)
All of the following statements are true regarding ___ - The payments are not guaranteed for life. - The insurer determines the amount for each payment. - It will pay the benefit only for a designated period of time.
installments for a fixed period annuity settlement option
Under the ___, the annuitant selects the time period for the benefits; the insurer determines how much each payment will be. This option pays for a specific amount of time only, and there are no life contingencies.
installments for a fixed period annuity settlement option
The following is true regarding ___ - The annuitant's life expectancy is taken into consideration for the annuity. - The annuitant receives the annuity benefits. - The annuitant must be a natural person.
the annuitant
All of the following are true about ___ - The cash value is not guaranteed. - Policyowners bear the investment risk. - The minimum death benefit is guaranteed.
variable products
All of the following are true about ___ - The minimum death benefit is guaranteed. - The cash value is not guaranteed. - Policyowners bear the investment risk.
variable products
A ___ combines a flexible premium with an investment component that allows for potentially great returns.
variable universal life insurance policy
The following is a type of ___ - Limited payment - Single premium - Straight life
whole life insurance