Insurance Part 2
Separate accounts
A domestic insurer issuing variable contracts must establish one or more
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?
A level annual premium for the life of the insured
A straight life policy has what type of premium?
Guaranteed surrender value
According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following?
Universal life
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?
$50,000
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined, and the cash value fell to $10,000. If the insured dies, how much will be paid out?
$50,000
Before he died, an annuitant had received $12,500 in monthly benefits from his $25,000 straight life annuity. He was also the insured under $50,000 paid-up whole life policy that named his wife as primary beneficiary. Considering both contracts, how much will the annuitant's spouse receive in benefits?
Intrest
During partial withdrawal from a universal life policy, which portion will be taxed?
Hedge against inflation
Fixed annuities provide all of the following EXCEPT
A separate account
For variable products, underlying assets must be kept in
Joint life annuity
If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a
It is a percentage of the cash value and decreases over time
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?
10%
If an annuitant withdraws cash before age 59 and a half, the tax penalty is
The beneficiary
If the annuitant dies during the accumulation period, who will receive the annuity benefits?
A full death benefit
If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of death benefit will be paid to the beneficiary?
Amount of premium
In flexible premium payment plans, the term "flexible" refers to the
Adjusted to the insured's age at the time of renewal
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be
The cash value will be paid to the annuitant's estate
The annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums paid. Which of the following is TRUE?
Flexible Premium Deferred Annuity
The annuity purchased with multiple payments, whose benefits is paid more than one year after the purchase is known as which type of annuity?
Annually referable term
The death protection component of Universal life insurance is always
The death benefit can be increased by providing evidence of insurability
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?
The annuitant must be a natural person
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?
Death benefit
The term "fixed" in a fixed annuity refers to all of the following EXCEPT
SEC registration
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
Joint life
Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?
For 20 years or until death, whichever occurs first.
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid
Only for the life of the annuitant
Under a pure life annuity, an income is payable by the company
Level fixed
Variable whole life insurance is based on what type of premium?
Face amount
What does "level" refer to in level term insurance?
The insurance company's general account
When a fixed annuity owner pays a monthly annuity premium to the insurance company, where is this money placed?
When the insured reaches age 100
When would a 20-pay whole life policy endow?
Funds exceeding the premium paid are taxable as ordinary income
Which is TRUE about the cash surrender nonforfeiture option?
The performance of the policy portfolio
Which of the following determines the cash value of a variable life policy?
Policyowner
Which of the following has the right to convert the existing term coverage to permanent insurance?
An individual who wants to grow retirement funds tax deferred
Which of the following individuals would be likely candidate to purchase a deferred annuity?
Level term
Which of the following is NOT a whole life insurance?
They ear lower interest rates than fixed annuities
Which of the following is NOT true regarding Equity Indexed Annuities?
Income payments begin within 1 year from date purchase
Which of the following is NOT true regarding a deferred annuity?
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?
Variable whole life has a guaranteed death benefit
Which of the following is a key distinction between variable whole life and variable universal life products?
Annuity certain
Which of the following is a short-term annuity that limits the amounts paid to certain fixed period or until a certain fixed amount is liquidated?
Straight life
Which of the following policies would be classifies as a traditional level premium contract?
Universal Life Option A
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?
An annuity
Which of the following product provides income for a specified period of years or for life, and protects a person against outliving their money?
The policyowner is entitled to policy loans
Which of the following statements is correct regarding a whole life policy?
Greatest
Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?
The annuitant assumes the risks on investment
Which of the is TRUE regarding variable annuities?
Option B
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?
Face amount
Which policy component decreases in decreasing term insurance?
Its premium steadily decreases over time, in response to its growing cash value
Which statement is NOT true regarding a straight life policy?
It has a guaranteed minimum interest rate
Why is an equity indexed annuity considered to be a fixed annuity?
She might have a deferred annuity
Your client paid for her annuity with a lump-sum payment, but after a year she still has not received her first income payment from the annuity. Which of the following is true?
Annually renewable term
the LEAST expensive first-year premium is found in which of the following policies?
Joint life
A couple receives a set amount of income from their annuity. When the wife dies, the husband no longer receives annuity payments. What type of annuity did the couple buy?
Increasing
A return of premium term life policy is written as what type of term coverage?
Upon conversion, the death benefit of the permanent policy will be reduced by 50%
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT
The premiums are invested in the insurer's general account
All of the following are true about variable products EXCEPT
The payable premium amount steadily declines throughout the duration of the contract
All of the following are true regarding a decreasing term policy EXCEPT
The annuitant receives a fixed amount of return
All of the following statements about equity index annuities are correct EXCEPT
The payments will stop when the annuitant dies
All of the following statements are true installments for a fixed amount EXCEPT
Decreasing term
An individual has just borrowed $10,000 on a 5-year note from his bank. The note is due in installments. What type of life insurance policy would be best suited to this situation?
The insured may renew the policy for another 10 years, but at a higher premium rate
An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?
After 1 year
If a person purchases a Flexible Premium Deferred Annuity, when is the soonest that income payouts will begin?
Either the amount paid into the annuity or the cash value, whichever is a greater amount
If an annuitant dies before annuitization occurs, what will the beneficiary receive?
If the insured lives to age 100
In which of the following cases will the insured be able to receive the full face amount from a whole life policy?
Lower
The premium of a survivorship life policy compared with that of a joint life policy would be
Pure life
What form of the annuity settlement options provides payments to an annuitant for the rest of the annuitant's life and ceases at the annuitant's death?
Only the annuity owner
Which of the following can surrender a deferred annuity contract?
At the end of 20 years, the policy's cash value will equal $100,000
Which of the following is INCORRECT regarding a $100,000 20-year level term policy?
They earn lower interest rates than fixed annuities
Which of the following is NOT true regarding Equity Indexed Annuities?
The annuitant cannot be the same person as the annuity owner
Which of the following is NOT true regarding the annuitant?
Income payments start within one year
Which of the following is a feature of a single premium immediate annuity?
Benefit payment amounts are not guaranteed
Which of the following is a feature of a variable annuity?
Universal life
Which type of insurance policy allows the policyowner to pay more or less than the planned premium?
Required a premium increase each renewal
A man decides 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 60-year-old-man
All other factors being equal, which of the following individuals would receive the largest monthly check from a single premium straight life immediate annuity?
FINRA
An agent selling variable annuities must be registered with
Interest Sensitive Whole Life
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an
Interest-sensitive whole life
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an
To keep the policy in force
What is the purpose of establishing the target premium for a universal life policy?
It is a period during which the payments into the annuity grow tax deferred
Which of the following is TRUE regarding the accumulation period of an annuity?
Variable life insurance
Which of the following types of policies allows for a flexible premium and a variable investment component?
Target Premium
Which of the following would help prevent a universal life policy from lapsing?
Single Premium
Which type of life insurance policy generated immediate cash value?
The insurance company
Who bears all of the investment risk in a fixed annuity?
Joint and survivor
a married couple's annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, payments stop. What settlement option did they select?
The owner will receive the surrender value of the annuity
What happens if a deferred annuity is surrendered before the annuitization period?
Current assumption life
What is another name for interest-sensitive whole life insurance?
The number of payments that purchase the annuity
What is the difference between a single premium and a flexible premium payment options in a deferred annuity?
Universal life
What kind of policy allows withdrawals or partial surrenders?
Immediate
What type of annuity can be purchased with a single premium and provides benefit payments immediately?
Flexible
What type of premium do both Universal life and variable universal life policies have?
Pure life provides payments for as the annuitant is alive
Which of the following best describes a pure life annuity settlement option?
It is level term insurance
Which of the following best describes annually renewable term insurance?