Life Insurance

Renewable provision

Allows the policy owner the right to renew the coverage at the expiration date without evidence of insurability

Policy maturity

In life policies, the time when the face value is paid out

The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE

The beneficiary will receive the greater of the money paid into the annuity or the cash value.

endow

The cash value of a whole life policy has reached the contractual face amount

All of the following are true regarding the guaranteed insurability rider except

This rider is available to all insureds with no additional premium.

Earned Income

salary, wages, or commissions; but not income from investments, unemployment benefits, and similar sources of income's

The interest earned on policy dividends is

taxable

Which of the following types of insurance policies would perform the function of cash accumulation?

whole life

Rollover

withdrawal of the money from one qualified plan and placing it into another plan

Qualified Plan

A retirement plan that meets the IRS guidelines for receiving favorable tax treatment.

Which is not true about beneficiary designations?

The beneficiary must have insurable interest in the insured.

The insured is also the policy owner of a whole life policy. What age Must the insured attain in order to receive the policy's face amount ?

100

A Straight Life policy has what type of premium?

A level annual premium for the life of the insured

cash value

A policy's saving element or living benefit

suitability

A requirement to determine if an insurance products is appropriate for a customer

All of the following are examples of third party ownership of a life insurance policy?

An insured borrows money from the bank and makes collateral assignments of a part of the death benefit to secure the loan

Nonforfeiture Values

Benefits in a life insurance policy that the policy owner cannot lose even if the policy is surrendered or lapses

Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?

Cash surrender

What does "liquidity" refer to in a life insurance policy?

Cash values can be borrowed at any time

Variable Life Insurance

Contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance

Fixed Life Insurance

Contracts that offer guaranteed minimum or fixed benefits

Liquidation of an estate

Converting a person's net worth into a cash flow

Which nonforfeiture option has the highest amount of insurance protection?

Extended term

An agent selling variable annuities must be registered with

FINRA

What does "level" refer to in level term insurance?

Face amount

permanent life insurance

General term used to refer to various forms of life insurance policies that build cash value and remain in effect for the entire life of the insured as long as the premium is paid

At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called

Guaranteed insurability

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future ? Which of the following options should be included in the policy ?

Guaranteed insurability option

If a life policy allows the policy owner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

Guaranteed insurability rider

Annually renewable term policies provide a level death benefit for a premium that

Increases annually

What are the two components of a universal policy

Insurance and cash account

Which of the following is true regarding the accumulation period of an annuity

It is a period during which the payments into the annuity grow tax deferred.

Which of the following is true about the premium on the children's rider in a life insurance policy ?

It remains the same no matter how many children are added to the policy

Which of the following statements is TRUE concerning the Accidental Death Rider?

It will pay double or triple the face amount

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?

Joint Lifestyle

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?

Life income with period certain

Return of Premium

Life insurance is an increasing term insurance policy that pays an additional death benefits to the beneficiary equal to the amount of the premiums paid

Which option for universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured

Option B

An insurer has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 yes old and not 43, as stated on the application. What will the company do ?

Pay a reduced death benefit

Decreasing terms

Policies features a level premium and a death benefits that decrease each year over the duration of the policy term

A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?

Proof of insurability is not required.

whole life insurance

Provides lifetime protection, and includes a saving element or cash value.

Convertible Provision

Provides the policyowner with the right to convert the policy to a permanent insurance policy without evidence of insurability

An insured pays $1200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe ?

Reduction of premium

Which of the following is NOT one of the 3 basic types of coverages that are available, based on how face amount changes during the policy term?

Renewable

The ownership provision entitles the policy owner to do all of the following except

Set premium rates

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured and matures at the insured age 100 is called

Single premium whole life

Term Insurance

Temporary protection because it only provides coverage for a specific period of time.

Pure Death Protection

Term insurance provides what is known as

Face Amount

The amount of benefit stated in the life insurance policy

The president of a company is starting an annuity and decides that his corporation who'll be annuitant.

The annuitant must be a natural person

Death benefits

The death benefit is guaranteed and also remains level for life

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?

The insured may renew the policy for another 10 years, but at a higher premium rate

Attained Age

The insured's age at the time the policy is issued or renewed

In a life settlement contract, whom does the life settlement broker represent?

The owner

Which of the following determines the cash value of a variable life policy

The performance of the policy portfolio

The policy owner of a universal life policy may skip paying the premium and the policy will not lapse as long as

The policy contains sufficient cash value to cover the cost of insurance.

Living Benefits

The policy owner can borrow against the cash value while the policy is in effect, or can receive the cash value when the policy is surrendered.

Level Premium

The premium for the whole life policies is based on the issues Age; therefore, it remains the same throughout the life of the policy

Level Premium

The premium that does not change throughout the life of a policy

Vesting

The right of participant in a retirement plan to retain part of all of the benefits

What kind of policy allows withdrawals or partial surrenders?

Universal Life

Which of the following types of policies allows the policy owner to skip premium payments , provided that there is enough cash value in the policy to cover the premium amount ?

Universal Life

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT

Upon conversion, the death benefit of the permanent policy will be reduced by 50%

If a policy includes a free look period of atleast 10 days , the buyer's guide may be delivered to the applicant

When Policy arrived

deferred

Withheld or postponed until a specified time or event in the future

Gross Income

a person's income before taxes or other deductions

non-profit organization

an organization that uses its surplus revenues to further achieve its purpose or mission

If a annuitant dies during the accumulation period, who will receive the annuity benefits?

beneficiary

Pretax contribution

contribution made before federal and/or state taxes are deducted from earnings

Cash value

created by the accumulation of premiums is scheduled to equal the face amount of the policy when the insured reaches age 100

surrender

early termination of a policy by the policyowner

Securities

financial instruments that may trade for value (for example, stocks, bonds, options)

Straight life

is the basic whole life policy

Level Term Insurance

is the most common type of temporary protection purchased. The word level refers to the death benefit that does not change throughout the life of the policy.

Annually Renewable Term

is the purest form of term insurance -death benefit remains level and the policy may be guaranteed to be renewable each year without proof of insurability, but the premium increases annually according to the attained age, as probability of death increases

The premium of a survivorship life policy compared with that of a joint life policy would be

lower

Policy endowment

maturity date

LIFO

principle applied to asset management in life insurance products, under which it is assumed that the funds paid into the policy last will be paid out first

FIFO (first in, first out)

principle under which it is assumed that the funds paid into the policy first will be paid out first

Level Premium

provides a level death benefit and a level premium during the policy term