Life Insurance Policies
A man purchased a $100,000 annually renewable term life policy to provide additional protection until his children finish college. He discovered that his policy:
Requires a premium increase each year which adjusts to the insured's age
What is not a feature of indexed universal life?
Sale of this product requires a securities license
What is true about group life insurance?
The cost of coverage is based on the ratio of men and women in the group
An adjustable life policy owner can change what policy feature?
The coverage period
Variable life insurance is based on what kind of premium?
level fixed
An individual purchases a $100,000 joint policy on himself and his wife. He dies 8 years later. How much will his wife receive from the policy?
$100,000 because joint life pays on the first death
When an employee terms coverage under a group insurance policy, coverage continues for:
31 Days which gives them time to convert to an individual policy
Who could not own group life insurance?
A group needing low-cost life insurance
What is not required to be included in the certificate of insurance delivered to each insured by the policy holder?
A letter of approval from the commissioner
A straight life policy has what type of premium?
A level annual premium for the life of the insured. The benefit remains level as well
All factors equal, the least expensive first year premium payment is found in:
Annually renewable term
The death protection component of a universal life insurance is always:
Annually renewable term
The death protection component of universal life insurance is always:
Annually renewable term
A universal life policy is best described as what?
Annually renewable term policy with a cash value account
According to the terms of the policy or an agreement between the insured, the group policy holder, and the insurer, the insured person may not do what?
Assign an appropriate premium based on preference
What is not true about a $100,000 20-year level term policy?
At the end of 20 years, the cash value is equal to $100,000.
Which is not correct regarding a $100,000 20 year level term policy?
At the end of the 20 years, the policy's cash value is equal to $100,000
What element of an indexed universal life policy is tied to an index?
Cash Values
What characteristic makes whole life permanent protection?
Coverage until death or age 100
What is a indeterminate premium life policy with cash values being credited at current interest rates?
Current assumptions
An individual just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life policy would be best?
Decreasing term (decreases as the amount of debt is reduced)
If an employee wants to enter the group insurance plan outside of open enrollment period, to reduce adverse selection, the insurer may require what?
Evidence of insurability
Which policy component decreases in decreasing term insurance?
Face Amounts
What does "level" refer to in level term insurance?
Face amount
An applicant wants to buy a life policy in which he can count on receiving the same benefit as stated in the contract. What should he buy?
Fixed- Offer benefits in contract
In what case will the insured be able to receive the full face amount from a whole life policy?
If the insured lives to age 100
Annually renewable term policies provide a level death benefit for a premium that:
Increases annually
What are the 2 components of a universal life policy?
Insurance and cash account
In juvenile life insurance, what is NOT true?
It is classified as life insurance purchased by a minor
What best describes annually renewable term insurance?
It is level term insurance
An insured buys a 5 year level policy with $10,000 face amount and decides to renew after the 5 years are up. What happens to the premium?
It will increase because the insured is not 5 years older
What is not true regarding a straight life policy?
It's premium steadily decreases over time in response to it's growing cash value
Twin brothers are starting a business. They will need several years to build the business to where they can pay off the debt the incurred. What insurance is most affordable and still provides death benefits?
Joint life- premiums are based on attained age and pays on the first death
What is an example of a limited pay policy?
Life paid- up at age 65. This will be paid for by age 65, and will pay the benefit until the policy owner is 100 years old.
A client wants a policy with protection and savings. The client is willing to pay premiums until retirement at age 65. What type of life policy should he buy?
Limited pay whole life
All factors equal, what would the premium be like in a survivorship policy compared to the premium in a joint life policy?
Lower
Which universal life option has a gradually increasing cash value and level death benefit?
Option A
What option for universal life allows the beneficiary to collect the death benefit and cash value?
Option B
Which is NOT one of the three basic types of coverages that are available based on how the face amounts change during the policy term?
Renewable
If an agent wishes to sell their variable life policies, what license do they need?
Securities license
A domestic insurer issuing variable contracts must establish one or more:
Separate accounts
What type of insurance policy generates immediate cash value?
Single premium- generates cash value due to the lump sum payment
What does not regulate variable life policies?
The guaranty association
What is not considered when underwriting group insurance?
The individual insured's medical records
An employee is covered under her employers group life plan. If she terminates her group coverage, which statement is INCORRECT?
The insured may choose to convert to term or permanent individual coverage
What is not true regarding a decreasing term policy?
The payable premium amount steadily declines throughout the duration of the contract
What best defines target premium in a universal life policy?
The recommended amount to keep the policy in force throughout it's lifetime
A group of 15 skydivers decide to band together for small group life insurance. After they applied, they were rejected. Why?
The sole purpose of the establishment of the group was for life insurance
In an adjustable life policy, what cannot be changed by the policy owner?
The type of investment
What is not a characteristic of group life insurance?
There is a requirement to prove insurability on the part of the participant
When would a 20-pay whole life policy endow?
When the insured reaches age 100
Graded-premium whole life policy premiums are typically lower initially, and gradually increase over. period of 5-10 years. After the increase, the premiums will:
be level thereafter
A universal life insurance policy has two types of interest rates that are called:
guaranteed and current
What best described a term-to-65 contract's premium and death benefit respectively?
level and level
What is not a characteristic of group life insurance?
premiums are determined by age, sex, and occupation of each individual certificate holder
Which policy would have an IRS required corridor/gap between the cash value and death benefit?
universal life option a
At age 30, an applicant wants to start an insurance program, but realizes his needs will change and wants a policy that can be modified. What type of policy is best for this?
Adjustable Life
To sell variable life insurance policies, an agent must receive all licenses and registrations except:
An SEC registration- SEC is for securities
A whole life insurance policy with performance based upon the current interest rate being credited and the current mortality cost being charged is called what?
Current assumption whole life
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to the beneficiary, the premiums must be paid:
For 20 years or until death, whichever occurs first
What policy type is characterized by a provision where premiums are low, then increases, then are level for the remainder of the policy?
Graded premium whole life
The death benefit under the universal life option b:
Gradually increases each year by the amount that the cash value increases
All factors being equal, what term best describes the coverage provided by term policies, as compared to any other form of protection?
Greatest, it has the highest amount of coverage for the lowest premiums
If a life insurance policy increases significantly in the death benefit at a certain age. What type of policy is this?
Jumping juvenile policy
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 years. What type of policy is this?
Level Term
An employee has group life insurance through her employer. After 5 years, she decided to leave to work independently. How can she obtain an individual policy?
She can convert to an individual policy within 31 days without providing evidence of insurability
An insurance policy that only requires a payment of premium at it's inception, provides insurance protection for the rest of a person's life, and matures at age 100, it is called:
Single premium whole life
Group life insurance policies issued in Nebraska do not contain what?
Statements of the applicant are considered warranties
Which is called 'second-to-die' policy?
Survivorship policy
What would help prevent a universal life policy from lapsing?
Target premium
Which type of insurance policy would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources?
Term
A term policy with level premium and level death benefits that provides coverage until age 65 is called:
Term-to-65
An employee quits his job and converts his group policy to an individual policy. What is the premium he will pay based on?
The Attained age
What entity does not regulate variable life policies?
The Guaranty Association
In a group life insurance policy, the employer may select all of the following except what?
The beneficiary
The death benefit of an adjustable life policy is to be increased. What statement is correct regarding this change?
The death benefit can be increased by providing evidence of insurability
An employee is insured under her employer's group life plan. If she terms group coverage, what is NOT true?
The insured may choose to convert to term or permanent individual coverage
A group life policy is converted to an individual policy. The insured is eligible for individual life insurance coverage without evidence of insurability. Within how many days of the first premium must the insurer notify the insured of his eligibility?
The insurer has 15 days to notify the insured
An employee quits his job on May 15th and does not covert to individual coverage for 2 weeks. He dies in a freak accident on June 1st. What will happen?
The insurer will pay the full death benefit because the insured has 31 days to convert to individual coverage
What determines the cash value of a variable life policy?
The performance of the policy portfolio
A universal life policy allows a skipped payment without lapsing as long as:
The policy contains sufficient cash value to cover the cost of insurance premiums
What statement is correct about a whole life policy?
The policy owner is entitled to policy loans
What is true regarding premiums in term policies?
The premium is level
What is not true about variable products?
The premiums are invested in the insurer's general account
What employee insured under a group plan would be allowed to convert to an individual insurance of the same coverage once the plan is terminated?
Those who have been insured by the plan for at least 5 years
What is the purpose of establishing the target premium for a universal life policy?
To keep the policy in force
Which type of life policy allows the policy holder to pay more or less than the planned premium?
Universal life
Which life insurance policy would be considered interest sensitive?
Universal life- the insurer credits current (nonguaranteed) interest rates
An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is much lower this month than last month. What kind of policy is this?
Variable