Life Insurance: Types of Policies
An individual puchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?
$100,000
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
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?
100
An insured purchased a variable life insurance policy with a face amount of 50,000 dollars. 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 dollars
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 the death benefit will be paid to the beneficiary?
A full death benefit
A Straight Life policy has what type of premium?
A level annual premium for the life of the insured
For variable products, underlying assets must be kept in
A separate account
The LEAST expensive first-year premium is found in which of the following policies?
Annually Renewable Term
The death protection component of Universal Life Insurance is always
Annually Renewable Term
When an annuity is written, whose life expectancy is taken into account?
Annuitant
Which of the following is a short-term annuity that limits the amounts paid to a certain fixed period or until a certain fixed amount is liquidated?
Annuity certain
Which of the following is a feature of a variable annuity?
Benefit payment amounts are not guarantted
What license or licenses are required to sell variable annuities?
Both a life insurance license and a securities license
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a
Convertible Term policy
What characteristic makes whole life permanent protection?
Coverage until death or age 100
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?
Decreasing term
An agent selling variable annuities must be registered with
FINRA
What does "level" refer to in level term insurance?
Face amount
Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?
Fixed amount
What type of premium do both Universal Life and Variable Universal Life policies have?
Flexible
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
For 20 years or until death, whichever occurs first
What are two components of a universal policy?
Insurance and cash account
During partial withdrawal from a universal life policy, which portion will be taxed?
Interest
Which of the following best describes annually renewable term insurance?
It is level term insurance
A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that?
Joint Life Policy
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?
Joint life
Which of the following is NOT a type of whole life insurance?
Level term
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
Which of the following is NOT true about a joint and survivor annuity benefit option?
Payments stop after the first death among the annuitants
Which of the following is NOT one of the three types of term coverage based on what happens to the face amount during the policy term?
Renewable
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
SEC registration
If an agent wishes to sell variable life policies, what license must the agent obtain?
Securities
Which type of life insurance policy generates immediate cash value?
Single Premium
Which two terms are associated directly with the way an annuity is funded?
Single or periodic payments
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's age 100 is called
Single premium whole 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
Which of the following best describes what the annuity period is?
The period of time during which accumulated money is converted into income payments
The policyowner 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
Which of the following statements is correct regarding a whole life policy?
The policyowner is entitled to policy loans
What kind of policy allows withdrawals or partial surrenders?
Universal life
A domestic insurer issuing variable contracts must establish one or more
separate accounts
Who bears all of the investment risk in a fixed annuity?
the insurance company
In level term and increasing term policies,
the premium also remains level for the term of the policy.
At age 30, an applicant wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit his needs?
Adjustable life
Which of the following products provides income for a specified period of years or for life, and protects a person against outliving their money?
An annuity
A Return of Premium term life policy is written as what type of term coverage?
Increasing
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option?
It does not guarantee that the entire principal amount will be paid out
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
Life income with period certain
Which of the following policies would be classified as a traditional level premium contract?
Straight life
Which of the following is called a "second-to-die" policy?
Survivorship life
Which of the following is TRUE regarding variable annuities?
The annuitant assumes the risks on investment
Which of the following is NOT true regarding the annuitant?
The annuitant cannot be the same person as the annuity owner
Which of the following TRUE regarding the premium in term policies?
The premium is level for the term of the policy
Which of the following best defines target premium in a universal life policy?
The recommended amount to keep the policy in force throughout its lifetime
What is the purpose of establishing the target premium for a universal life policy?
To keep the policy in force
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%
The main difference between immediate and deferred annuities is
When the income payments begin
When would a 20-pay whole life policy endow?
When the insured reaches age 100
The target premium
a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.
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
adjusted to the insured's age at the time of renewal
The term "fixed" in a fixed annuity refers to all of the following EXCEPT
death benefit
What does "level" refer to in level term insurance?
face amount
A fixed annuity
fixed in the sense that it provides a guaranteed minimum rate of interest and income payments that do not vary from one to the next. The company also guarantees the specified dollar amount for each payment and the length of the payout period. Annuities do not provide a death benefit.
Annually renewable term policies provide a level death benefit for a premium that
increases annually
In decreasing policies,
while the face amount decreases, the premium remains constant throughout the life of the contracts.
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?
It will increase because the insured will be 5 years older than when the policy was originally purchased.
Which of the following is NOT true regarding the accumulation period of an annuity?
It would not occur in a deferred annuity
Which statement is NOT true regarding a Straight Life policy?
Its premium steadily decreases over time, in response to its growing cash value
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 Life
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?
Limited pay whole 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?
Limited-pay Life
Which Universal Life option has a gradually increasing cash value and a level death benefit?
Option A
The premium of a survivorship life policy compared with that of a joint life policy would be
lower
All of the following are true regarding a decreasing term policy EXCEPT
the payable premium amount steadily declines throughout the duration of the contract
Annually renewable term
the purest form of term insurance. The death benefit remains level, but the premium increases each year with the insured's attained age.
Fixed annuities provide all of the following EXCEPT
Hedge against inflation
In which of the following cases will the insured be able to receive the full face amount from a whole life policy?
If the insured lives to age 100
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 would help prevent a universal life policy from lapsing?
Target premium
Which of the following is called a "second to die" policy?
Survivorships life
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?
The death benefit can be increased by providing evidence of insurability
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?
Universal life