POL California Life: Types of Life Policies

A young father would like a life insurance policy to provide coverage for all five family members at the lowest cost. Which type of policy would he most likely buy?

Family (Protection) Policy

A man decided to purchase a $100,000 Annually Renewability Term Life policy to provide additional protection until his children finished college. He discovered that his policy...

Required a premium increase each renewal

All other factors being equal, the least expensive first-year premium payment is found in...

Annually Renewable Term

Concerning Juvenile Life insurance, which of the following statements is INCORRECT?

Juvenile Life is classified as any life insurance purchased by a minor

Which type of life insurance policy generates immediate cash value?

Single Premium

A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?

The insured's premiums will be waived until she is 21

What is the purpose of establishing the target premium for a universal life policy?

To keep the policy in force

Which of the following elements in an indexed Universal Life policy is tied to an index?

Cash values

One of the advantages of a family life insurance policy that provides coverage for children is that it...

May be converted to permanent insurance for the children without requiring evidence of insurability.

When would a 20-pay whole life policy endow?

When the insured reaches age 100

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

What characteristic make whole life permanent protection?

Coverage until death or age 100

The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called...

Credit life

Which of the following would be the beneficiary in credit life insurance?

Creditor

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

Which of the following is NOT a way to determine the interest rate in a Universal Life Policy?

Estimate market conditions for the life of the policy

Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?

Family term rider

A Return of Premium term life policy is written as what type of term coverage?

Increasing

The following are features of the Indexed Universal Life EXCEPT...

Sale of this product requires a securities license

Which of the following policies would be classified as a traditional level premium contract?

Straight Life

Which of the following statements is true regarding the cash value in a Universal life policy?

The insurer credits the cash value in the policy with a current interest rate

Which of the following Life Insurance policies would be considered interest sensitive?

Universal Life

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?

Level term

J purchased 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 employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds...

$50,000

Which of the following is true regarding the insurance amount in a credit life policy?

Creditor can only insure the debtor for the amount owed.

Which of the following types of insurance covers the whole family in a single contract?

Family Policy

Which of the following must an agent receive in order to sell variable life insurance policies?

FINRA registration

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

Face amount

All of the following are the types of term insurance depending on how the face amount changes during e policy term EXCEPT...

Renewable

A Universal Life insurance policy has two types of interest rate that are called...

Guaranteed and Current

All of the following entities regulate variable life policies EXCEPT...

The Guaranty Association

A 20-year family income policy was purchased effective April 1, 2001. The insured died four months later, on August 1, 2001. The beneficiary receives monthly income for...

19 years and 8 months

Which of the following is an example of a limited-pay life policy?

Life Paid-up at Age 65

The type of term insurance that provides increasing death benefits as the insured ages is called...

Increasing term

The type of term insurance the provides increasing death benefits as the insured ages is called...

Increasing term

All of the following are true regarding a deceasing term policy EXCEPT...

The payable premium amount steadily declines throughout the duration of the contract.

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

The performance of the policy portfolio

All of the following are characteristics of a Universal Life policy EXCEPT...

The planned premium pays for morality charges and expenses and any excess is returned to the policy-owner

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

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

Which of the following types of policies will provide permanent protection?

Whole life

What kind of policy does NOT typically require proof of insurability?

Group insurance

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

A Universal Life Insurance policy is best described as...

An Annually Renewable Term policy with a cash value account

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

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

Increases annually

What type of insurance would be used for a Return of Premium rider?

Increasing Term

W owns a policy in which she is covered as the bread-winner with permanent insurance and with decreasing term insurance in the form of a ride. What type of policy is this?

Family Income Policy

Which component increases in the increasing term insurance?

Death benefit

What kind of policy issues certificates of insurance to insureds?

Group insurance

Which statement is NOT true regarding a Straight Life policy?

Its premium steadily decreases over time, in response to its growing cash value.

Which of the following statements is correct regarding a whole life policy?

The polic-yowner is entitled to policy loans

At age 30, a man 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

Term policies are available as Level, Increasing, and Decreasing. Which policy component fluctuates depending on the policy type?

Death Benefit

Variable Life insurance is based on what kind of premium?

Level fixed

Which of the following has the right to convert the existing term coverage to permanent insurance?

Policyowner

Which of the following riders would NOT cause the Death Benefit to increase?

Payor Benefit Rider

In term policies, what happens to the premium throughout the term of the policy?

Premium always remains level

Which of the following is NOT allowed in credit life insurance?

Creditor requiring that a debtor buys insurance from a certain insurer

The death benefit under the Universal Life Option B...

Gradually increases each year by the amount that the cash value increases

All other factors being equal, which of the following best describes the coverage provided by term policies, as compared to any other form of protection?

Greatest

Which of the following is NOT a type of whole life insurance?

Increasing term

In Modified Life policies, what happens to the premium?

It is level at the beginning and increases after the first few years

An insured buys a 5-year level premium term policy with a face amount of $10, 000. The policy also contains a 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.

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

Which of the following is called a "second-to-die" policy?

Survivorship life

Which type of life insurance policy allows the policy-owner to pay more or less than the planned premium?

Universal life

An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?

Variable

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

An insured and his spouse own a home. When the insured dies, the insurer pays the remaining balance on his home loan. Which type of life insurance provision/rider does this describe?

Mortgage Redemption

Which of the following allows the insurer to relive a minor insured from premium payments if the minor's parents have died or become disabled?

Payor Benefit

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?

Universal Life - Option A

A policy which pays monthly income upon the death of the breadwinner for a predetermined number of years after death, plus a lump sum at death, and combines level term and whole life is known as which policy?

Family maintenance

A man wants to buy a life insurance policy in which he can count on receiving the same benefited as stated in the contract. Which type should he buy?

Fixed

Because of financial obligations, John felt that he needed more insurance than the insurer was willing to issue. John's insurance producer told him that he could maximize the death benefit without increasing the face amount by the use of a(n)

Return of premium rider

Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources?

Term

Which policy component decreases in decreasing term insurance?

Face amount

Which of the following would help prevent a universal life policy from lapsing?

Target premium

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

Which of the following is INCORRECT regarding a $100,000 20-year level term policy?

At the end of 20 years, the policy's cash value will equal $100,000.

Both Universal Life and Variable Universal Life have a...

Flexible premium

A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium?

If the father is disabled for more than 6 months

In which of the following cases will the insured but able to receive the full face amount form a whole life policy?

If the insured lives to age 100

What are the two components of a universal policy?

Insurance and cash amount

Credit Life Insurance...

Insures the life of a debtor

An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expenses 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 insurance policy that only requires a payment of premium at its inception, and in addition to providing insurance protection for the life of the insured, matures at the insured's age 100, is called...

Single premium whole life

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.

Which of the following best describes annually renewable term insurance?

It is level term insurace

B just bought a new car, which he anticipates will be paid for 4 years from now. He also wants to buy a life insurance policy, but its financially limited until the car is paid off. Which of the following types of policies would be best for B?

Modified Life