Type of Insurance Policies
Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase?
A Whole Life Policy with other Insured Rider
P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P Purchase?
A family maintenance policy should be purchased.
Which of these is an element of a variable life policy?
A fixed, Level Premium
Which statement is TRUE regarding a Variable Whole Life policy?
A minimum guaranteed Death benefit is provided- A Variable Whole Life Policy provides a minimum guaranteed death benefit
G purchased a Family Income policy at age 40. The policy has a 20-year rider period. IF G were to die at age 50, how long would G's family receive an income?
10 years
What kind of life insurance product covers children under their parent's policy?
A term rider
How Long does the coverage normally remain on a limited-pay life policy
Age 100
Additional coverage can be added to a Whole Life Policy by adding an
Decreasing team rider
When is the face amount of a Whole Life policy paid?
When the insured dies or at the policy's maturity date, whichever happens first
Which provision allows the policy owner to change a term life policy to a permanent one without providing proof of good health
Conversion
Which of the following features of a group term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?
Conversion Privilege
When a policy owner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
Conversion Provision
What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?
Convertible Term
Which of these types of policies may NOT have the automatic premium loan provision attached to it?
Decreasing Term
F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?
Decreasing Term Policy- a life insurance policy written for a specified period of time with a death benefit that changes regularly according to a schedule is a decreasing term policy
Credit life insurance is typically issued with which of the following types of coverage?
Decreasing Term- the type of insurance used for Credit Life is typically decreasing term, with the term matched to the length of the loan period
A Family Income Policy is a combination of Whole Life and
Decreasing term Insurance
K purchased a $10,000 Life Policy that will pay the face amount to her if she lives to age 65, or to her beneficiary if she dies before age 65. K purchased which of the following types of policies?
Endowment at Age 65
S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?
Equity Index Insurance
Which of these statements describe a Modified Endowment Contract (MEC)
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance Policy
Which of the following actions require a policy owner to provide proof of insurability in an Adjustable Life Policy
Increase Face amount
A renewable term policy is renewable at the option of the:
Insured
Which of the following statements is CORRECT about the period in which a Term Policy can be converted?
It varies according to the contracts
Which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death?
Joint Life- policy covers two or more people. Using some type of permanent insurance (as opposed to term), it pays the death benefit at the first insured's Death
L, aged 50, and L's spouse, 48, have one natural child and one adopted child. They purchase a Family Policy that covers L's spouse to age 65. A death benefit will NOT be paid in which of the following circumstances?
L's spouse dies at age 66- L's spouse has coverage until age 65
What kind of premium does a whole life policy have?
Level
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them, EXCEPT for:
Modified Whole Life
K buys a policy where the premium stays fixed for the first 5 years. The premium than increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?
Modified Whole Life
Which of these life products is NOT considered interest-sensitive
Modified Whole Life
Whole life insurance policies are contractually guaranteed to provide each of the following, EXCEPT:
Partial withdrawal features beyond a surrender charge period
A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision?
Payor Provision
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
Policyowner
Which is true concerning a Variable Universal Life Policy
Policyowner controls where the investment will go and selects the amount of the premium payment
Which of these characteristics is consistent with a Straight Life Policy?
Premiums are payable for as long as there is insurance coverage in force
Which statement is correct regarding the premium payment schedule for whole life policies
Premiums are payable throughout the insured's lifetime/coverage lasts until death of the insured
Which of the following actions is NOT possible with a Universal Life Policy?
Premiums may be applied as a credit against income tax
T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?
Renewable
What type of life insurance are credit policies issued as?
Terms
The Investment gains from a Universal Life Policy usually go toward
The cash Value
How does a typical Variable Life Policy investment account grow?
Through Mutual funds, stocks, bonds
What type of insurance incorporates flexible premiums and an adjustable death benefit?
Universal Life
Which of these types of life insurance allows the policy owner to have level premiums and to also choose from a selection of investment options
Variable Life
Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?
Variable Life
Which of the following policies combines investment choices with a form of Term Coverage?
Variable Universal Life
Which of the following policies is characterized by a flexible premium and death benefit and allows the policy owner control of the investment aspect of the plan?
Variable Universal Life
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
Variable Universal Life
A life insurance policy that provides a policy owner with cash value along with a level face amount is called:
Whole Life
What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?
Whole Life
What type of insurance offers permanent life coverage with premiums that are payable for life?
Whole Life
A 15-year montage is best protected by what kind of life policy?
15-year decreasing term
K pays on $20,000 20-year endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary
20,000 death benefit- if the insured dies before the endowment's maturity, the policy face value- also known as the "death benefit"
J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?
20-pay life
A whole life Insurance Policy Endows when the:
Cash value equals the death benefit
Which statement about a whole life policy is correct?
Cash value may be borrowed against
What type of life policy covers 2 lives and pays the face amount after the first one dies?
Joint Life Policy
The amount of coverage on a group credit life policy is limited to:
The insured's total loan value
When is the face amount paid under a Joint Life and Survivor Policy?
Upon death of the last insured
A policy that becomes a Modified Endowment Contract (MEC)
Will lose many of its tax advantages- when a policy becomes a modified Endowment Contract (MEC), many of the tax adv. are lost
Variable Whole Life Insurance can be described as
both an insurance and securities product
A variable insurance policy:
does not guarantee a return on its investment accounts
All of these are characteristics of an Adjustable Life policy EXCEPT
face amount can be adjusted using policy dividends
Credit Life Insurance Is:
issued in an amount not to exceed the amount of the loan
A limited-Pay life policy has:
premium payments limited to a specified number of years
What type of policy would offer a 40-year old the quickest accumulation of cash value
20-pay life
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?
20-pay life accumulates cash value faster than Straight Life
N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?
30 pay life
If X wants to buy $50,000 worth of permanent protection on his/her spouse and $25,000 worth of 10-year Term coverage on X under the same policy, the applicant should purchase
A Whole Life Policy with an Other Insured Rider
Which of the following types of policies pays a benefit if the insured goes blind?
AD&D- Accidental Death & Dismemberment policy
S is covered by a whole life policy. Which insurance product can cover his children
Child term Rider
The Universal Life Policy is called an unbundled Life Policy because the policyholder can see the expense charges, the interest earned, and the:
Cost of Insurance
What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?
Decreasing term- a decreasing term policy has a death benefit that adjusts periodically and is written for a specified period of time
Term insurance has which of the following characteristics?
Expires at the end of the policy period
What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death
Face amount plus the policy's cash value- a Face amount plus cash value policy is a contract that promises to pay at the insured's death the face amount of the policy plus a sum equal to the policy's cash value
What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?
Family Maintenance Policy
What kind of special need would a policy owner require with an Adjustable Life Insurance Policy
Flexible Premiums
Variable Life products require a producer to
Hold a life insurance license and a Securities License
K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?
Level
D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?
Level Term
Which of these would be considered a Limited Pay Life Policy
Life Paid-up at Age 70
Life Insurance that covers an Insured's whole life with level premiums paid over a limited time is called:
Limited Pay Life
Which type of policy is considered to be overfunded, as stated by IRS guidelines
Modified Endowment Contract
When a life insurance policy exceeds certain IRS table values, the result would create which of the following?
Modified Endowment Contract (MEC)
M purchases a $70,000 Life Insurance Policy with premium payments of $550 a year for the first 5 years. At the beginning of sixth year, the premium will increase to $800 per year but will remain level thereafter. The face amount will remain at $70,000 throughout the life of the policy. The type of policy that has purchased is:
Modified Premium Life
Which of the following characteristics is CORRECT about interest sensitive Whole Life?
Premium Payments can vary
What type of life policy covers 2 people and pays upon the death of the last insured?
Survivorship
T would like to assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase
Ten-year Endowment
The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is"
The cost
When applied to Whole Life insurance, the word "straight" denotes
The duration of premium payments
All of these statements about Equity Indexed Life Insurance are correct, EXCEPT
The premiums can be lowered or raised, based on investment performance
Stranger Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to an
Third Party with no insurable interest
Which of the following types of policies BEST identifies one in which the cash value may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors ?
Universal Life
A 42-year-old executive wants to purchase life insurance that will allow for increases or decreases to coverage as his/her needs change. Which of the following policies will best meet this need?
Universal Life- insurance is characterized by flexible premiums and an adjustable death benefit
A term life insurance policy matures:
Upon the insured's death during the term of the policy- Term life policies can only mature (pay out the face amount) if death occurs during the term of the policy
A(n) ________ life policy offers the owner investment in products such as money-market fund, long-term bonds and equities
Variable
A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as:
Variable Life
Life Insurance Immediately creates an estate upon the death of an insured. Which of the following policies is characterized by guaranteed minimum death benefit?
Variable Life
What type of life insurance gives the greater amount of coverage for a limited period of time
term life
Under a renewable term policy,
the renewal premium is calculated on the basis of the insured's attained age