xcel ch 4 part 1

limited payment insurance

a life insurance policy that has premiums fully paid-up within a state of time period is called

variable whole life

a life insurance policy which contains cash values that vary according to its investment performance of stocks is called

the single premium cash value policy can be described as a

a policy that is paid up after only one payment

life insurance policy written on one contract for two people in which it is payable upon the first death is called

joint

which type of life insurance is normally associated with a payor benefit Rider?

juvenile insurance

which policy feature makes a universal life policy different from a whole life policy?

a flexible Premium schedule

a modified endowment contract (MEC) is best described as

a life insurance contract which accumulates cash value is higher than the IRS will allow

Universal Life Insurance

a life insurance policy that contains a guaranteed interest rate with the chance to earn a rate that is higher than the Guaranteed Rate is called

limited pay policy

a permanent life insurance policy where the policyowner pays premiums for a specified number of years is called a

a policy owner may change two policy features on what type of Life Insurance?

adjustable life policyowner can change premium and face amount

partial surrender

an interest sensitive life insurance policy owner may be able to withdraw the policy's cash value interest-free. The provision that allows this is called

a renewable term life insurance policy can be renewed

at a predetermined date or age, regardless of the insured's health

Donald is the primary insured of a life insurance policy and adds a children's term Rider. What is the advantage of adding this Rider?

can be converted to permanent coverage without evidence of insurability

Jonas is a whole life insurance policy owner and would like to add coverage for his two children. Which of the following products would allow him to accomplish this?

child term Rider

what happens to the coverage under a children's term Rider when that child reaches a specified age?

coverage is eliminated

which of these is NOT subject to income taxation under a modified endowment contract (MEC)?

death benefit

leather premium permanent Insurance accumulates a reserve that will eventually

equal the face amount of the policy

a side and child can be added to the primary insurance coverage as what kind of Rider?

family term

which of these Riders will pay a death benefit if the insured spouse dies?

family term insurance Rider

all of these are characteristics of a universal life insurance policy EXCEPT

fixed surrender value CORRECT: flexible death benefit, flexible premiums, build cash value

index whole life insurance contains a Securities component that acts as a

hedge against inflation

industrial life insurance

insurance that issues very small face amount, such as $1,000 or $2,000. Premiums are paid weekly and collected by debit agents. They were designed for burial coverage.

whole life insurance

insurance that provides death benefits for the entire life of the insured. It also provides living benefits in the form of cash values. And it matures at age 100 and normally has a level premium.

ordinary life insurance

is made up of several types of individual life insurance, such as temporary (term), permanent (whole)

when a decreasing term policies purchased, it contains a decreasing death benefit and

level premiums

universal life

life insurance policy that is subject to a contract interest rate is referred to as a

a limited payment whole life policy provides

lifetime protection

the premium for a modified whole life policy is

lower than the typical whole life policy during the first four years and then higher than the typical for the remainder

all of these are valid options for an adjustable life policy EXCEPT

nonforfeiture option can be used to increase the death benefit CORRECT: the policy's premium can be increased or decreased, the policies death benefit can be increased or decreased, the policy's protection period can be modified

Shirley has a $500,000 10 year non renewable level term life policy. If she dies 15 years after the policy's Inception date how much will her beneficiary receive?

nothing because the policy is valid for only 10 years

variable life insurance and universal life insurance are very similar. Which of these features are held exclusively by variable universal life insurance?

policyowner has the right to select the investment which would provide the greatest return

which of these describes the result of a modified endowment contract that failed to meet the seven pay test?

pre-death distributions are typically taxed

under a modified endowment contract, what are the likely tax consequences?

pre-death distributions will become taxable

how are survivorship life insurance policies helpful in estate planning?

provide funds to help pay taxes

term insurance is appropriate for someone who

seeks temporary protection and lower premiums

which of the following are the premium payments for a universal life policy NOT used for?

separate account Investments CORRECT: death benefits, cash value, loading costs

which of the following policies does NOT build cash value?

term

what types of life insurance are normally used for team play Indemnification?

term, whole, and Universal Life Insurance

free death distributions from a modified endowment contract (MEC) receive different tax treatment than other life insurance policies because

the MEC tends to be an investment vehicle

group policy

the business will typically use which type of life insurance to cover their employees?

what does the word "level" in level term describe?

the face amount

what is a corridor in relation to a universal life insurance policy?

the gap between the total death benefit and the policy's cash value

survivorship life

the type of policy which pays on the death of the last person is called

a partial surrender is allowed in which of the following Life policies?

universal life

Joe has a life insurance policy that has a face amount of $300,000. After a number of years, a policy's cash value accumulates to $50,000 and the face amount becomes $350,000. What kind of policy is this?

universal life policy

a Securities license is required for life insurance producer to sell

variable life insurance

which type of policy combines the flexibility of a universal life policy with investment choices

variable universal life policy

which type of life insurance offers flexible premiums, a flexible death benefit, and the choice of how the cash value will be invested?

variable universal policy

renewal

what is an automatic continuance of insurance coverage referred to as?

all of these statements concerning whole life insurance are false EXCEPT

when a whole life policy is surrendered, income taxes may be owed

endowment policy

which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive?

which of these would be the best example of a limited pay life insurance policy?

whole life policy with premiums paid up after 20 years

Sean, Mike, and Dave are brothers who have a $100,000 "first to die" joint life policy covering all three of their lives. If my dies first, the policy proceeds

will no longer provide Insurance protection

a renewable term life insurance policy allows the policyowner the right to renew the policy

without producing proof of insurability

Rob purchased the standard whole life policy with a $500,000 death benefit when he was age 30. his insurance agent told him to policy would be paid up if he reached age 100. the present cash value of the policy equals $250,000. Rob recently died at age 60. The death benefit would be

$500,000 face amount

there are three main types of Life Insurance

1. ordinary life 2. industrial life 3. group life

term life insurance

Insurance provides pure death protection since it only pays a death benefit if the insured dies during the policy term does not accrue cash value it's meant for those who need the greatest amount of life insurance for a specified period of time at the lowest premium the initial premium of term insurance is lower than for an equivalent amount of whole life insurance life insurance that has no cash value when the policy expires.

group life insurance

Insurance written for members of a group, such as a place of employment, Association, or Union. coverage is provided to the members of that group under one master contract. the group is under written as a whole, not on each individual member. one of the benefits of group life coverage is usually there is no evidence of insurability required.

Equity indexed whole life

Peter has a pulse you were 80% to 90% of the premium is invested in traditional fixed-income Securities and the remainder of the premium is invested in contracts tied to a stipulated stock index. What kind of policy is this?