CA License - Life Policies - Section 5 Study Quiz

Companies rate their policies based on what mode? BCP or automatic drafting plans. Yearly Monthly Quarterly

A life insurance company`s policy rates are based on an annual payment plan so the company can invest a years worth of premiums. Yearly

The statement that does not apply to a Modified life policy would be: The cash value will equal the face amount at age 100. Premiums are payable to age 100 with one premium increase. Premiums are lower in the early years of the policy. Premiums increase in the early years of the policy however eventually level out.

A modified whole life policy is premium paying to age 100 and it has premium increase. The premiums are discounted for the first 5 years. *Premiums increase in the early years of the policy however eventually level out.*

What life policy features a level premium and a death benefit that decreases each year? Renewable Term Increasing Term Level Term Decreasing Term

Decreasing term policies feature a level premium and a death benefit that decreases each year over the duration of the policy term. *Decreasing Term*

All the following term policies would have a level premium for at least 10 years except: 10 year convertible 10 year renewable 20 year decreasing 10/5 year level

The split tells you the premium is only guaranteed level for 5 years, though the policy is a 10 year policy. 10/5 year level

All of the following apply to universal life except: Whether or not premiums are paid the policy stays in force as long as the cash account is sufficient to pay the insurance protection. The policy is considered unbundled as it consists of an increase term and a cash account. The policy has both a current and guaranteed interest rate. Premiums can be increase or decrease at the policy owners option.

The universal life policy is unbundled however it consists of decreasing term and a cash account. *The policy is considered unbundled as it consists of an increase term and a cash account.*

The life insurance policy that is a 20 year pay with a level death benefit and the cash value increases in increments to an amount equal to the face of the policy at 65. Limited pay life policy. Equity-index life 20 pay life Endowment

This is a 20 pay endowment to 65. The cash value equals the face amount in an endowment before age 100. Endowment

Which of the following statements about decreasing term is false? The policy features a level premium. The death benefit decreases over the policy's term until it reaches 20% of the initial face amount. The death benefit decreases each year over the duration of the policy term. Another name for this policy is mortgage protection policy.

The death benefit decreases over the policy's term until it reaches 20% of the initial face amount. *The death benefit decreases over the policy's term until it reaches 20% of the initial face amount.*

The death benefit of a whole life insurance policy is: Variable Adjustable Fixed Dependent upon the current interest

The death benefit of a whole life policy is level which means its fixed at the same amount throughout the policy term. Fixed

Which of the following are disadvantages to term insurance? Term policies have a lower monthly premiums. Term policies have no living benefits Term policies offer temporary coverage for temporary needs. Term policies offer many different time frames.

The following is a brief list of other disadvantages to term insurance:Term is pure death protection only, with no living benefits such as cash values. The term premium increases with each renewal, and over a long period of time the premium becomes expensive and probably unaffordable. Most term policies are generally not renewable beyond a certain age, and thus protection is lost. An estimated 90% of all term policies never pay out a death benefit due to either the insured living through the contract period or the insured canceling the policy. Term policies have no living benefits

Universal term life insurance policies provide all of the following except: Provides for flexible premium payments if they are sufficient to keep policy in force Though it's a hybrid it has the same 31 day grace period as term insurance. Provides a set number of years at a level premium that is comparable to term insurance The flexibility to extend their coverage after the initial term period expires up to age 95

The grace period is 62 days which begins with the first day of the first policy month in which both the net cash surrender value and the coverage protection amount, less the policy loan balance are less than zero. Though it's a hybrid it has the same 31 day grace period as term insurance.

What term insurance provision is an incentive for an insured to obtain lower premiums? Renewable provision Interest rate provision Conversion provision Re-entry provision

The incentive for an insured to re-enter is that the premiums will typically be lower over the next level premium period than if the policy is simply allowed to renew. *Re-entry provision*

Which of the following is true when comparing whole life with universal life? The death benefit in a whole life and universal life is fixed. Universal life provides a structured premium and whole life a level premium The interest rate earned in a whole life policy is fixed and guaranteed. The interest rate paid by Universal life is interest-sensitive and the actual rate paid depends upon what the insurer can earn from year to year. The cash value in a whole life policy is invested into a cash account and universal life is invested into the general account.

The interest rate of a universal life is interest sensitive which means that there is a minimum guaranteed rate, however actual performance of the insurer can make the current rate higher. The interest rate earned in a whole life policy is fixed and guaranteed. The interest rate paid by Universal life is interest-sensitive and the actual rate paid depends upon what the insurer can earn from year to year.

All the following are true about the term conversion provision except: Policies being waived must wait 30 days before converting. Companies usually make at least one permanent plan available for conversion. Policy can be converted at any time before 20 years. Policy can be converted at any time prior to the insured`s 65 birthday.

The policy is not eligible for conversion if premiums are currently being waived. Policies being waived must wait 30 days before converting.

All of the following concerning variable life is incorrect, except: The premium for the variable life policy purchases units. Variable life policy has a flexible premium. Variable life policies the insurer assumes the risk of the general account. Variable life policy both the cash value and death benefit are not guaranteed.

The premium for a Variable life also known as a Variable Whole life policy is a fixed premium that purchases units in the separate account. Though the death benefit is guaranteed the cash value is not. The premium for the variable life policy purchases units.

Which of the following policies endow at age 100? All permanent policies. Both traditional and flexible policies Whole life policies and 10 yr pay. Whole life and universal life policies

A 10 yr pay is a limited pay whole life and all whole life policies endow at 100. Universal life which is one of the flexible policies are not guaranteed to endow. Whole life policies and 10 yr pay.

What is the difference between Par and Non-Par insurance policies? A Par policy does not pay dividends to policyowners, but dividends are paid to stockholders. A Par is a stock company. A Non-Par is a mutual company. A Non-Par is a nonparticipating life policy

A non-par (stock company) or nonparticipating life insurance policy does not pay dividends to policyowners, but dividends are paid to stockholders. *A Non-Par is a nonparticipating life policy*

All the following statements are true about endowments except: The period of time that provides protection is called the endowment window. The living benefits are always paid to the beneficiaries. Endowments are generally more expensive than other life policies. Endowments have a face amount that is payable in one of two ways.

Endowments are payable as a living benefit to the insured and as a death benefit to the beneficiary. *The living benefits are always paid to the beneficiaries.*

What is a life policy written as a master policy? Home service Ordinary Group Industrial

Group life insurance is written as a master policy issued to the sponsoring organization, covering the lives of more than one individual member of that group. Group

Which type of life insurance policy has a rate of return that may be able to keep up with inflation, provide flexibility while protecting the cash value from market risk? Adjustable life Variable life Universal Life Index Universal Life

Index universal life guarantees a minimum interest rate to be credited or gains linked to a specific index such as Standard & Poor's, whichever is greater. Index Universal Life

What is the difference between a jumping juvenile and a regular juvenile life policy? Jumping juveniles will waive the premiums if the parent or guardian dies before child turns 21. Regular juvenile allows the child to continue their policy at a higher premium at age 21. Jumping juvenile`s face amount increases at a certain age, but premiums remain level. Jumping juvenile allows the child to purchase insurance without requiring evidence of insurability.

Jumping juvenile is a common juvenile policy where the face amount increases at a predetermined age (usually 21), but the premium remains level. *Jumping juvenile`s face amount increases at a certain age, but premiums remain level.*

A Life Agent license will allow you to sell which of the following products without other licenses? Universal life policy that has the death benefit linked to the S and P 500. Term life insurance with a mutual fund account attached. Variable Annuities Variable Universal Life

Linking the death benefit to indexes such as CPI or SP 500 is offered by an additional rider and doesn`t require a variable license. Universal life policy that has the death benefit linked to the S and P 500.

The Payor Rider is mainly used with what policies? Universal Life Return of Premium Whole Life Juvenile

Payor Rider is mainly used with juvenile policies. If the payor (parent or guardian) becomes disabled or dies, the insurance company waives the premiums until the child reaches a certain age (usually 21). Juvenile

A form of term insurance that provides the policyowner with a reduced premium rate if he/she can requalify by providing evidence of insurability from time to time is referred to as: Re-entry term Convertible term Qualified term Renewable term

Re-entry term is a renewable and convertible term issued at low rates due to extensive underwriting. Upon renewal if the insured submits to being underwritten again they may qualify to keep the rates low. If not there is a maximum rate that can be charged at renewal. Re-entry term

All of the following are true regarding survivorship life except: offers premiums that are quite low compared to premiums charged for separate policies. Survivorship life is a contract that insures one person on the policy and one on a rider. face amounts are usually more than one million dollars. well situated to meet the need for cash to cover estate taxes.

Survivorship life insurance is a contract that insures two people, with the promise to pay only upon the second death. *Survivorship life is a contract that insures one person on the policy and one on a rider.*

Which whole life policy insures two or more lives for a premium that is based on a joint age? First to Die Life Limited-Pay Life Survivorship Life Graded Premium Life

Survivorship life insures two or more lives for a premium based on a joint age. Survivorship Life

Which of the following types of contracts does not have a variable version? Term Whole Life Annuity Universal Life

Term insurance does not have a variable version. Term

Term insurance is considered: Temporary with surrender value. Temporary with no cash value. Permanent, because it only last for the length of time specified in the contract. Permanent with no cash value.

Term insurance is considered temporary because it only lasts for the length of time specified in the contract. Temporary with no cash value.

A term policy is designed to mature upon: The end of the policy period. The death of the insured during the insured period The insureds attained age. No later than age 65

Term insurance pays the death benefit only if the insured died during the specified period of time. The death of the insured during the insured period

A term policy where the premium may fluctuate between the current charge and a maximum amount that is stated in the insurers premium table, based on the insurers mortality experience, expenses, and investment return is known as: Indeterminate level premium term This is not a premium option for term as all term policy premiums are level. Non-guaranteed level premium term Guaranteed level premium term

This is indeterminate level premium term. Non-guaranteed level premium term the premiums are only guaranteed for a limited time period such as five or ten years, after which the insurer reserves the right to increase the premiums. Guaranteed level premium term guarantees the premium will remain the same throughout the policy period. Guaranteed level premium term

_____________ charges a level annual premium with guaranteed death benefits to the insured when he/she is 100 years old. Modified Life Single Premium Life Ordinary Life Limited Pay Life

This policy is designed so that premiums for coverage will be completely paid up well before age 100. This type of policy is best designed for someone who doesn't want to pay premiums beyond a certain age. Limited Pay Life

Universal Life is a flexible premium adjustable benefit life insurance policy that: accumulates cash value. endows for the face amount of the policy if the insured lives to 100. has a fixed premium with a flexible death benefit. pays on the last death rather than the first.

Universal Life is a flexible premium adjustable benefit life insurance policy that accumulates cash value. accumulates cash value.

All of the following statements about Whole Life are true except: Whole life policies are also known as permanent protection. Death benefits and premiums are guaranteed and remain level for the life of the policy. Whole life policies builds cash value. The premium generally lower than most permanent plans.

Whole life policies are also known as permanent protection because the policy lasts for the duration of the life of the insured, or age 100. The death benefits and premiums are guaranteed and will remain level for life. *The premium generally lower than most permanent plans.*

Whole life policies are permanent plans because they last for the duration of: The life of the insured or age 100. 25 years. 25 years or age 100, whichever comes first. The life of the insured with no age limit.

Whole life policies are also known as permanent protection because they last for the duration of the life of the insured, or age 100. *The life of the insured or age 100.*