(Ch 2) types of life insurance policies

What elements of an adjustable life policy that can be changed by the policy owners?

The amount of payment. Of the premium, the face amount, and the period for protection.

A policy states that it will pay a specified face amount if the insured dies during the 20 year premium paying. And nothing is death occurs after the 20 year. What type of policy is this?

20 year level term

What type of premium is charged on a straight life policy?

A level premium for the life of the insured

What type of license is required to sell variable annuities?

A life insurance license and a securities license

What are the two phases of an annuity?

Accumulation and annuitization (or pay-in and pay-out)

Whole life policies provide protection until the insured reaches what age?

Age 100

In flexible, premium payment, annuities, the term flexible refers to what?

Amount of premium

The death protection component of a universal life policy is expressed as what type of coverage?

Annually renewable term

Who receives income payments from an annuity?

Annuitant

Who's life expectancy is taken into consideration in an annuity contract?

Annuitant

If there is no named beneficiary for the annuity, benefits, to which entity well, the benefits be paid?

Annuitants estate

In an annuity, the accumulated money is converted into a stream of income, during which phase?

Annuitization period

Regarding annuity payments, what is the difference between the annuitant end of the beneficiary of an annuity?

The annuitant receive payments from the annuity during the annuitization period the beneficiary receives benefits after the annuitant death

An individual has a contract that will provide him with a certain amount of income for the rest of his life. However, this is not a life insurance policy. What type of contract does a person have?

annuity

In variable, universal life insurance, to what policy components does the term variable refer?

Cash value and death benefit

What happens to the cash value when a whole life insurance policy matures?

Cash value is paid to the policyowner

An individual has just borrow $10,000 on a five year note from his bank. The note is due in installments what type of life insurance policy it would be best suited to the situation?

Decreasing term

What type of life insurance is best suited to cover a mortgage?

Decreasing term

If the annuitant dies before the annuitization period starts, what will the beneficiary receive?

Either the amount paid into the annuity or the cash value, whichever is greater

What type of annuity credits it's interest based upon an indexed such as S&P 500?

Equity indexed annuity

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

Face amount

What policy component must decrease in decreasing term insurance?

Face amount

An annuity purchased with multiple payments that vegan income payments after one year from the moment of purchase is known as what type of annuity?

Flexible premium deferred annuity

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 what time period?

For 20 years or until the insured's death, which ever occurs first

How long will a life annuity with a 15 - year period Certain pay

For the life of the annuitant, unless he/she dies within the first 15 years of the annuitization. Then the payments will last for 15 years.

What are the two classifications of annuities according to the time when annuity payments begin?

Immediate and deferred

What type of annuity can be purchased with a single premium?

Immediate annuity

During partial withdrawal from a universal life policy, what portion, if any, will be taxed?

Interest earned on the withdrawn cash value

If an annuity provide a set amount of income for two or more persons with the income ceasing upon the first death, what type of annuity is that?

Joint life annuity

Mortality tables are used by insurance companies to predict what?

Life expectancy and the death rates for specific groups of individuals

What annuity settlement option provides income payments to the annuitant for the duration of his or her life and also guarantees payment for a specified number of years?

Life income with period certain

A whole life policy that requires that the policy owner only pays premiums for a specified number of years is known as what kind of policy?

Limited pay whole life

What type of life insurance policy is life paid up at age 65

Limited pay whole life

How soon can income payments begin in an immediate annuity?

No later than 1 year from the time of annuity purchase

With a single premium deferred annuity, when will the annuity payments become available?

No sooner than 1 year after the annuity purchase

Can a business or a corporation be an annuitant?

No, an annuitant must always be a natural person

What are the death benefit options in universal life policies?

Option A - level death benefit, and Option B - increasing death benefit

What universal life option as a gradually increasing cash value, and they level death benefit?

Option a

What type of life insurance offers an applicant a cash value element?

Permanent insurance (usually, whole life)

Who is entitled to the cash values in a life insurance policy?

Policyowner

What type of whole life insurance policies only requires a payment of premium outlets, inception, and, in addition to providing insurance protection for the life of the insured, endows at the Insured age 100?

Single premium whole life

What type of whole life insurance policy generates immediate cash value?

Single premium whole life

What type of annuity is suitable for someone who wants to select the benefit option that will pay the largest amount only for as long as the annuitant lives?

Straight life

Whole life insurance policies, Maturo when is the insured reaches the age of 100. If the owner of a whole life policy 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?

The full death benefit

In annually renewable term policies, what is the annual premium based upon?

The insured's attained age

What is the difference between a single premium and a flexible premium payment options in a deferred annuity?

The number of payments that purchase the annuity

What happens to the premium in and annually renewable term life policy?

The premium increases with each renewal

How is the premium determined in a joint life insurance policy?

The premium is based on the average age of the insureds

Why are policy loans not available on term insurance?

There is no cash value to borrow against

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

To prevent the policy from lapsing

What is the main reason for purchasing an annuity?

To provide income that the annuitant cannot outlive

Under option, be in a universal life policy, what happens to the death benefit?

Under option be the death benefit increase as each year by the amount of the cash value increases

In what type of life insurance policies can the policy owner skip premium payment without the policy lapsing?

Universal Life

In a joint life policy, when is the death benefit paid?

Upon the first death

When would a 20 - pay whole life policy endow?

When the insured reaches age 100

When does an adjustable life policy accumulate cash value?

When the premiums paid are more than the cost of the policy

If the annuitant dies during the accumulation, period, who will receive the annuity benefits?

beneficiary

Who bears the investment risk in a fixed annuity

insurer

What type of life insurance policy offers Pure death protection?

term

What type of annuity requires an agent to have a securities license?

variable

What type of life insurance policy provides permanent protection?

whole life

What type of insurance would perform at the function of cash accumulation?

whole life insurance