CH 3 Questions
What type of policy would offer a 40 year old the quickest accumulation of cash value
20 pay life
What type of policy would offer a 40 year old the quickest accumulation of cash value?
20 pay life
A ____ term life policy is normally used when covering an insured's mortgage balance
decreasing
The combination of whole life and ______ term insurance is referred to as a family income policy
decreasing
Credit Life insurance is
issued in an amount not to exceed the amount of the loan
A policy the becomes a modified endowment contract
will lose many of its tax advantages
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Modified Endowment Contract
K buys a policy where the premium stays fixed for the first 5 years. The premium then 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 Policy
Which of the following information is not required to be included in a whole life policy?
Policy's guaranteed dividend table
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 policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?
Variable life
What kind of life insurance product covers children under their parents policy
A term rider
S is covered by a whole life policy. Which insurance product can cover his children?
Child term rider
Credit Life insurance is typically issued with which of the following types of coverage?
Decreasing term
Additional coverage can be added to a whole life policy by adding an
Decreasing term rider
Which of these statements describe a Modified Endowment COntract?
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
Term Insurance has which of the following characteristics?
Expires at the end of the policy period
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
Which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death?
Joint Life
When a life insurance policy exceeds certain IRS table values, the result would create which of the following
Modified Endowment Contract
Which of the following types of permanent life insurance policies offered the highest initial cash value
Single premium
Under a renewable term policy
The renewable premium is calculated on the basis of the insured's attained age
K purchased a life insurance policy in 1986 which paid 10% interest in the early years of the policy. 20 years after the purchase, she received a notice from the insurer stating that the policy will soon terminate unless a much higher premium is paid because of falling interest rates. That type of policy is known as an _____ life policy
Universal
Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options
Variable life
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?
Whole life policy with other insured rider
Under a graded premium policy, the premiums
are lower in the policy's early years
Variable whole life insurance can be described as
both an insurance and securities product
Which statement about a whole life policy is true
cash value may be borrowed against
A company that owns a life insurance policy on one of its key employees may do all of the following except
change the policy's interest rate
When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
conversion provision
A universal life policy is sometimes referred to as an unbundled life policy because the owner can see the interest interest earned, expense charges, and the
cost of insurance
T would like to be 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 investment gains from a Universal Life Policy usually go toward
the cash value
Which of the following is considered an element of a variable life policy
underlying equity investment
