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