Chapter 2
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined, and the cash value fell to $10,000. If the insured dies, how much will be paid out?
$50,000
If the owner of a whole life policy who is also the insured 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?
A full death benefit
The LEAST expensive first-year premium is found in which of the following policies?
Annually Renewable Term
The term "fixed" in a fixed annuity refers to all of the following EXCEPT
Death benefit
A Universal Life insurance policy has two types of interest rates that are called
Guaranteed and Current.
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?
The death benefit can be increased by providing evidence of insurability.
Which of the following best describes what the annuity period is?
The period of time during which accumulated money is converted into income payments
The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as
The policy contains sufficient cash value to cover the cost of insurance.
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?
Universal Life - Option A
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT
Upon conversion, the death benefit of the permanent policy will be reduced by 50%.
Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?
Greatest
A Return of Premium term life policy is written as what type of term coverage?
Increasing
What are the two components of a universal policy?
Insurance and cash account
Which of the following is TRUE regarding the accumulation period of an annuity?
It is a period during which the payments into the annuity grow tax deferred.
Which statement is NOT true regarding a Straight Life policy?
Its premium steadily decreases over time, in response to its growing cash value.
A married couple's retirement annuity pays them $250 per month. The husband dies and his wife continues to receive $125.50 per month for as long as she lives. When the wife dies, payments stop. What settlement option did they select?
Joint and survivor
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?
Level term
Which of the following is NOT a type of whole life insurance?
Level term
Which two terms are associated directly with the way an annuity is funded?
Single payment or periodic payments
Which of the following would help prevent a universal life policy from lapsing?
Target premium
Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?
Universal life
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?
Universal life