Chapter 3- Life Policies

The Combination of Whole Life and _____ Term insurance is referred to as a Family Income Policy a. Decreasing b. Universal c. Variable d. Level

a. Decreasing

S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase? a. Equity index insurance b. Endowment c. Graded whole life policy d. Return of premium policy

a. Equity index insurance

Term insurance has which of the following characteristics? a. Expires at the end of the policy period b. Builds cash value c. Has nonforfeiture options d. Endows at the end of the policy period

a. Expires at the end of the policy period

A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision? a. Payor provision b. Accelerated Benefits provision c. Assignment provision d. Waiver of Premium provision

a. Payor provision

The Cash value in a(n) _____ life policy may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors. a. Universal b. Graded c. Term d. Endowment

a. Universal

G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income? a. 5 years b. 10 years c. 15 years d. 20 years

b. 10 years

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? a. Family Lump Sum Policy b. Family Maintenance Policy c. Family Survivor Policy d. Family Income Policy

b. Family Maintenance Policy

Which of the following information is NOT required to be included in a Whole Life policy? a. Policy's loan interest rate b. Policy's guaranteed dividend table c. Policy's premium d. Policy's cash value table

b. Policy's guaranteed dividend table

K is shopping for a permeant life insurance policy that will offer her the MOST protection per dollar of annual premium. Which of these policies best fits her needs? a. Endowment b. Straight life c. 10-Year Renewable Term d. Joint Life

b. Straight life

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? a. Interest-Sensitive Whole Life b. Ten-Year Endowment c. Variable Universal Life d. Ten-Year Renewable Term

b. Ten-Year Endowment

Life insurance immediately create an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit? a. Universal life b. Variable life c. Fixed annuity d. Modified endowment contract

b. Variable life

A(n) __________ term life policy is normally used when covering an insured's mortgage balance. a. increasing b. decreasing c. level d. variable

b. decreasing

Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? a. Modified Whole Life b. 20-Pay Life c. Decreasing Term d. Endowment

c. Decreasing Term

Credit Life insurance is: a. issued in any amount at the discretion of the applicant b. used in the event of loss of income c. issued in an amount not to exceed the amount of the loan d. coverage that waives the premiums on a loan payment in the event of total disability

c. issued in an amount not to exceed the amount of the loan

Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n): a. underwriter b. sole proprietor with insurable interest c. third-party with no insurable interest d. relative with insurable interest

c. third-party with no insurable interest

A company that owns a life insurance policy on one of its key employees may do all of the following EXCEPT a. Borrow against cash value b. Change beneficiary c. Cancel policy d. Change the policy's interest rate

d. Change the policy's interest rate

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time? a. Modified whole life b. 20-year paid up policy c. Endowment d. Decreasing term

d. Decreasing term

J is issued a Life Insurance policy with a death benefit of $100,000. She pays $600 per year in premium for the first 5 years. The premium then increases to $900 per year in the sixth year, and remains level thereafter. The policy's death benefit also remains at $100,000. Which type of Life Insurance policy is this? a. Endowment b. Graded Premium Life c. Straight Life d. Modified Premium Life

d. Modified Premium Life

A Universal Life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, expense charges, and the a. inherent risk b. commission rate c. inflation factor d. cost of insurance

d. cost of insurance

Whole Life insurance policies are contractually guaranteed to provide each of the following EXCEPT a. cash value that will ultimately replace the death benefit b. nonforfeiture benefit options c. premiums that remain fixed for the life of the policy d. partial withdrawal features beyond a surrender charge period

d. partial withdrawal features beyond a surrender charge period