Chapter 3 permanent life insurance (quiz)

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 20 years or until death, whichever occurs first.

The death benefit under the Universal Life Option B

Gradually increases each year by the amount that the cash value increases

Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?

Greatest

In variable whole life policies, where are the policy premiums allocated?

Separate account

The death benefit in a variable universal life policy

depends on the performance of a separate account

An applicant wants to buy a life insurance policy in which he can count on receiving the same benefits as stated in the contract. Which type should he buy?

fixed

Which of the following is NOT a type of whole life insurance?

increasing term

If an agent wishes to sell variable life policies, what license must the agent obtain?

securities

A domestic insurer issuing variable contracts must establish one or more

separate accounts

Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources?

term

An Adjustable Life policyowner can change which of the following policy features?

the coverage period

Which of the following is NOT true regarding a Variable Universal Life policy?

the death benefit is fixed

An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?

variable

Which of the following types of policies will provide permanent protection?

whole life

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.

At age 30, an applicant wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit his needs?

Adjustable Life

Your customer doesn't mind paying a higher premium as long as he gets a life insurance product that would allow for a faster growth of the cash value. What kind of policy would you recommend?

An endowment policy

What characteristic makes whole life permanent protection?

Coverage until death or age 100

In which of the following cases will the insured be able to receive the full face amount from a whole life policy?

If the insured lives to age 100

After the initial period, and based on the company's expected mortality, expense and investment projections, this type of whole life policy allows the insurer to raise the premium, lower the premium, or leave it the same?

Indeterminate premium whole life

What are the two components of a universal policy?

Insurance and cash account

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 owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that?

Joint Life Policy

Variable Life insurance is based on what kind of premium?

Level fixed

The premium of a survivorship life policy compared with that of a joint life policy would be

Lower

Which type of life insurance policy generates immediate cash value?

Single Premium

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called

Single premium whole life

Which of the following policies would be classified as a traditional level premium contract?

Straight life

Which of the following would help prevent a universal life policy from lapsing?

Target premium

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 best defines target premium in a universal life policy?

The recommended amount to keep the policy in force throughout its lifetime

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

To keep the policy in force

The death protection component of Universal Life Insurance is always

annually renewable term

A Universal Life Insurance policy is best described as a/an

annually renewable term policy with a cash value account