Chapter 4 section 2- Whole life

Limited payment policies "allows the policyholder(s) to pay for the entire policy in a shorter period of time."

2. Gina and Jerry are purchasing life insurance. They decided on policies that would be paid up in 20 years. What type of policies did they purchase?

The policy endows. " When the cash value in a life insurance policy equals the face amount, the policy endows, or pays out. Life insurance policies may not endow earlier than the insured's 95th birthday."

4. What happens when the cash value of a life insurance policy equals the face value?

The premium-paying period may extend beyond the income-earning years. " Because permanent (whole) life insurance protects the insured for their entire life, premiums are due each year until the insured dies. This may prove to be expensive when the insured is retired, and does not earn an income."

10. All of the following are advantages of whole life insurance, EXCEPT:?

The cash value in a permanent life insurance policy is not a nonforfeiture benefit. " The cash value in a whole life policy is a nonforfeiture value, meaning that said funds cannot be forfeited, and the policyowner is entitled to such values."

1. All of the following are characteristics of whole life insurance, EXCEPT:

Whole "life insurance provides living benefits, including cash values and policy loans."

3. Which type of life insurance provides living benefits?

The total premium is lower. " A major advantage of a single premium policy is that the premium is less than it would be if it stretched over several or many years."

5. After looking at his options, Randy decided on a single premium whole life policy. What is an advantage of this type of policy?

It may be used as a policy loan without affecting the death benefit. " Unpaid policy loans are deducted from the policy death benefit upon maturation."

6. Which of the following is not true regarding the cash value in an ordinary whole life policy?

They must cover cash values, net insurance and mortality costs, as well as expenses. " Because whole life policies include cash values in addition to net insurance, the premiums must cover mortality costs, expenses and the savings amount"

7. Why are whole life policies more expensive than some other insurance options?

20-pay life " Limited payment whole life policies provide life insurance protection for the insured's entire life, but premiums are paid for a limited period of time, such as 20 or 25 years."

8. This life insurance policy provides death protection for the insured's entire life, but premiums are not paid for the insured's entire life.?

Josh, a 25-year old successful entrepreneur with extra funds, who doesn't want to pay life insurance premiums when he retires. " Limited payment policies are suitable for clients who do not want to pay premiums for their entire lives or people who are nearing retirement with liquid capital who don't already have permanent life insurance."

9. A limited payment life insurance policy is best suited for:?