L/A/H Insurance . C4.Life Insurance Policies . Questions

Joe is a building contractor whose income dramatically fluctuates from year to year. Because of his fluctuating income, which Whole life policy below would you probably recommend to him? A. Adjustable life B. 10 Pay Whole life C. 20 Pay Whole life D. Graded Premium Whole life

A

Joe is a real estate salesmen whose income dramatically fluctuates from year to year. Which life insurance policy below would you probably recommend, based upon his fluctuating income? A. Adjustable life B. 10 Pay Whole Life C. 20 Pay Whole Life D. Graded Premium Whole Life

A

Permanent life protection combined with decreasing term insurance would be fond in which policy below? A. Family Income B. Credit Insurance C. Family Maintenance D. Joint & Survivors

A

Which Limited Pay Whole life contract would have the highest annual premium? A. 10 pay B. 20 pay C. 30 pay D. 25 pay

A

Which of the following items, if any, are considered level in a Variable life policy? A. Premium B. Cash value growth C. Death benefit D. None of the above

A

Which of the following types of life insurance is characterized by guaranteed coverage but provides no guarantees with regard to cash value build up? A. Variable life policy B. Universal Life policy C. Joint life policy D. Modified life policy

A

Which statement below is true with regard to Endowments? A. It's primary focus is on an accelerated cash value B. Endowments are designed to pay for nursing home costs C. Premiums are flexible and may be skipped entirely D. There is no guaranteed cash value accumulation

A

Why would someone normally purchase Credit life insurance? A. To provide a death benefit to pay off a loan. B. To protect the insured's credit card interest rate. C. To provide permanent death benefit protection. D. To provide "over-draft" protection.

A

Paul owns a $500,000 whole life insurance contract. He takes a $10,000 loan against the cash value. His premium is $6,000, which he pays annually on September 10th. He is tragically killed on September 12th while on his way to the post office to mail his overdue premium. The loan also has an accumulated interest amount of $500. How much benefit, if any, will be paid to his beneficiary? A. $483,500 B. $500,000 C. $489,500 D. $0

A Paul died during the Grace Period of his contract, so he would be covered. The policy has a $500,000 death benefit, but the amount of the outstanding loan ($10,000), plus the interest owed ($500) plus the premium due would all have to be subtracted from the death benefit.

Which of the following items, if any, is considered level in a variable life policy? A. Policy Premium B. Policy Cash Value Growth C. Policy Death Benefit D. None of the Above

A, Level Premium

A Joint life policy pays a death benefit: A. when the last insured dies. B. when either insured dies. C. when the beneficiary dies. D. when either the last insured or the beneficiary dies.

B

A combination policy that provides a large death benefit to be paid upon the death of the last insured, and is typically utilized to pay estate taxes is called: A. Credit Policy B. Survivorship life C. Joint life D. Family Income

B

A method of financing life insurance which is best suited for indiviudals who are in a higher tax bracket is known as: A. Split life B. Minimum Deposit C. Joint Life D. Deposit Term

B

A policy covering a child characterized by an increasing death benefit at a future age with no premium increase best describes: A. Split life policy B. Jumping juvenile policy C. payor benefit life D. junior endowment

B

All of the following are characteristics of a universal life policy, EXCEPT: A. Fixed Interest Paid on Cash Value B. Bundled Premiums C. Adjustable Death Benefit D. Transparency

B

An insurance policy that is characterized by a level death benefit, a level premium and a cash savings value is known as a: A. Universal life policy B. Straight Life Policy C. Adjustable Life Policy D. Convertible Term Like Policy

B

Cameron borrows $275,000 to buy a small beachfront vacation home. He wants to make sure that should he die, a death benefit is available to pay off the loan os that his wife can continue to use the vacation home. He has little additional cash for insurance, and wants the most economically policy available to cover his new debt. What type of life insurance policy would you recommend? A. Whole life B. Decrease Term C. Family Maintenance D. Level Term

B

Cash Value growth potential based upon stock and bond performance would help describe which of the following policies? A. Ordinary Whole Life B. Variable Life C. Universal Life D. Level Term

B

Each of the following policies will lapse if an annual premium is not paid to the insurer, EXECPT: A. Ten Pay life B. Universal Life C. Current Assumption Life D. Annual Renewable Life

B

Joe enters Sara's insurance office and makes the following statement: "I want to purchase a standard whole life insurance policy." Sara's initial reaction or thought would probably be: A. "Fine, we only sell standard policies." B. "There is no such thing as a standard life insurance policy." C. "I can offer you a large discount on a standard policy." D. "Standard policies only apply to term insurance"

B

Michael borrows $164,000 to buy the sports car of his dreams. He wants to make sure that if he should die, he has a death benefit to pay off the loan so that his wife can enjoy the car. Short on cash, he wants the "most economical" policy available on the market. Which type of life insurance product would you recommend? A. Whole Life B. Decreasing Term C. Family Maintenance D. Level Term

B

Term life insurance is a form of insurance that is typically less expensive initially than Whole life insurance and provides pure or temporary protection for a limited period of time. Which of the following statements is NOT TRUE? A. Term insurance provides death benefit protection for a limited period of time. B. The cash value endows at age 100. C. Convertibility to a Whole life policy is often available. D. Term insurance does not build cash valu

B

Term life insurance is a form of insurance that is typically less expensive initially than whole life insurance and provides pure or temporary protection for a limited period of time. Which of the following statements is NOT TRUE? A. Term Insurance provides death benefit protection for a limited period of time. B. The cash value endows at age 100 C. Convertibility to a whole policy is often available. D. It does not build Cash Value

B

The death benefit of a Joint Life Policy pays: A. When the last insured Dies B. When either insured dies C. When the beneficiary dies D. When either the last insured or the beneficiary dies

B

What type of policy would you suggest your client purchase if she desires death protection and a cash value build-up but is presently of limited means? A. Whole life B. Modified Life C. Universal Life D. Straight Life

B

Which life insurance policy listed below has the greatest cash value growth potential? A. Ordinary Whole life B. Variable life C. Universal life D. Level Term

B

Which of the following life insurance policies provides a policy owner with flexibility and control over the investment portion of the contract? A. Whole life policy B. Variable Life Policy C. Adjustable life Policy D. Continuous Premium Life Policy

B

A combination policy that provides a large death benefit be paid upon the death of the last insured, and is typically utilized to pay estate taxes is called: A. Credit Policy B. Survivorship life C. Joint Life Policy D. Family Income

B, Provides Monies

A Single Pay Whole life contract provides coverage until death or age ___. A. 90 B. 95 C. 100 D. Until the cash value is exhausted

C

A family policy is a combination of: A. Whole life and decreasing term B. Whole life and an annuity C. Whole life and level term D. Whole life and increasing term

C

A person age 40 desires a life insurance policy that will allow him to increase or decrease the death benefit in the future would purchase a: A. whole life policy B. modified life policy C. adjustable life policy D. renewable term policy

C

A single pay whole life contract will provide death benefit coverage until death or age ______? A. 90 B. 95 C. 100 D. Until the Cash Value is exhausted

C

All the statements below are TRUE of Survivorship life insurance EXCEPT: A. Premiums are low when compared to purchasing 2 policies providing identical coverage on the same insureds. B. Survivorship life policies are often used to pay estate taxes. C. A Survivorship life policy pays a death benefit upon the death of the first insured. D. Survivorship life policies often have death benefits that exceed $1,000,000.

C

Bob purchased a policy that will pay him $50k at retirement. If he dies prior to this time, the policy will pay his family $50k. What type of policy did Bob purchase? A. Retirement Income Policy B. Retirement Annuity C. Endowment D. Variable Life

C

Family policies usually provide death benefit coverage: A. for the primary insured B. for the working spouse only C. For all family members although the benefits differ D. That maybe be assigned to the tertiary beneficiary

C

Insurance companies use age 100 to calculate life insurance death benefits because: A. It allows them to charge higher premiums B. It makes sure they never have to pay a death benefit C. They assume everyone will have died by that age D. They Assume that mortality rates will decrease by then.

C

Interest sensitive whole life policies such as universal life, use varying interest rates: A. in order to determine future premiums B. in order to determine death benefits C. in order to determine cash values D. in order to determine non-forfeiture values

C

Jack buys a $100,000 20-year Family Income Policy in 2000. The policy includes an income rider of $1,000 per month. He dies in 2005. What will Jack's beneficiary receive? A. $1,000 per month for life B. $100,000 C. $1,000 per month until the year 2020 and then a $100,000 lump sum D. $1,000 per month for 20 years and then a $100,000 lump sum

C

John's client would like to purchase a whole life policy that will provide her with $30k in ten years. Which of the following will help accomplish this objective? A. Ten Pay life policy B. Single premium life C. Ten-year endowment D. Ten-year renewable Term

C

Larry, age 52, wishes to convert his level term policy to a whole life policy. He has owned the term policy for 10 years. His agent informs him that the insurance company could use age 42 to determine the future whole life premiums. What term describes this convertibility option? A. Attained Age B. Retrogenerational Age C. Original Age D. Futuristic Option

C

Ralph wants a life insurance policy that will pay him $10,000 in 10 years. Which of the following would you recommend to Ralph to help him meet his goals? A. Ten-Pay life policy B. Twenty Pay Life Policy C. Ten-Year Endowment D. An endowment at age 65

C

Ricky D., age 42, wishes to convert his level term policy to a whole life policy. He has owned the term policy for 4 years. His agent informs him that the insurance company could use age 38 to determine his future Whole life premiums. What term best describes this convertibility provision? A. Attained Age B. Retrogenerational Age C. Original Age D. Futuristic Option

C

The ability to continue a term insurance contract without having to provide evidence of insurability best describes what option? A. Convertibility B. Insurability C. Renewability D. Compatibility

C

The ability to continue a term insurance contract without having to provide evidence of insurability best describes what option? A. Convertibility B. Insurability C. Renewability D. Compatibility

C

What increases in a whole life policy with every successive premium payment? A. Coverage Amount B. Non-forfeiture values C. Cash Value D. Face Value

C

What type of life insurance policy allows insurers to adjust premiums to reflect any changes in investment income? A. Limited-Pay whole life B. Permanent Life Insurance C. Indeterminate Premium Whole Life D. Current Assumption whole life

C

Which of the following would not be covered by a family rider? A. Spouse b. Natural Child C. Primary Insured D. Adopted Child

C

Which statement below is NOT TRUE with regard to policy loans? A. Loans are tax-free generally. B. Loans are a right granted to the policyowner. C. If unpaid at time of death, only the loan amount is subtracted from the death benefit. D. Loans are not considered income and therefore they are not taxed.

C It is true that most loans are not taxed because the loan is not considered income. This may differ if the contract is considered a modified endowment contract. At death, if a loan has not been paid, both the amount of the loan AND interest owed would be subtracted from the death benefit.

A Whole life or Continuous Premium Whole life insurance policy includes a loan provision. Which of the following statements in INCORRECT? A. Loans do not need to be repaid. B. At death, outstanding loans plus interest are subtracted from the death benefit. C. Only fixed interest rates can be charged against the loan. D. Loans may be delayed by the insurer for up to 6 months.

C, Fixed & Variable

Which of the following statements is NOT CORRECT regarding whole life policy loans? A. Loans do not need to be repaid B. At death, outstanding loans plus interest are subtracted from the death benefit C. Only fixed interest rates can be charged against the loan D. Loans may be delayed by the insurer for up to 6 months

C, Fixed or Variable

Each of the following is a TRUE statement regarding Juvenile Insurance EXCEPT: A. The parent would be the owner of the contract B. Death benefit increases at a predetermined age C. Death benefit increase means a premium increase D. The child can convert the policy once they reach the age of majority

C, Typically predetermined age

Which Limited Pay Whole Life premium payment below would have the lowest annual premium? A. 10 Pay B. 20 Pay C. 30 Pay D. 25 Pay

C, the greater the number, the lower the payments

A Variable life policy can be characterized by investing cash values in stocks, bonds, or other investment-like vehicles. Which statement below is NOT TRUE regarding this kind of life insurance product? A. The death benefit amount is dependent upon the performance of securities. B. Variable life cash values are deposited in a separate account outside of the contract. C. Variable life provides a guaranteed minimum death benefit. D. Agents only need a life insurance license to sell this product

D

A Whole life policy has a level death benefit and premium. It also builds cash value. Another name for whole life is: A. Convertible B. Variable/Universal life C. Variable D. Straight

D

A level term policy has all the following characteristics EXCEPT: A. Premium increases at end of each term period B. Level Death Benefit C. Temporary Protection D. Loan Option

D

A life insurance policy which matures at the termination of a specified period is known as: A. Whole Life Policy B. Variable Life Policy C. Limited-Pay Policy D. Endowment

D

A type of life insurance policy whose premium is initially lower than a traditional whole life plan and increases each year for an introductory period best describes: A. Universal Life B. Flexible Premium Life Insurance C. Variable Whole Life D. Graded Premium whole Life

D

A variation of the endowment principle may be illustrated by a retirement income policy. In this plan the amount payable upon survival is greater than the face amount. The death benefit payable is the greater of the face amount or the: A. Mortality factor B. Bundled Premium C. Performance of the securities D. Cash Value

D

A whole life policyholder's cash savings value will equal the policy's face amount at what age? A. 55 B. 65 C. 70 D. 100

D

Advantages of Term life insurance would include all of the following except: A. It can be inexpensive, especially at younger ages. B. It is often convertible to Whole life. C. It often renews without having to provide evidence of insurability. D. It always provides permanent protection to age 100.

D

Denise purchases a 20 year return of premium term policy. In year 19 of the term period, she cancels her coverage. What answer best describes what Denise my be entitled to receive upon cancellation of her policy? A. Nothing B. The full cash value of the contract C. The full premiums paid D. A pro-rated portion of the premiums paid over 19 years, as depicted in her contract.

D

Each of the following is provided to the policyowner of a Universal life policy on an annual basis except: A. Interest earnings. B. Policy expenses. C. Upcoming premium. D. Change of beneficiary form.

D

Mrs. James wishes to purchase a life insurance policy that will help her survivors pay off her mortgage in case she dies. What type of policy would you recommend she purchase? A. Flexible Premium Annuity B. Modified Life C. Level Term D. Decreasing Term

D

The possibility for premium flexibility would be a characteristic of which of the following policies? A. Variable Life B. Ordinary Whole Life C. Level Term D. Universal Life

D

The primary portion of an adjustable life policy that is adjustable is the: A. Beneficiary designation B. Policy Expenses C. The Surrender Values D. The Coverage Amount

D

What portion of a mortgage redemption plan decreases annually? A. The non-forfeiture values B. The Cash Values C. The annual premium D. The Death Benefit

D

What type of license must a producer hold in order to engage in the sale of variable life insurance? A. Securities License Issued by FINRA B. A broker's license C. Non-Resident agent license D. A life insurance license and a securities license

D

What type of policy did Bill buy if the contract states that the cash value will be $326 per $1,000 of coverage in year 18? A. Variable life B. Convertible Life C. Term Life D. Whole LIfe

D

When discussing Life or Health Insurance policies, it is important to remember that: A. Almost all policies are identical B. All life insurance policies are identical C. There are many standard life and health policies D. There is no such thing as a standard life or health insurance contract

D

When discussing life or health insurance policies, it is important to remember that: A. Almost all policies are identical. B. All life insurance policies are identical. C. There are many standard life and health policies. D. There is no such thing as a standard life or health insurance contract.

D

Which life insurance policy below is a combination of death benefit protection, cash value buildup and the opportunity for premium flexibility? A. Variable life B. Ordinary Whole life C. Level Term D. Universal life

D

Which of the following is associated with a corridor? A. Annual Renewable term B. Variable Annuity C. Mortgage Protection Life D. Universal Life

D

Which of the following is not a characteristic of term insurance? A. Pure protection B. Temporary coverage C. Inexpensive D. Cash value builds after 3 years

D

Which of the following life insurance policies would have the lowest first-year premiums? A. Whole life B. Universal life C. Single Pay life D. Modified Whole life

D

Which of the following statements is TRUE regarding Variable life insurance? A. It has a variable premium. B. It has a predetermined death benefit. C. It possesses no guarantees whatsoever. D. The cash value is not guaranteed.

D

Which of the following statements regarding Universal life insurance is NOT CORRECT? A. Partial cash value withdrawals are allowed. B. The owner receives an annual statement listing the premiums paid, death benefit amount and related contract expense. C. It is a combination of annually renewable term and a cash value fund. D. It has a level premium with a cash value that fluctuates depending upon stock and bond market performance.

D

Which policy/product below, sold to a 40-year-old man, will mature or endow the soonest? A. 10 Pay Life B. 20 Pay Life C. Ordinary Whole Life D. 20 Year Endowment

D

Which policy/product below, sold to a 65-year-old man, will mature or endow the soonest? A. 10 Pay life B. 20 Pay life C. Ordinary Whole life D. 20-year Endowment

D

Which statement is false regarding a return of premium term policy? A. Provides a level death benefit during the policy term B. Has slightly higher premiums than level term C. Provides a full premium refund at the end of the policy term D. Builds cash value equal to the face amount of the policy

D

Which statement below is NOT CORRECT with regard to credit life insurance: A. Decreasing Term is Used B. The amount of protection is equal to the loan amount C. It is designated to protect the lender if the borrower should die D. The insured is also the beneficiary

D, Bank or lender is beneficiary

All of the following statements are INCORRECT regarding Variable Life Insurance Except: A. It has a variable premium B. It has a predetermined death benefit C. It possesses no guarantees whatsoever D. The Cash Value is not guaranteed.

D, Consider Investments

Which of the following statements regarding Universal Life insurance is NOT CORRECT? A. Partial Cash Value withdrawals are allowed B. The owner receives an annual statement listing the premiums paid, death benefit, and other contract information C. It is a combination of annually renewable term (ART) and a cash value fund. D. It has a level premium with a cash value that fluctuates depending upon stock or bond performance.

D, Flexible Premiums

Each year, the owner of a Universal Life Policy will receive an annual statement regarding their contract. This statement will include all of the following items EXCEPT: A. Interest rate credited B. Policy Expenses C. Future Premiums D. Change of Beneficiary Form

D, Not required

Which of the following is not a characteristic of Whole Life? A. Level Lifetime premium B. Level lifetime death benefit C. Cash Value = face amount at age 100 D. Is not considered property

D, considered property and can be sold

Which policy below would have the lowest first year premiums? A. Whole Life B. Universal Life C. Single Pay Life D. Modified Whole Life

D, first 3 to 5 years

A life insurance plan that combines permanent whole life protection with decreasing term insurance best describes: A. Family Income B. Credit Insurance C. Family Maintenance D. Joint and Survivors

A

An Endowment contract is designed to pay a benefit either at the end of a specified time frame or death, whichever occurs first. Which statement below is TRUE with regard to endowments? A. Its primary focus is on an accelerated cash value. B. Endowments are designed to pay for nursing home costs. C. Premiums are flexible and may be skipped entirely. D. There is no guaranteed cash value accumulation.

A