Life Insurance Exam CHAPTER 3-Exam 1

All of these statements about Equity Indexed Life Insurance are correct, EXCEPT:

The premiums can be lowered or raised, based on investment performance

Under a Renewable Term policy,

The renewal premium is calculated on the basis of the insured's attained age

A policy that becomes a Modified Endowment Contract (MEC):

Will lose many of its tax advantages

Additional coverage can be added to a Whole Life policy by adding a(n):

Decreasing term rider

A variable insurance policy:

Does not guarantee a return on its investment accounts

A 15-year mortgage is best protected by what kind of life policy?

15-year decreasing term

What type of life insurance are credit policies issued as?

Term

How does a typical Variable Life Policy Investment account grow?

Through mutual funds, stocks, bonds.

What type of policy would offer a 40-year old the quickets accumulaton of cash value?

20-pay 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?

Ten-Year Endowment

The Universal Life Policy is called an unbundled life policy because the policyholder can see the expense charges, the interest earned, and the:

Cost of insurance

Credit Life insurance is:

Issued in an amount not to exceed the amount of the loan.

Which of the following statements is Correct about the period in which a Term Policy can be converted?

It varies according to the contracts

Which type of policy is considered to be overfunded, as stated by IRS guidelines?

Modified Endowment contract

D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of Policy is needed?

Level Term

Which is true concerning a variable universal life policy?

Policyowner controls where the investment will go and selects the amount of the premium payment.

Which type of life policy contains a monthly morality charge as well as self-directed investment choices?

Variable universal life

J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?

20-pay life

Which of these statements describe a Modified Endowment Contract (MEC)?

Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract.

What type of insurance offers permanent life coverage with premiums that are payable for life?

Whole life