Life Insurance Licensing Chapter 2

All other factors being equal, the least expensive first-year premium payment is found in

Annually Renewable Term

The death protection component of Universal Life Insurance is always

Annually Renewable Term

The type of policy that can be changed form one that does not accumulate cash value to the one that does is a

Convertible Term Policy

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?

Deprecation period

An agent selling variable annuities must be registered with

FIRNA

Fixed annuities provide all of the following EXCEPT

Hedge against inflation

A Return of Premium term life policy is written as what type of term coverage?

Increasing

During partial withdrawal from a universal life policy, which portion will be taxed?

Interest

Which of the following is TRUE regarding the accumulation period of an annuity?

It is a period during which the payments into the annuity grow tax deferred

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. What policy is that?

Joint Life Policy

Variable Whole Life insurance is based on what type of premium?

Level fixed

Which of the following is another term for the accumulation period of an annuity?

Pay-in period

Which two terms are associated directly with the way an annuity is funded?

Single payment or periodic payments

The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?

The beneficiary will receive the greater of the money paid into the annuity or the cash value

All of the following are true of an annuity owner except

The owner must be the party to receive benefits

Which of the following determines the cash value of a variable life policy?

The performance of the policy portfolio

All of the following are true about variable products EXCEPT

The premiums are invested in the insurer's general account

Which of the following is NOT true regarding Equity Indexed Annuities?

They earn lower interest rates than fixed annuities

Which of the following is TRUE for both equity indexed annuities and fixed annuities?

They have a guaranteed minimum interest rate

When would a 20-pay whole life policy endow?

When the insured reaches age 100

Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be

Adjusted to the insured's age at the time of renewal

In an annuity, the accumulated money is converted into a stream of income during which time period?

Annuitization period

Which of the following is a feature of a variable annuity?

Benefit payment amounts are not guaranteed

An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?

Decreasing term

An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change form those shown in the policy at issue time. The policy is a/an

Interest-sensitive Whole Life

Which of the following best describes annually renewable term insurance?

It is level term insurance

Which of the following is TRUE regarding the annuity period?

It may last for the lifetime of the annuitant

Which statement is NOT true regarding a Straight Life policy?

Its premium steadily decreases over time, in response to its growing cash value

Which of the following is an example of a limited-pay life policy?

Life paid-up at age 65

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited pay whole life

An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?

Limited-pay life

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

Lower

Equity indexed annuities

Seek higher returns

A domestic insurer issuing variable contracts must establish one or more

Separate accounts

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

An insurance policy that only requires a payment of premium at its inception, provides insurance protections 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 is called a "second-to-die" policy?

Survivorship life

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?

Universal Life

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

Which of the following has the right to convert the existing term coverage to permanent insurance?

policyowner