Life Insurance Policies
Premium payments will cease at age 65, but coverage will continue to her death or age 100
Limited Pay whole life
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
What are the living benefits of whole life insurance?
Loan values
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 -The death benefit cannot be increased -The death benefit can be increased only when the policy has developed a cash value -The death benefit can be increased only by exchanging the existing policy for a new one
The death benefit can be increased by providing evidence of insurability
Under Option B in a universal life policy, what happens to the death benefit?
The death benefit increases each year by the amount of the cash value increases
In annually renewable term policies, what is the annual premium based upon?
The insured's attained age
A policy states that it will pay a specified face amount if the insured dies during the 20 year premium-paying period and nothing if death occurs after the 20 year period. What type of policy is this?
20-year level term
All of the following could own group life insurance EXCEPT -An alumni group -A debtor group -A group needing low-cost life insurance -A group sponsored by an employer
A group needing low-cost life insurance
The policyowner of a whole life insurance policy is also the insured. What age must the insured attain in order to receive the policy's face amount?
Age 100
Whole life policies provide protection until the insured reaches what age?
Age 100
A universal life insurance policy is best described as a/an
An Annually Renewable Term policy with a cash value account.
The death protection component of a universal life policy is expressed as what type of coverage?
Annually renewable term
What happens to the cash value when a whole life insurance policy matures?
Cash value is paid to the policyowner
Which component increases in the increasing term insurance?
Death Benefit
An individual has just borrowed $10,000 on a 5-year note from his bank. The note is due in installments. What type of life insurance policy would be best suited to this situation?
Decreasing term
When the amount of insurance is increased in an adjustable life policy, what will the insurer require from the insured?
Evidence of insurability
What is the main advantage of converting from group life insurance to individual coverage?
Evidence of insurability is not required
What does level refer to in level term insurance?
Face amount
Universal life policies have two types of interest rates. What are they?
Guaranteed and current
The type of term insurance that provides increasing death benefits at the insured ages is called
Increasing term
A whole life policy that requires that the policyowner only pays premiums for a specified number of years is known as what kind of policy?
Limited-pay whole life
What type of life insurance policy is Life paid-up at age 65?
Limited-pay whole life
What is the major difference between the most common types of whole life policies: Straight Life, Limited Payment and Single Premium
Premium payment mode
Which policy is considered a "second-to-die" policy?
Survivorship life
Regarding taxation, how does the cash value of a universal life policy accumulate?
Tax deferred
What type of life insurance policy offers pure death protection?
Term
Which of the following is NOT true regarding a Variable Universal life policy? The minimum death benefit is guaranteed The cash values are not guaranteed The death benefit is fixed The policyowner can participate in some of the investment decisions
The death benefit is fixed
Who owns a group life insurance contract?
The employer (also known as the sponsor of the group)
Whole life insurance policies mature when the insured reaches age 100. If the owner of a whole life policy (the insured) dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?
The full death benefit
What is the purpose of establishing the target premium for a universal life policy?
To prevent the policy from lapsing / To keep the policy in force
In what type of life insurance policies can the policyowner skip premium payments without the policy lapsing?
Universal Life
Between adjustable life and universal life policies, which one provides more flexibility to the policyowner?
Universal life
When would a 20-day whole life policy endow?
When the insured reaches age 100
When would a 20-pay whole life policy endow?
When the insured reaches age 100
When does an adjustable life policy accumulate cash value?
When the premiums paid are more than the cost of the policy
If an insured terminates membership in group life insurance, to what type of insurance can the insured convert the coverage?
Whole life
What type. of life insurance policy provides permanent protection?
Whole life
The death benefit in a variable universal life policy
depends on the performance of a separate account
What policy component must decrease in decreasing term insurance?
face amount
An adjustable life policyowner can change what?
the coverage period
What type of life insurance is best suited to cover a mortgage?
Decreasing term
If an employee wants to join group life insurance coverage outside of the open enrollment period, what would the employee have to provide?
Evidence of insurability
A Return of Premium term life policy is written as what type of term coverage?
increasing
What type of premium is charged on a straight life policy?
A level premium for the life of the insured
The LEAST expensive first-year premium is found in which of the following policies?
Annually Renewable term
Group life insurance policies are written as what type of insurance?
Annually renewable term
In variable universal life insurance, to what policy component does the term variable refer?
Cash value and death benefit
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 what time period?
For 20 years or until the insured's death, whichever occurs first.
What type of policy is typically issued without proof of insurability from the insured?
Group policy
What type of policy issues certificates of insurance to the insureds?
Group policy
What are the characteristics of the group that underwriters will consider before issuing a group life policy?
Groups purpose, size, financial strength and turnover
Which statement is NOT true regarding a straight life policy? -The face value of the policy is paid to the insured at age 100 -It usually develops cash value by the end of the third policy year -It has the lowest annual premium of the three types of whole life policies -Its premium steadily decreases over time, in response to its growing cash value
Its premium steadily decreases over time, in response to its growing cash value
What universal life option has a gradually increasing cash value and a level death benefit?
Option A
What are the death benefit options in universal life policies?
Option A- level death benefit Option B- increasing death benefit
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
SEC registration
What type of whole life insurance policies only requires a payment of premium at its inception, and in addition to providing insurance protection for the life of the insured, endows at the insured's age 100?
Single premium whole life
What type of whole life insurance policy generates immediate cash value?
Single premium whole life
What element of an adjustable life policy can be changed by the policyowners?
The amount and payment period of the premium, the face amount, and the period for protection
An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen?
The insurer will pay the full death benefit from the group policy to the beneficiary
Who is entitled to the cash values in a life insurance policy?
The policyowner
What happens to the premium in an annually renewable term life policy?
The premium increases with each renewal
How is the premium determined in a joint life insurance policy?
The premium is based on the average age of the insureds.
In term policies, what happens to the premium throughout the term of the policy?
The premium remains level
All of the following are characteristics of a group life insurance plan EXCEPT -The participants receive a Certificate of insurance their proof of insurance -A minimum number of participants is required in order to underwrite the plan -The cost of the plan is determined by the average age of the group -There is a requirement to prove insurability on the parts of the participants
There is a requirement to prove insurability on the parts of the participants
Why are policy loans not available on term insurance?
There is no cash value to borrow against
In a joint life policy, when is the death benefit paid?
Upon the first death
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 is an example of a limited-pay life policy? level term life straight life life paid-up at age 65 renewable term to age 70
life paid-up at age 65
Who is insured under a juvenile life policy?
minor
