Life Insurance Policies

-Modified endowment Contract

If a life insurance policy develops cash value faster than a seven-pay whole life contract it becomes a

-insurance producer license -securities license

What type of license do you have to have to sell variable products?

-A level annual premium for the life of the insured and have a guaranteed death benefit

A Straight Life policy has what type of premium?

-Be level thereafter

Graded Premium Whole Life Policy premiums are typically lower initially, but gradually increase for a period of 5-10 years. After the period of increase, the primiums will.

-require evidence of insurability

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may

-age, sex, occupation of the entire group

In group life insurance the premiums are determined how?

-whole life

-permanent protection -guaranteed elements (face amount, premiums and cash values) until death or age 100 -level premium -cash value and other living benefits

-Costs of training a replacement

A key person insurance policy can pay for which of the following?

-The policy is owned by the company

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT

-limited-pay 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 this?

-Annually Renewable Term

The death protection component of Universal Life insurance is always

-Annually Renewable Term Policies

These premiums are adjusted each year to the insureds attained age

-Level Fixed

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

-Level -decreasing -increasing

What are the three basic types of Term Life Insurance?

-performance of the policy portfolio

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

-Cash Value growth

Which of the following features of the Indexed Whole Life policy is NOT fixed

-Survivorship Life

Which of the following is called "a second to die" policy?

-Annually Renewable term

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

-variable life

-fixed premium, minimum death benefit -cash value and actual amount of death benefit are not guaranteed -assets in separate accounts -assets must be dually licensed in insurance and securities

-survivorship life (second to die)

-insures 2 or more people -premium based on a joint age of inured -benefit paid upon the last death

-level premium term

-level death benefit -level premium

-Required a premium increase each renewal

A man decides to purchase a $100,000 Annually Renewable LIfe policy to provide additional protection until his children finish college. He discovered that his policy...

-be level thereafter

Graded Premium Whole Life policy premiums are typically lower initially, but gradually increase for a period of 5-10 years. After the period of increase the premiums will

-He can convert group coverage to individual coverage within 31 days of leaving the plan without proof of insurability

If a person has life insurance under a group plan and then leaves the group

-the death benefit can be increased by providing evidence of insurability

The Policyowner of an adjustable life insurance policy wants to increase the death benefit. Which of the following statements is true regarding this change?

-increasing term

The type of term insurance that provides increasing death benefits as the insured ages is called

-Joint Life

Twin brothers are starting up a new business, they know it will take several years to build the business to a point that they can payoff the debt. What type of insurance would be the most affordable and still provide death benefits should one of them die?

-increasing term

-increases each year

-Upon the last death

In a survivorship life policy , when does the insurer pay the death benefit?

-When the insured reaches age 100

When would a 20 whole life policy endow?

-when insured dies or reaches 100, whichever happens first

When would a whole life insurance policy mature?

-survivorship Life

Which of the following is called a "second-to-die" policy?

-decreasing term

-coverage decreases at predetermined times, gradually but best used when the need for protection declines from year to year

-joint life (first to die)

-insures 2 or more people -premium based on a joint age of insured -benefits paid upon first death

-the benefit is received as tax free

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

-funding against company's general financial loss

All of the following are are business uses of life insurance EXCEPT

-upon the last death

In a survivorship life policy when does the insurer pay the death benefit?

-graded premium whole life

Which of the following policies is characterized by a provision where the premiums are lower in the early years of the policy and increase over time to a point where they become level for the remainder of the policy?

-adjustable life

-policy owner may adjust the premium and premium paying period, face amount and period of protection -can be converted from term to whole life and vice versa -cash value only develops if the premiums paid are more than the cost of the policy

-universal Life

Which of the following life insurance policies would be considered interest sensitive?

-Withdrawals are not taxable

Which of the following statements regarding the taxation of Modified Endowment Contract is false?

-buy-sell agreement

These are normally funded with a life insurance policy

-limited payment (whole)

-premiums are paid until a certain age or time, coverage last until age 100

-term life

-pure protection -last for specific term -no cash value

-Buy-Sell Agreement

A _________ is simply a contract that establishes what will be done with a business in the event that an owner dies

-costs of training replacement

A key person insurance policy can pay for which of the following?

-Joint Life Policy

A married couple owns permenant policy which occurs both of their lives and pays the death benefit only upon the death of the first insured. What policy is this?

-Level Term -a 20 year term policy is written to provide a level death benefit for 20 years

A policy will pay the death benefit if the insured dies during the 20 year premium paying period, and nothing if the death occurs after that period, this is called a

-cost of the plan is determined by the average age of the group -participants receive a certificate of insurance as their proof of insurance -minimum number of participants is required in order to underwrite plan

All of the following are characteristics of a group life insurance plan

-premium for permanent policy will be based on attained age -evidence of insurability is not required -most policies contain a convertible option

All of the following options are true regarding convertibility option under a Term Life Insurance policy

-it is level at the beginning and increasing after the first few years

In modified life policies, what happens to the premium?

-Executive is the owner and the executive pays the premiums

In the Executive Bonus Plan, who is the owner of the policy, and who pays the premiums?

-Level Annual Premiums -Death Benefits

Increasing term features ___________ and _______________ that increases each year over the duration of the policy term

-Premium will increase because he will be 5 years older than when the policy was originally purchased

Insured buys a 5 year level premium term policy with a face amount of $10,000. Policy contains renewability and convertible options. What will happen 5 years later when he renews to the premium?

-variable life -joint life (first to die) -survivorship life (second to die) -group life

Other types of policies

-Convertible term policy

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

-flexible premium

-types of whole life insurance -flexible premium

-Single Premium Whole Life

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 age of 100 is called

-pay a lower renewal premium by proving insurability

An insured has a Level Term Insurance policy that is guaranteed renewable and also includes a re-entry provision. The re-entry provision would allow the insured to renew the policy and

-an endowment policy

You customer doesnt mind paying a higher premium as long as he gets a life insurance product that would allow for a faster growth of the cash value. What kind of policy would you recommend?

-a buy sell agreement

any form of life insurance may be used to fund a

-universal life

-has an insurable component in the form of annually renewable term -2 death benefit options 1.Option (A)-level death benefit 2.Option (B)-increasing death benefit -can make partial surrender/cash withdrawal -flexibility through unbundling (separating)

-annually renewable term

-renews each year without proof of insurability -premiums increase due to attained age

-20 year endowment, 20 pay life, 20 year level term, 20 year decreasing term / the shorter the premium paying period, the larger the premium must be

All other factors being equal, which of the following list from the largest annual premium to the smallest annual premium?

-To keep the policy in force

What is the purpose of establishing the target premium for a universal life policy?

-100%

What percentages of companies employees must take part in a noncontributory group life plan?

-For 31 days

When an employee terminates coverage under a group insurance policy, coverage continues in force

-the groups past claim experience -seize of the group -the nature of the group -insured's medical history is NOT

Which of the following are considered when underwriting group insurance?

-group life

-master contract goes to the sponsor, usually employer -certificate of insurance goes to member -underwritten as a group -if coverage after open enrollment, proof of insurability is required -conversion to individual policy within 31 days same face amount but higher premiums due to attained age

-SEC Registration

To sell variable life insurance policies, an agent must receive all of the following EXCEPT

-straight life (continuous premium) (whole)

-basic policy -level death benefit -insured pays premiums for life or until age 100

-single payment (whole)

-premiums paid in one lump sum and coverage is continuous to age 100

-The benefit is received tax free

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

-the minimum death benefit is guaranteed -the cash value is not guaranteed -the policy owners bear the investment risk -premiums are NOT invested into the insurers general account

All of the following are true about variable products