Life Insurance Policies

Also called a Return-of-Premium policy that limits increase each year

Increasing Term Policy

What is universal life insurance known as

Interest sensitive whole life

In a level term policy the premium and the amount of coverage are

level throughout the term

Can a Whole Life policy be canceled or changed by the insurance company?

no

Can you insure your sister on a group life or health policy

no

Since most clients do not like their premiums to increase each year, most insurers also offer this term, where both the premium and the face amount (policy limit) stay level for a period of time, such as five years, 10 years, or even 20 years. If a 30 year old male bought a $100,000 five year _____ term policy, the premium would stay the same (approximately $125) ever year since it is based on the insured's age during the five year period. However, at the end of the five year period, the policy would have to be renewed for the next five years and the premium would increase substantially since it is based on the insured's age for the next five years

Level Premium Term

This policy requires the client to pay all of their premiums by age 65, so the premiums are much higher than a traditional Whole Life policy that assumes you will pay at age 120. If a client at age 40, took out this policy, they would only have to pay premiums until age 65

Life Paid Up at 65

If an insured makes an assignment to a third party for an amount less than the death benefit of the policy, it is known as a

Life settlement

What kind of contracts are Life Paid up at 65, 20-Pay Life/30-Pay Life, and Single Premium Life

Limited Pay Life Contracts

What life insurance has limits that pertain either to the number of years payments must be made, such as 20 pay-life, or the age by which all premiums must be paid, such as life paid-up at 65

Limited pay whole Life Insurance

These policies are exactly like Ordinary or Straight Life policies, except, the premium is paid over a shorter period of time. What policies, though paid up earlier, do not mature until the clients age 120.

Limited-Pay Whole Life

On what policy will the premium increase every year, although the face amount will remain the same. For instance, A 30 year old male in good health could buy a $100,000 ____ policy for an annual premium of about $100. However, he would have to renew the policy next year (no physical is required to renew it) and the premium would increase to about $110. The year after he would have to renew it again and the premium would increase to about $125.

On an Annual Renewable Level Term Policy

Universal life insurance policies permit their owners to take

Partial Surrenders

What can the policy limit on Credit Life not exceed

The amount of the loan

Francisco purchases a five year non-renewable level term policy with a 100,000 policy limit and dies 8 years later. How much will his beneficiary receive

Zero

The face amount of a mortgage protection life insurance policy will ______ as the same rate as the mortgage balance declines

decrease

Is level Premium Term a permanent insurance? In order to be covered on this policy what must occur

no/ you must die in the term

Pamela has a $100,000 ten year level term policy. If she dies three years into the term, how much will her beneficiary receive

$100,000 Level term policy means the insured just has to die to accumulate the funds

An insured has a 30 year decreasing term life insurance policy with a $90,000 policy limit. If they die in 20 years into the policy period, how much will the insurer pay

$30,000

Like an LP65, these contracts require the client to pay over a shorter period of time. For example, a client, age 30, who bought this contract would have to pay all premiums in just 20 years, instead of paying over the 90 year period to age 120, so the premium would be much higher

20-Pay Life/30-Pay Life

Conversion from a Group Life policy to an individual policy when you terminate employment is permitted for how long and regardless of what

31 days and regardless of health

In a contributory group life insurance policy, what percent of those eligible employees must enroll

75%

Universal life is a combination of what

A 1 year renewable term and a cash value account

The plan of Permanent life insurance that offers cash value at the lowest premium is

A Whole Life Policy

What premium policy has an immediate cash value

A single premium policy

Joint life can be written as all of the following except Term insurance Universal Life insurance Accidental death and dismemberment Whole life insurance

Accident death and dismemberment

This policy is marketed to meed the insureds changing needs and ability to pay premiums in an uncertain economic climate. With this policy, an insured may adjust the face amount of the policy, the amount and/or frequency of premium payments or the period of protection, generally without any underwriting. For example, increasing the premium will cause the face amount and cash values to increase as well. A real-estate agent, because of fluctuating income, might purchase this.

Adjustable Whole Life

Group insurance "participation requirements" helps to avoid what

Adverse selection

If a client wants to be sure of having a certain amount of money at a certain time in the future, they should purchase what

An Endowment

Where is Partial surrenders usually allowed

Annuities, universal life and variable life policies

On a 20-pay life, the cash value will equal the face amount when

At maturity (age 120)

Whole life and Limited pay life both reach maturity when

At the same time (age 120)

On term life insurance, the re-entry option is contingent upon

Being able to pass a physical exam

Whole Life benefits are what

Bundled (packaged)

What must include a method to enable a client to calculate their cash value

Variable Whole Life

Buying life insurance on the life of a child does or does not provide income to the child in the event that a parent dies

Does not

The insured can receive the face amount of an Endowment policy if they are still living the policy's

Cash value equals the face amount

What is based on the client current age

Conversion

Most level and Decreasing term policies are _____ at anytime to Whole life insurance without a physical exam. If it is _______the insured may convert their Term policy to Whole life (never another term insurance policy) without proof of insurability. The premium will increase, but only because Whole life is more expensive than term. These are done at the clients "attained" age

Convertible Term

Although it is a type of Decreasing Term, What is usually NOT used for Mortgage Protection

Credit Life

If a client bought a 20 year _____ term policy with a face amount of $100,000 and a premium of $250 per year. After 10 years, the premium would still be $250 per year, but the amount of coverage would be $50,000, so you would say that the cash doubled. This term is often attached as a rider or endorsement to a Whole Life policy to enable the insured to purchase a large amount of coverage at a minimal price. As with all term insurance, there is no cash value accumulation. If is often used as mortgage protection insurance

Decreasing Term

The type of policy used to provide credit life insurance is? This policies premium stays the same each year, but the amount of coverage decreases, usually on a straight-line basis. These policies are usually written to protect a mortgage balance or to fill a business need. They are usually written for periods of 10, 20, or 30 years and expire at the end of the policy period with no option to renew. Although the premium stays the same throughout the policy period, since the amount of coverage goes down, the cost really increases

Decreasing term

What is the type of life insurance provided in mortgage redemption insurance

Decreasing term

What policy is just like Whole Life, except maturity occurs at a predetermined time selected by the insured. It is always the most expensive life policy. For example, if an insured bought an _______ to age 65 at age 25, with a face amount of $50,000, the beneficiary would receive $50,000 if they died anytime between age 25 and 65. If the insured were still alive at age 65, they would be paid the $50,000 by the insurance company and could use it for retirement purposes. Of course, in the meantime, the policy would have accumulated a cash value and the insured could take loans on it. It can be written for any length of time or to mature at any age, but age 65 is typical

Endowment Policy

This is a type of Whole Life with a term insurance rider which uses dividends to buy additional paid-up insurance For example, assume that a client needs $100,000 of whole life insurance, but cant afford to buy that much, so they buy $75,000 of whole life and attaches a $25,000 decreasing term rider, which is cheaper. As dividends are declared by the mutual insurer, they are used to buy additional paid-up insurance. In theory, the amount of paid-up insurance purchased will increase as the amount of the term rider decreases. Eventually the paid up additions will replace the coverage provided by the decreasing term rider and the client is left with $100,000 of whole life insurance, whole only paying an "economical" premium on a $75,000 policy

Enhanced Ordinary Life (economatic)

What type of life insurance has a rate of return that may keep up with inflation, but will never fall below the minimum guaranteed in the policy

Equity Indexed Life

What is for large groups only. Rates are based on claims experience of the group

Experience rating

Universal life insurance is different from whole life because it has premiums that are....

Flexible

In traditional whole life policy premiums are due until the insured dies or hits age 120. Conversely, in a limited pay policy, the premiums are paid when

For a shorter period of time

What premiums gradually increase for the first five years, then remain level at a higher-than-normal amount thereafter. The face amount is level

Graded Premium Whole Life

What premium is also known as Adjustable Whole Life

Graded premium whole life

All of the following are true regarding Variable Life Insurance, Except Producers are required to have a FINRA securities license to sell it The cash values are invested primarily in equities It has a flexible premium feature Insurers maintain cash values in a separate account

It has a flexible premium feature

A "whole life" insurance policy purchases today may or may no provide retirement income late

It may

On group life insurance, the employees receive a Certificate of Insurance, which does what

It summarizes their coverage and lists their beneficiary

What insurance policy is written on the life of a minor

Juvenile life insurance

What is the most expensive insurance in the long run and is usually popular with clients who have temporary needs, such as an outstanding loan or mortgage responsibility

Level Premium Term

If an insured makes an assignment to a third party for an amount less than the death benefit of the policy, it is known as a

Life Settlement

Once a year, the insurer projects its current interest rate, which combines the minimum guaranteed rate and any excess interest they anticipate earning above the minimum. For example, if the minimum rate is 4% and the insurer anticipates earning 3% above that, then the current rate would be 7%. The current rate is guaranteed only for one year. If the insurer earns less than 7% for that year, they ____ money. If they earn more than 7%, they ____ money

Lose/make

What insurance premiums are lower than normal for the first five years, but then increases to a higher-than-normal fixed premium thereafter. The face amount is level

Modified Whole Life

Individual policies are usually more or less expensive than group

More expensive

Can you form a group just to buy insurance

NO

Are loans prohibited on Universal Life policies

No

Is there cash value in Level Premium Term?

No

In what group life plan (employer pays total premium), 100% of all eligible employees must participate

Non-contributory group life plan

When is the creditor both the policy holder and the beneficiary

On Group Credit Life

In what life policy could the employer require an employee to pay the premium for dependent coverage

On Group Life

This death benefit is the policy's stated face amount, which is actually made up of the sum of the accumulated cash value, plus the amount of risk (insurance protection). As cash value increases, the amount the insurance company has at risk decreases (they offset). The premium, which remains level, is used to purchase a decreasing amount of protection over a period of time. This is the same concept utilized in Straight Whole Life contacts

Option A (level death benefit)

There are two options concerning death benefits under Universal Life: Option A and Option B

Option A, which provides a level death benefit, and Option B, which provides an increasing death benefit. Under either option, the death benefit is received tax-free by the beneficiary

This policy provides for an increasing death benefit that is made up of the policy face amount plus the cash value account. The amount of pure risk for the insurance company is a level amount equal to the policy face amount. For example, your client buys a Universal life (Option _) policy with $100,000 face amount. At first, there would be no cash value, so if the client died, the beneficiary would receive the face amount of $100,000. Later on, as the cash values increases, the death benefit would be more than the face amount, since the death benefit equals the face amount plus the cash value. Lets say the client who has a face amount of $100,000 also had a cash value (after a number of years, depending on the size of the premiums paid) of $25,000. If the insured dies, the policy would pay the beneficiary $125,000. Option _ would be the more expensive policy

Option B

A single premium may buy a policy that is paid for how long

Paid for life (age 120)

All of the following are true about universal life insurance except A policy that has a cash value cannot lapse for non-payment Once a cash value develops, loans may be taken Expense charges must be stated separately in the policy Proceeds payable to a beneficiary are taxable

Proceeds payable to a beneficiary are taxable

Whole life policy furnishes a form of permanent protection because it never has to be

Renewed or converted

This policy becomes fully paid up by paying a single premium at policy inception. This is sometimes called a One Pay Life policy. This policy would have an immediate cash value, but would be very expensive

Single Premium

What type of life insurance is written as whole life Single premium Credit Group Mortgage redemption

Single premium

What is commonly used in estate planning so the death of the policy can be used to pay estate taxes when due

Survivor Life insurance

What insurance may be converted to Whole Life but not the reverse.

Term Insurance

What is renewable without a physical examination, up to a certain age

Term Insurance

What type of insurance policy would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources

Term Life insurance

On a term life insurance, what option is contingent upon the insured passing a physical exam at the end of the tern in order to qualify to renew the policy at a lower premium rate then the guaranteed rate available

The "re-entry"

In group insurance the policy owner, who is usually an employee, is issued what

The Master Policy

Convertible term is convertible based upon what of the client

The current or attained age of the client

All of the following are true about Universal Life EXCEPT Taking out a loan will affect cash value accumulation The death benefit paid to the beneficiary is taxable as ordinary income Insurance company administrative costs are subtracted from the cash value Loans are permitted

The death benefit paid to the beneficiary is taxable as ordinary income

When an insured purchases a Decreasing term policy, what decreases each year

The face amount

What decreases on a decreasing term policy

The face amount not the premium

Straight or traditional whole life has a level premium and will provide coverage until when

The insured dies or reaches age 120

A single premium used to buy a Whole Life Policy will pay up the policy for how long

The life of the policy

Survivorship life pays when

The surviving insured dies

All of the following are true regarding Universal Life insurance polices EXCEPT They have no minimum guaranteed rate of return Partial surrenders are permitted without paying tax on the earnings They are also known as "interest sensitive" whole life They have a flexible premium

They have no minimum guaranteed rate of return

Universal Life benefits are what

Transparent (stand-alone)

The shorter the premium paying period, the higher the premium and the faster the cash values build

Truism

This is an adjustable benefit life insurance contract that accumulates cash values and has a flexible premium. This policyholder may increase the death benefit without buying another policy, although they may have to prove insurability to do so. Also, the policyholder has the flexibility to reduce the death benefit as well. What offers flexible premiums and a minimum guaranteed rate of return. Each month, the accumulated cash value of this contact will be credited with interest at the current rate.

Universal Life

What is the Minimum Guaranteed Interest Rate:

Usually around 4%

A life insurance policy that invests its cash values in "Equities" are known as

Variable Life

Investing in what is considered a HEDGE against inflation

Variable Products

What products have no guarantees and are not backed by the Guaranty Fund

Variable Products

What allows the client to self-direct their cash-value investment

Variable Whole Life

A universal life policy that has an investment piece is called

Variable universal life

A client may skip, reduce, or increase premiums on a _______ policy. The policy will not lapse as long as there is enough cash value to cover expense deductions

Variable/Universal Life Policy

A life insurance policy that has a flexible premium and allows the policy owner to self-direct their cash values into equities is known as

Variable/universal Life

A "joint life" policy pays when

When the first insured dies

A "joint and survivor" life policy pays when

When the second insured dies

What policy provides the greatest amount of protection for an insured's premium dollar as well as some cash accumulation

Whole Life

Which policy provides the greatest amount of protection for an insureds premium dollar as well as some cash accumulation Limited-pay life Term Annuity Whole Life

Whole Life

What will pay the face amount upon death or age 120, which ever come first

Whole Life insurance

What policies must contain a table showing their Guaranteed Cash Value at the end of each year (Anniversary Date) for the first 20 years. It is shown per unit (per thousand)

Whole Life policies

Taking a partial surrender on a universal life policy allows the policy owner to do what

Withdraw some of the cash value without paying tax on the interest

Will adjusting the premium paid on an adjustable whole life policy affect the face amount

Yes

The Universal Life policy must always include an amount at risk until age ____when the accumulated cash value may equal the death benefit. This means that the insurance company would no longer have any risk

age 95