MO ch1,2,3,4,5

K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?

$20,000 death benefit

S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary?

$50,000

All of these statements concerning Settlement Options are true, EXCEPT -increased proceeds can be provided through accumulation of interest -rapid depletion of proceeds can be avoided -proceeds can be administered by the insurance company -only the beneficiary may select

-only the beneficiary may select incorrect bc settlement options may be selected by PO

What type of policy would offer a 40-year old the quickest accumulation of cash value?

20-pay life-In this situation, a 20-pay Life policy offers the quickest accumulation of cash value.

Which of these is an element of a Variable Life policy? Policy has: A fixed, level premium Insurer assumes the investment risk No investment risk to the PO Rate of returns are guarantee

A fixed, level premium-Variable Whole Life policies have a fixed, level premium.

which of the following statements is correct regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary?

All proceeds are income tax free in the year they are received

When can a PO change a revocable beneficiary?

Anytime

Whose life is covered on a life insurance policy that contains a payor benefit clause?

Child -payor benefit clause is generally added to a life policy that insures the life of a juvenile. it provides continuance of insurance coverage in the event of death or total disability of the individual responsible for the payment of premiums

Which rider provides coverage for a child under a parent's life insurance policy?

Child term rider

Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?

Decreasing Term

Credit life insurance is typically issued with which of the following types of coverage?

Decreasing term

A term life insurance policy matures

Upon the insured's death during the term of the policy Term life policies can only mature/pay out the face amount if death occurs during the term policy

A variable insurance policy: -Guarantees a minimum rate of return -Does not allow the policy owner to assume the investment risk -Does not guarantee a return on his investment accounts -Does not guarantee an assignment provision

Does not guarantee a return on its investment accounts. -they do not guarantee contract cash values, it's a policy owner who assumes the investment risk. -variable life insurance contracts do not make any promises as to either interest rates or minimum cash values Requires a producer to guarantee not more than 12% return per annum

D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?

Ex wife

A universal life policy is sometimes referred to as an unbundled life policy because the owner can see the interest earned, cost of insurance, and the

Expense charges

Term insurance has which of the following characteristics?

Expires at the end of the policy period

An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?

Full face amount minus any past due premiums

A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following?

Inability of the insured to perform more than 2 activities of Daily Living (ADLs)

K, age 45, and his wife, age 43, have three children. They purchase a family policy that covers K's wife to age 65. All of these situations will pay a death benefit except: k's wife dies @ age 60 K's wife dies at age 66 A child dies at age 15 A child dies at age 18

Ks wife dies at age 66 —— K's wife has coverage only until age 65

K is looking to purchase renewable term insurance. Which of these types of term insurance may be renewable? -increasing -decreasing -adjustable -level

Level -a level term policy pays the same benefit amount if death occurs at any point during the term- renewable

D need 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 -covers a need for a specified amount of time at lowest premium

Life insurance that covers an insured's whole life with level premiums and paid over a limited time is called: -adjustable life -renewable term -limited pay life -joint life

Limited pay life. -Life insurance that covers and insured's whole life with level premiums paid over a limited time

K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?

Modified whole life

Which statement is true regarding a minor beneficiary?

Normally, a guardian is required to be appointed in the Beneficiary clause of the contract

On a life insurance policy, who is qualified to change the beneficiary designation?

PO -if designated as irrevocable, consent may be needed by the current beneficiary before changing

K owns a Whole Life policy. If K wants an increasing Death Benefit to protect against inflation, which Dividend Option should she choose? -Paid-Up Additional Insurance -Cash Option -Reduced Premiums -Accumulate with interest

Paid-Up Additional Insurance

A father who dies within 3 years after purchasing a life insurance life on his infant daughter can have the policy premiums waived under which provision? payor provision accelerated benefits provision assignment provision waiver of premium provision

Payor provision -provides that in the event of death or disability of the adult premium payor, the premiums on a juvenile policy will be waived until the insured child reaches a specified age or the maturity date of the contract

Which statement is correct regarding the premium payment schedule for whole life policies?

Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured

K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true?

Proceeds will be payable to K's estate if P dies within a specified time under the Common Disaster provision

Which of these provisions require proof of insurability after a policy has lapsed?

Reinstatement

Child term rider with a whole life policy means

The children get life insurance as long as the whole life policy is entact

The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is: The cost The health of the insured The amount of coverage being converted Who will be beneficiary

The cost -The cost of insurance is most important when an insured owner is trying to decide whether to convert term insurance at the insurance original age or the insured's attained age

What is the underlying concept regarding level premiums?

The early years are charged more than what is needed

What is the initial source of underwriting for an insurance policy?

The initial source of underwriting for an insurance policy is the application containing statements from the insured

Which of the following is considered an element of a variable life policy?

Underlying equity investment

Which of the following life insurance policies combined term insurance with an investment element? -increasing term life -decreasing term life -universal life -graded life

Universal life -universal life policy combines term life insurance with an investment element

When is the face amount paid under a Joint Life and survivor policy? -when policy reaches maturation -upon death of first insured -Upon death of the last insured -when one of the insured's becomes disabled and no longer able to make premium payments

Upon death of the last insured

Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options? -modified whole life -variable life -universal life -adjustable life

VARIABLE LIFE -level premium & allows the PO to choose from a selection of investment options with term coverage

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

Variable Universal Life -comprised of monthly mortality charges and self directed investment choices

Life insurance immediately creates a state upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit Universal life Variable life Fixed annuity Modified endowment contract

Variable life -The variable feature of variable whole life insurance is it's just benefits. -death benefit will not go lower than the policies guaranteed minimum even if investment performance is poor

A life policy with the death benefit in cash value that can fluctuate according to the performance of its underlying investment portfolio is referred to as

Variable life -cash value and death benefits of a variable life policy can fluctuate according to the performance of its underlying investment portfolio

what does the ownership clause in a life insurance policy state?

Who the policyowner is and what rights the policyowner is entitled to

B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of

additional Whole Life coverage at specified times -guaranteed insurability option in a whole life policy permits the policyowner to purchase, without evidence of insurability, stated amounts of whole life ins at specified times

A cost of Living rider gives the insured

additional death benefits -the cost of living rider can be purchased with many different types of life insurance. This type of coverage is designed to help you hedge your bets against inflation. ex: if you purchase this rider, your policy is going to increase in value if inflation increases

L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will

adjust the death benefit to a reduced amount under the Misstatement of Age provision in the policy it specifies age and sex can be changed and it will be adjusted

Which premium schedule results in the lowest cost to the policyowner?

annual -the more times a year you pay the more it costs

T is the policyowner for a Life insurance policy with an Irrevocable beneficiary designation. If T wishes to change the beneficiary, T must obtain permission from the

beneficiary -irrevocable designation may not be changed without the written consent of the beneficiary

Variable whole life insurance can be described as

both an insurance and securities product

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

decreasing term rider

N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot?

exclusion -specified hazards listed in a policy for which benefits will not be paid

All of these are characteristics of an Adjustable Life policy EXCEPT: -adjustable premiums -adjustable premium payment period -combination of term and whole life insurance -face amnt can be adjusted using policy dividends

face amount can be adjusted using policy dividends -an insured may make all of these actions with an adjustable life policy

Which of these statements is incorrect regarding the federal income tax treatment of life insurance? premiums are normally not tax deductible cash dividends are normally not taxed proceeds are received tax-free if there is a named beneficiary -entire cash surrender value is taxable

incorrect: -entire cash surrender value is taxable total cash surrender value is NOT taxable, the interest gained is taxable

Which of the following actions require policy owner to provide proof of insurability in an adjustable life policy?

increase face amount

In a life insurance contract, an insurance company's promise to pay stated benefits is called the:

insuring clause -this establishes the basic promise of the ins co

What kind of premium does a Whole Life policy have?

level

what is not an element of life insurance premiums from the following? mortality rate insurer's expenses interest credit morbidity rate

morbidity rate

Whole life insurance policies are contractually guaranteed to provide each of the following except: Cash value that will ultimately replace the death benefit Nonforfeiture benefit options Premiums that remain fixed for the life of the policy Partial withdrawal features beyond a surrender charge period

partial withdrawal features beyond a surrender charge period

Which statemen is TRUE regarding a policy loan?

past due interest on a policy loan is added to the total debt

Which of the following information is NOT required to be included in a Whole Life policy? -policy loan interest rate -policy guaranteed dividend table -policy premium -policy cash value table

policy guaranteed dividend table

A policyowner is able to choose the frequency of premium payments through what policy feature?

premium mode

T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?

request of change will be refused

which statement regarding the change of beneficiary provision is true?

the PO can change the beneficiary -PO can change at any time however consent may be needed by the current beneficiary if designated as irrevoccable

whole life insurance is sometimes referred to as "straight life". what does the word "straight" indicate when using this phrase?

the duration of premium payments, usually of the rest of someones life - maturing at 100