Section 2 - Types of Life Policies

A Straight Life policy has what type of premium?

A level annual premium for the life of the insured

Which of the following is NOT true regarding the accumulation period of an annuity?

It would not occur in a deferred annuity.

Which of the following statements is correct regarding a whole life policy?

The policy owner is entitled to policy loans.

Which of the following is true regarding the premium in term policies?

The premium is level.

Level term insurance provides a level death benefit and a level premium during the policy term. If the polict 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.

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

Benefit Payment amounts are not guaranteed

The term "fixed" in a fixed annuity refers to all of the following EXCEPT

Death Benefit

A domestic insurer issuing variable contracts must establish one or more

Seperate accounts.

Which type of life insurance policy generates immediate cash value?

Single Premium

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

Single payment or peridodic payments.

An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?

The insured may renew the policy for another 10 years, but at a higher premium rate.

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

The performance of the policy portfolio.

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have.

Universal Life

The accumulation period is also known as

the Pay-in Period

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

To keep the policy in force

The insured is also the policy owner of a whole life policy. What age must the insured attain in order to receive the policy's face amount?

100

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?

Lower

The policy owner 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.

All of the following are true regarding a decreasing term policy EXCEPT

The payable premium amount steadily declines throughout the duration of the contract.

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT

Upon conversion, the death benefit of the permanent policy will be reduced by 50%

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

Upon the last death.

An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?

$100,000

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

A SEC registration

If the owner of a whole life policy who is also 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?

A full death benefit.

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

The death benefit under the Universal Life Option B

Gradually increases each year by the amount that the cash value increases

Fixed annuities provide all of the following EXCEPT

Hedge against inflation

Annually renewable term policies provide a level death benefit for a premium that

Increases annually

Which of the following is NOT a type of whole life insurance?

Increasing term

Equity Indexed Annuity

Interest rates of EIA are tied to the Standard and Poor's Index

Why is an equity indexed annuity considered to be a fixed annuity?

It has a guaranteed minimum interest rate.

Which of the following best describes annually renewable term insurance?

It is level term insurance.

If an agent wishes to sell variable life policies, what license must the agent obtain?

Securities

Which of the following would help prevent a universal life policy from lapsing?

Target premium

What kind of policy allows withdrawals or partial surrenders?

Universal Life

A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?

Immediate Annuity

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

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Option A

Which option for Universal Life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B

Which of the following is NOT one of the three basic types of coverages that are available, based on how the face amount changes during the policy term?

Renewable

A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy

Required a premium increase each renewal.

Equity indexed annuities

Seek higher returns

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?

Universal Life - Option A

Which of the following types of policies will provide permanent protection?

Whole Life

The equity in an equity index annuity is linked to

an index like Standar & Poor's 500

The death protection component of Universal Life insurance is always

Annually Renewable Term

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

Annuitization period.

All other factors being equal, which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?

Greatest

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

Increasing

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?

The annuitant must be a natural person.

Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources?

Term

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.

Which policy component decreases in decreasing term insurance?

Face Amount

What does "level" refer to in level term insurance?

Face amount

Which of the following types of policies allows the policy owner to skip premium payments provided that there is enough cash value in the policy to cover the premium amount?

Universal Life

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

Universal Life