Type of insurance policy's
Which statement regarding an adjustable life insurance policy is NOT true?
Policy loans are not permitted
Which statement regarding a single premium life insurance policy is not correct?
Additional premiums may be required under certain conditions
Which statement regarding the cash value of a whole life insurance policy is correct?
Available to the policyowner when policy has been surrendered
At what point are death proceeds paid in a joint life insurance policy?
When the first insured dies
What typically changes at the re-entry option date found in some term life policies?
premium
A material change in a modified endowment contract (MEC) results in
the seven pay test, adjusted for cash value, being applied
Which of these is not an advantage of term life insurance?
A cash benefit will be provided if the insured is alive at the end of the policy period
All of these are considered features of whole life insurance except
Initial premium is lower than for an equivalent amount of term insurance
Which type of life insurance policy is best suited for paying off the outstanding balance of the 30 year mortgage in the event of the insured's death?
30 year decreasing term
Which is an accurate description of the premium in a graded premium life insurance policy?
Annual increases in premium for a stated number of years then remains level
When does the insured's stop making payments under 30 payment whole life policy?
At the time of death or 30 years after the policies inception, which ever comes first
Which statement regarding universal life insurance is correct?
Cash value accumulations have a guaranteed minimum interest rate
Which of these is not considered a type of limited payment whole life insurance?
Endowment at age 70
Rick owns a variable universal life policy and chooses a variable death benefit option. What will typically happened to the death benefit as a result of the selection?
Fluctuate with changes in the cash account
The policy owner has just borrowed from a life insurance policies cash value. Which of these statements is true?
In the event of death, the loan amount is deducted from the policy proceeds
Which statement regarding whole life insurance is accurate?
Insurance coverage can continue for life
I like policy that has premiums that are lower than normal during the early years is called
Modified life
Which action will trigger a penalty tax on premature distribution from a modified and down my contract?
Policy loans
How are level term policies able to provide level premiums?
Premiums are averaged over the term of the policy
Which of these policies is considered a whole life policy?
Single premium life
What would be considered an advantage of purchasing term life insurance?
The initial premium is lower compared to an equivalent amount of whole life coverage
Under an adjustable life insurance policy, which of the following may not be changed without further underwriting?
The person insured
An advantage of owning a flexible premium life insurance policy would be
The policyowner can make policy changes without difficulty
Which of these is not a reason to buy a term life policy?
To accumulate savings
What is the face amount of a $50,000 graded death benefit life insurance policy on the policy is issued?
Under $50,000 initially, but increases over time
An insurance policy that can also be classified as a securities product is called
Variable Life
When would evidence of insurability be required for a person already covered with a variable universal life policy?
When the death benefit is increased
An individual who purchases a modified life insurance policy expects
an improvement in future income
Who normally pays the premiums for group credit life insurance?
borrower
Which of these life insurance policies does not contain a cash value provision?
decreasing term life
The insurance coverage in a variable life insurance policy may vary based on the value of
its underlying investments
Which of the following is a true statement regarding universal life insurance?
Policy indicates how much of each premium is used toward company expenses
Which statement concerning adjustable life insurance is accurate?
The face amount and premiums can be changed simultaneously by the policyowner
John received a one-time distribution of $50,000 from his modified endowment contract (MEC). Prior to that, the contract's cash value was $150,000, the contract investment amount was $100,000, and the death benefit was $500,000. What percentage of the $50,000 distribution was taxable as ordinary income?
100%
What kind of life policy typically offers mortgage protection?
Decreasing term
Which of the following is generally a form of group credit life insurance?
Decreasing term insurance
Which statement concerning a decreasing term life policy is accurate?
Face amount decreases over the policy period
Which of these may not be deducted from premium payments or the cash value of a variable life insurance policy?
Federal premium taxes
Which of the following would not be a reason for purchasing life insurance on the child's life?
If it's for the child if the parents die
What is the guaranteed cash value of a whole life insurance policy when the insured turn 65 years old?
Less than the policies face amount
Straight whole life insurance can be accurately described in all of these statements except
Policy protection normally expires at age 65
Assets that back the non-guaranteed values a variable life insurance products are held in which account?
Separate account set up by the insurer
How does the cost for a survivorship life policy compare to the cost of combining two separate individual life insurance policies?
Survivorship life policy is lower
All of these statements concerning Group credit life insurance are false except
The face amount is determined by the outstanding loan balance
Peter, age 50, surrenders his modified endowment contract (MEC). How is the gain treated in terms of federal income taxes?
The gain is treated as taxable income and a penalty tax is imposed on the gain
Just the following could be a future use of the cash value that build in a recently purchased whole life insurance policy?
Wyddd supplemental income and 35 years
A nonparticipating whole life insurance policy was surrendered for its $20,000 cash value. The total premium paid has totaled $16,000. eBay were the federal income tax consequences to the policy owner on receipt of the cash value?
$16,000 was received tax-free and $4,000 as ordinary income
When a 10 year renewable term life insurance policy issued at age 45 is renewed, the premium rate will be the current rate for
10 year term insurance for a person aged 55
A "premature" Distribution from a modified and down main contract (MEC) incurs a penalty tax of
10%
A survivorship life insurance policy usually covers how many lives?
2
Which of the following combinations best describe universal life insurance policy?
A flexible premium deposit fund and a monthly renewable term insurance policy
What is a juvenile life insurance policy?
A life policy that covers the life of a minor
Which statement concerning an adjustable life insurance policy is false?
Evidence of insurability is required when there is a change in premium
How long does one premium payment cover in a single premium whole life policy?
Full life of the policy
What type of life insurance policy covers two or more persons and pays the face amount upon the death of the first insured?
Joint Life
The death proceeds of a credit life insurance policy are typically paid to the
Lender
What type of premiums are associated with an individual mortgage protection life insurance policies?
Level premiums
Laura added a children's rider To her life insurance policy. What type of coverage was added?
Level term
Which of these statements accurately portray is an adjustable life insurance policy?
Policies can alternate between forms of term and whole life insurance
Taxable income may be the result from all of these modified endowment contract transactions except for
Policy is surrendered for less than what was paid into it
These are all accurate statements regarding universal life insurance except
Policy loans are not permitted
Which of these must be disclosed in a universal life policy?
The policy's surrender charges
How does a continuous premium whole life policy differ from a limited payment whole life policy?
The time period in which premiums will be paid
Which of the following statements about universal life insurance is not true?
Universal life insurance normally has a minimum guaranteed cash value for duration of the policy
How long does protection normally extend to under a limited pay whole life policy?
Until age 100
Which type of life insurance policy allows a policy owner the choice of investments along with flexible premium payments?
Variable universal life
