Types of Individual Life Insurance
which of the following life insurance policies would be considered interest sensitive?
universal life as well as being a flexible premium policy, universal life is also an interest-sensitive policy. the insurer credits the cash value in the policy with a current (nonguaranteed) interest rate and backs the cash value with a contract (lower guaranteed) rate of interest
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
SEC registration agents selling variable life products must be registered with FINRA, have a securities license within the state to sell life insurance.
which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?
payor benefit if the payor (usually a parent or guaradian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21
which of the following riders would not cause the death benefit to increase
payor benefit rider payor benefit rider does not increase the death benefit; it only pays the premium if the payor is disabled or dies.
An applicant wants to buy a life insurance policy in which he can count on receiving the same benefits as stated in the contract. Which type should he buy?
fixed fixed life insurance policies offer minimum guaranteed or fixed benefits stated in the contract.
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 term insurance provides a death benefit only; cost per $1,000 of coverage is less than other types of policies that create cash values
which of the following determines the cash value of a variable life policy
the performance of the policy portfolio the cash value of a variable life policy is not guaranteed and fluctuates with the performance of the portfolio in which the premiums have been invested by the insurer.
when would a 20 day whole life policy endow
when the insured reaches age 100 a limited pay whole life policy, just like straight life, endows for the face amount if the insured lives to age 100. the premium is, however, completely paid off in 20 years.
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy 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. if a level term product is renewed at the end of the term period the premium will be based upon the attained age of the insured.
term policies are available as level, increasing, and decreasing. which policy component fluctuates depending on the policy type?
death benefit regardless of the type of term insurance purchased, the premium is often level throughout the term of the policy. only the amount of the death benefit may change
An insured buys a 5-year level premium term policy with a face amount of $100,000. The policy also contains renewability and convertibility options. When the insured renews the policy in five years
it will increase because the insured will be 5 years older than when the policy was originally purchased the premium will remain level during the entire level premium term policy period. if the policy renews at the end of the term, the premium will be based on the insured's attained age at the time of renewal
Concerning Juvenile Life insurance, which of the following statements is INCORRECT?
juvenile life is classified as any life insurance purchased by a minor
both universal life and variable universal life have a
flexible premium variable universal life, like universal life itself, has a flexible premium that can be increased or decreased as the policyowner chooses, so long as there is enough value in the policy to fund the death benefit
which of the following would be considered an advantage of owning term insurance?
it provides the highest amount of coverage for a temporary period of time. term insurance has no cash value and provides no death benefit if the insured dies after the policy is expired; however it provides the highest amount of protection for a temporary period of time
The policyowner 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 the policy owner (insured) would need to prove insurability for the amount of the increase
all of the following entities regulate variable life policies except
the guaranty association variable life insurance is regulated by both the state and federal government, as well as the insurance department and the SEC
which of the following features of the indexed whole life policy is not fixed
cash value growth the premium is fixed and the death benefit is guaranteed. cash value is dependent upon the performance of the equity index although a minimum cash value is guaranteed.
in a survivorship life policy, when does the insurer pay the death benefit
upon the last death
which of the following is NOT a characteristic of universal life insurance? a. cash account b. fixed premium c. unbundled premium d. flexible death benefit
b. fixed premium
Which policy component decreases in decreasing term insurance?
face amount decreasing term policies feature a level premium and a death benefit that decreases each year over the duration of the policy term
what type of whole life insurance policy has premiums that are adjusted so that during the first years of the policy, the premiums are lower than those of a straight whole life policy, and in subsequent years the premiums are higher than those of a straight whole life policy?
modified life it is a permanent policy, but in the early years the premiums are similar to that of a term policy; in later years the premiums are increased to build cash values and cause the policy to endow.
a return of premium term life policy is written as what type of term coverage
Increasing ROP is an increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid
Which Universal Life option has a gradually increasing cash value and a level death benefit?
option A under option A, the death benefit remains level while the cash value gradually increases. the death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures
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 the policyowner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. in fact, the policyowner may even skip paying a premium and the policy will not lapse as long as there is sufficient cash value at the time to compensate for the nonpayment of the premium.
which component increases in the increasing term insurance?
death benefit increasing term features level annual premiums and a death benefit that increases each year over the duration of the policy term.
which of the following is an example of a limited-pay life policy?
life paid-up at age 65 limited pay whole life premiums are all paid by the time the insured reaches age 65. the policy endows when the insured turns 100. it is the premium paying period that is limited, not the maturity
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 in limited pay policies the premiums for coverage will be completely paid up well before age 100, usually after a specified number of years
If an agent wishes to sell variable life policies, what license must the agent obtain?
securities variable products are governed in part by the securities and exchange commission; therefore, agents selling variable life policies must also secure a securities license.
which of the following is INCORRECT regarding a 100,000 20-year level term policy? a. if the insured dies before the policy expired, the beneficiary will receive 100,000. b. the policy will expire at the end of the 20-year period c. at the end of 20 years, the policy's cash value will equal 100,000 d. the policy premiums will remain level for 20 years.
c. at the end of 20 years, the policy's cash value will equal 100,000. term policies do not develop cash values... all other statements are true
