xcel ch 4 part 1
limited payment insurance
a life insurance policy that has premiums fully paid-up within a state of time period is called
variable whole life
a life insurance policy which contains cash values that vary according to its investment performance of stocks is called
the single premium cash value policy can be described as a
a policy that is paid up after only one payment
life insurance policy written on one contract for two people in which it is payable upon the first death is called
joint
which type of life insurance is normally associated with a payor benefit Rider?
juvenile insurance
which policy feature makes a universal life policy different from a whole life policy?
a flexible Premium schedule
a modified endowment contract (MEC) is best described as
a life insurance contract which accumulates cash value is higher than the IRS will allow
Universal Life Insurance
a life insurance policy that contains a guaranteed interest rate with the chance to earn a rate that is higher than the Guaranteed Rate is called
limited pay policy
a permanent life insurance policy where the policyowner pays premiums for a specified number of years is called a
a policy owner may change two policy features on what type of Life Insurance?
adjustable life policyowner can change premium and face amount
partial surrender
an interest sensitive life insurance policy owner may be able to withdraw the policy's cash value interest-free. The provision that allows this is called
a renewable term life insurance policy can be renewed
at a predetermined date or age, regardless of the insured's health
Donald is the primary insured of a life insurance policy and adds a children's term Rider. What is the advantage of adding this Rider?
can be converted to permanent coverage without evidence of insurability
Jonas is a whole life insurance policy owner and would like to add coverage for his two children. Which of the following products would allow him to accomplish this?
child term Rider
what happens to the coverage under a children's term Rider when that child reaches a specified age?
coverage is eliminated
which of these is NOT subject to income taxation under a modified endowment contract (MEC)?
death benefit
leather premium permanent Insurance accumulates a reserve that will eventually
equal the face amount of the policy
a side and child can be added to the primary insurance coverage as what kind of Rider?
family term
which of these Riders will pay a death benefit if the insured spouse dies?
family term insurance Rider
all of these are characteristics of a universal life insurance policy EXCEPT
fixed surrender value CORRECT: flexible death benefit, flexible premiums, build cash value
index whole life insurance contains a Securities component that acts as a
hedge against inflation
industrial life insurance
insurance that issues very small face amount, such as $1,000 or $2,000. Premiums are paid weekly and collected by debit agents. They were designed for burial coverage.
whole life insurance
insurance that provides death benefits for the entire life of the insured. It also provides living benefits in the form of cash values. And it matures at age 100 and normally has a level premium.
ordinary life insurance
is made up of several types of individual life insurance, such as temporary (term), permanent (whole)
when a decreasing term policies purchased, it contains a decreasing death benefit and
level premiums
universal life
life insurance policy that is subject to a contract interest rate is referred to as a
a limited payment whole life policy provides
lifetime protection
the premium for a modified whole life policy is
lower than the typical whole life policy during the first four years and then higher than the typical for the remainder
all of these are valid options for an adjustable life policy EXCEPT
nonforfeiture option can be used to increase the death benefit CORRECT: the policy's premium can be increased or decreased, the policies death benefit can be increased or decreased, the policy's protection period can be modified
Shirley has a $500,000 10 year non renewable level term life policy. If she dies 15 years after the policy's Inception date how much will her beneficiary receive?
nothing because the policy is valid for only 10 years
variable life insurance and universal life insurance are very similar. Which of these features are held exclusively by variable universal life insurance?
policyowner has the right to select the investment which would provide the greatest return
which of these describes the result of a modified endowment contract that failed to meet the seven pay test?
pre-death distributions are typically taxed
under a modified endowment contract, what are the likely tax consequences?
pre-death distributions will become taxable
how are survivorship life insurance policies helpful in estate planning?
provide funds to help pay taxes
term insurance is appropriate for someone who
seeks temporary protection and lower premiums
which of the following are the premium payments for a universal life policy NOT used for?
separate account Investments CORRECT: death benefits, cash value, loading costs
which of the following policies does NOT build cash value?
term
what types of life insurance are normally used for team play Indemnification?
term, whole, and Universal Life Insurance
free death distributions from a modified endowment contract (MEC) receive different tax treatment than other life insurance policies because
the MEC tends to be an investment vehicle
group policy
the business will typically use which type of life insurance to cover their employees?
what does the word "level" in level term describe?
the face amount
what is a corridor in relation to a universal life insurance policy?
the gap between the total death benefit and the policy's cash value
survivorship life
the type of policy which pays on the death of the last person is called
a partial surrender is allowed in which of the following Life policies?
universal life
Joe has a life insurance policy that has a face amount of $300,000. After a number of years, a policy's cash value accumulates to $50,000 and the face amount becomes $350,000. What kind of policy is this?
universal life policy
a Securities license is required for life insurance producer to sell
variable life insurance
which type of policy combines the flexibility of a universal life policy with investment choices
variable universal life policy
which type of life insurance offers flexible premiums, a flexible death benefit, and the choice of how the cash value will be invested?
variable universal policy
renewal
what is an automatic continuance of insurance coverage referred to as?
all of these statements concerning whole life insurance are false EXCEPT
when a whole life policy is surrendered, income taxes may be owed
endowment policy
which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive?
which of these would be the best example of a limited pay life insurance policy?
whole life policy with premiums paid up after 20 years
Sean, Mike, and Dave are brothers who have a $100,000 "first to die" joint life policy covering all three of their lives. If my dies first, the policy proceeds
will no longer provide Insurance protection
a renewable term life insurance policy allows the policyowner the right to renew the policy
without producing proof of insurability
Rob purchased the standard whole life policy with a $500,000 death benefit when he was age 30. his insurance agent told him to policy would be paid up if he reached age 100. the present cash value of the policy equals $250,000. Rob recently died at age 60. The death benefit would be
$500,000 face amount
there are three main types of Life Insurance
1. ordinary life 2. industrial life 3. group life
term life insurance
Insurance provides pure death protection since it only pays a death benefit if the insured dies during the policy term does not accrue cash value it's meant for those who need the greatest amount of life insurance for a specified period of time at the lowest premium the initial premium of term insurance is lower than for an equivalent amount of whole life insurance life insurance that has no cash value when the policy expires.
group life insurance
Insurance written for members of a group, such as a place of employment, Association, or Union. coverage is provided to the members of that group under one master contract. the group is under written as a whole, not on each individual member. one of the benefits of group life coverage is usually there is no evidence of insurability required.
Equity indexed whole life
Peter has a pulse you were 80% to 90% of the premium is invested in traditional fixed-income Securities and the remainder of the premium is invested in contracts tied to a stipulated stock index. What kind of policy is this?