3 - Life Insurance Policies - Provisions, Options and Riders: Types of Insurance Policies

Universal Life

A 42-year-old executive wants to purchase life insurance that will allow for increases or decreases to coverage as his/her needs change. Which of the following policies will best meet this need?

The premiums can be lowered or raised, based on investment performance. Cash value has a minimum rate of accumulation; If the gain on the index goes beyond the policy's minimum rate of return, the cash value will mirror that of the index; Tied to an equity index such as the S&P 500

All of these statements about Equity Indexed Life Insurance are correct, EXCEPT:

10 years

G purchased a Family Income policy at age 40. The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income?

Through mutual funds, stocks, and bonds

How does a typical Variable Life Policy investment account grow?

20-pay Life

J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?

$20,000 death benefit

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?

Whole Life Policy with other insured rider

Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase?

Face amount plus the policy's cash value

What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death?

Convertible Term

What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?

Level

What kind of premium does a Whole Life policy have?

Decreasing term

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?

Only when the insured dies

When is the face amount of a Whole Life policy paid?

Equity Index Insurance

S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?

Conversion provision

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

Interest rates determine cash values

Which of the following characteristics is CORRECT about Interest Sensitive Whole Life?

A fixed, level premium

Which of these is an element of a Variable Life policy?

Life Paid-Up at Age 70

Which of these would be considered a Limited-Pay Life policy?

Cash value may be borrowed against

Which statement about a whole life policy is correct?

Modified Endowment Contract (MEC)

When a life insurance policy exceeds certain IRS table values, the result would create which of the following?

Variable

A(n) ______ Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities.