Alabama (Department of Insurance) Life and Health Insurance

-evidence of insurability is not required -most term policies contain a convertibility option -upon conversion, the premium for the permanent policy will be based upon attained age

All of the following are regarded true under the convertibility option under a term life insurance

-single premium

Which type of life insurance policy generates immediate cash value?

-adjustable life

-policy owner may adjust the premium and premium paying period, face amount, and period of protection -can be converted from term to whole life and vice versa -cash value only develops if the premiums paid are more than the cost of the policy

-term insurance

A 27 year old professional has a limited budget and can only $15 per month for life insurance. Which one of the following life insurance policies provide the largest face amount for that amount of premium?

-required a premium increase at each renewal

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

-a full death benefit (if he lives to the maturity date they will pay the policy owner, if dying before they pay the beneficiary)

If the owner of a whole life policy who is also the insured dies at 80 and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?

-Term Life

Level Premium Term Annually Renewable Term Decreasing Term Increasing Term

-General Characteristics (Term Life)

Pure protection Last for specific time No cash value

-Level Premium term

level death benefit and premium

-Group life

master contract goes to sponsor usually employer certificate of insurance to employee underwritten as a group if coverage after open enrollment proof of insurability is required -conversion to ind policy in 31 days same face amount but a higher premium

-increases annually

Annually Renewable Term policies provide a level death benefit for a premium that

-renewable

All of the following are types of term insurance depending on how the face amount changes during the policy term EXCEPT

-straight life (have a level guaranteed face amount and a level premium for the life of the insured)

Which of the following policies would be classified as a traditional level premium contract?

-Flexible premium

adjustable life universal life

-Increasing Term

coverage increases each year

-universal life

has an insurance component in form of ART 2 death benefit options : OpA: level death OpB:increasing death can make partial surrender and cash withdrawal flexible through unbundling (seperating)

-Annually Renewable Term

renews each year without proof of insurability premiums increase due to attained age

-Death Benefit (premium typically stays the same, only the death benefit or face amount will change)

Term policies are available as level, increasing and decreasing. Which policy component fluctuates depending on the policy type?

-death benefit (features level annual premiums and death benefits that increases each year over the duration of the policy)

Which component increases in the increasing term insurance?

-its a form of level term insurance that offers the most insurance at the lowest cost

Which of the following best describes Annually Renewable term insurance?

-greatest (term policies provide the greatest amount of coverage for the lowest premium)

Which of the following terms best describes the coverage provided by term policies, as compared to any other form of protection?

-General Characteristics (Whole Life)

permanent protection guaranteed elements (face amount, premium, cash value) until death or age 100 Level premium cash value and other living benefits

-limited payment

premium paid until certain time, coverage in effect until age 100

-single payment

premiums paid in one lump sum and coverage continues until age 100

-Survivorship (second to die)

same concept as joint paid after death of second to die

-Whole Life

straight life (continuous premium) limited payment single payment

-General characteristics (flexible premium)

type of whole life insurance flexible premium

-face amount (offers a level premium with a face amount that decreases annually throughout the duration of the policy term)

Which policy component decreases in decreasing term insurance?

-straight life (continuous premium)

basic policy level death benefit insured pays premium for life or until age 100

-Decreasing Term

coverage decreases at predetermined times gradually, best used when the need for protection declines from year to year

-Joint Life (first to die)

insures two or more people premium based on a joint age of insured paid on first death

-Variable Life (different type of policy)

fixed premium, minimum death benefit cash value and amount of death benefit not guaranteed assets in separate accounts agents must be dually licensed in insurance and securities