Ch 3 Sec. 1 Life types of polices
A term life insurance policy matures? -upon endowment of the contract -upon death of the insured -when the cash value equals the death benefit -upon the insured's death during the term of the policy
upon the insured's death during the term of the policy
T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this? -renewable -increasing -level -decreasing
(Renewable Term) policies guarantee the insured the right to continue term coverage after expiration of the initial policy period
A policy can provide financial benefits if an insured is killed, loses a limb, suffers blindness, or is paralyzed in a covered accident? -universal life -AD&D -endowment -adjustable life
Accidental Death & Dismemberment (AD&D)
Allows an individual to leave the group term plan and continue his or her insurance without providing evidence of insurability? -owner's rights clause -incontestable period -insuring agreement -conversion privilege
Conversion Privilege
Credit life insurance is typically issued with which of the following types of coverage? -annual renewable term -decreasing term -individual whole term -group term
Decreasing Term
What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death? -face amount plus the policy's cash value -face amount plus the policy's dividends -the greater amount of the policy's death benefit or the cash value -face amount plus total premium paid throughout the life of the policy
Face amount plus the policy's cash value
P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase? -Family Benefit policy -Family Maintenance policy -Family Income Policy -Family Survivor Policy
Family Maintenance policy
What kind of special need would a policyowner require with a Adjustable Life insurance policy? -level premiums -flexible premiums -flexible nonforfeiture options -level death benefits
Flexible premiums
What plan is designed to protect an insured from an unpaid mortgage balance upon premature death? -survivorship life -family plan -joint life -whole life and level term rider
Joint Life
M purchases a $70,000 life insurance policy with premium payments of $550 a year for the first 5 years. At the beginning of the sixth year, the premium will increase to $800 per year but will remain level thereafter. The face amount will remain at $70,000 throughout the life of the policy. The type of policy that M has purchased is? -adjustable life -indeterminate premium life -grader premium life -modified premium life
MODIFIED PREMIUM LIFE (whole life policies are distinguished by premiums that are lower than typical whole life premiums during the first few years (usually five) and then higher than typical thereafter
K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this? -variable life -adjustable life -graded premium whole life -modified whole life
Modified Whole Life
Which is true concerning a Variable Universal Life policy? -Policyowner controls where the investment will go & selects the amount of the premium payment -Policy owner has no say where the investment will go but can choose the premium mode -the investment vehicle for this type of policy is held in the insurer's general portfolio -the death benefit can vary but the policyowner has no say in the premium amount paid
Policyowner controls where the investment will go & selects the amount of the premium payment
With a group credit life policy, the amount of insurance on the life of a debtor is limited to the total amount of? -half of the insured's total loan value -the insured's total loan value -75% of the insured's total loan value -$25,000
The insured's total loan value
When is the face amount paid under a Joint Life and Survivor policy? -when policy reaches maturation -upon death of the first insured -upon death of the last insured -when one of the insureds becomes disabled and no longer able to make premium payments
Upon death of the last insured
How long does the coverage normally remain on a limited-pay life policy? -age 65 -age 100 -when premium payments stop -at the discretion of the insurer
age 100
A variable insurance policy? -guarantee a minimum rate of return -does not allow the policyowner to assume the investment risk -does not guarantee a return on its investment accounts -does not guarantee an assignment provision
does not guarantee a return on its investment accounts
A policy that is overfunded to where it does not meet the 7-pay test is considered a -modified whole life -modified endowment contract -variable universal life -interest-sensitive whole life
Modified Endowment Contract
What type of life policy insures two individuals and is designed to pay a benefit upon the second death? -shared -survivorship -adjustable -joint
Survivorship
What type of life insurance are credit policies issued as? -whole -variable -term -universal
Term
Which of the following actions is not possible with a Universal Life policy? -Policy's cash value may be used to pay premiums -Premium payments may be made at unscheduled times -Premiums may be applied as a credit against income tax -Face amount may be adjusted
Premiums may be applied as a credit against income tax
