CH#3: Life Insurance Policies Q&A

Upon the last death

In a survivorship life policy, when does the insurer pay the death benefit A) If the insured survives to age 100 B) Upon the last death C) Upon the first death D) Half at the first death, and half at the second death

The insureds' medical history

Which of the following are generally NOT considered when underwriting group insurance A) The size of the group B) The insureds' medical history C) The nature of the group D) The group's past claim experience

It is level term insurance

Which of the following best describes annually renewable term insurance A) It is level term insurance. B) It requires proof of insurability at each renewal. C) Neither the premium nor the death benefit is affected by the insured's age. D) It provides an annually increasing death benefit

There is a requirement to prove insurability on the part of the participants

All of the following are characteristics of a group life insurance plan EXCEPT A) The cost of the plan is determined by the average age of the group. B) There is a requirement to prove insurability on the part of the participants. C) The participants receive a Certificate of Insurance as their proof of insurance. D) A minimum number of participants is required in order to underwrite the plan

The death benefit can be increased by providing evidence of insurability

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change A) The death benefit can be increased only by exchanging the existing policy for a new one. B) The death benefit can be increased by providing evidence of insurability. C) The death benefit cannot be increased. D) The death benefit can be increased only when the policy has developed a cash value

A SEC registration

To sell variable life insurance policies, an agent must receive all of the following EXCEPT A) A securities license. B) A life insurance license. C) A SEC registration. D) A FINRA registration

Universal life

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium A) Straight whole life B) Universal life C) Variable life D) Decreasing term

The beneficiary

In a group life insurance policy, the employer may select all of the following EXCEPT A) The amount of insurance. B) The premium payor. C) The beneficiary. D) The type of insurance

Guaranteed and Current

A Universal Life insurance policy has two types of interest rates that are called A) Option A and Option B. B) Fixed and Variable. C) Minimum and Target. D) Guaranteed and Current

A level annual premium for the life of the insured

A Straight Life policy has what type of premium? A) A decreasing annual premium for the life of the insured B) A variable annual premium for the life of the insured C) A level annual premium for the life of the insured D) An increasing annual premium for the life of the insured

Joint Life Policy

A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that A) Joint Life Policy B) Survivorship Life Policy C) Second-to-Die D) Family Income Policy

It will increase because the insured will be 5 years older than when the policy was originally purchased

An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium A) It will decrease for the new 5-year term since the insured is now a lesser risk to the company. B) It will increase each year during the next 5 years as the face amount increases each year. C) It will increase because the insured will be 5 years older than when the policy was originally purchased. D) It will remain the same for the new 5-year term

Juvenile Life is classified as any life insurance purchased by a minor

Concerning Juvenile Life insurance, which of the following statements is INCORRECT A) Usually a parent or guardian is the applicant for insurance on the life of a minor. B) It can be a limited premium payment policy. C) Juvenile Life is classified as any life insurance written on the life of a minor. D) Juvenile Life is classified as any life insurance purchased by a minor

Jumping juvenile policy

If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this A) Limited pay whole life policy B) Modified life insurance policy C) Single premium policy D) Jumping juvenile policy

Require evidence of insurability

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may A) Require a higher premium. B) Prolong the open enrollment period. C) Increase medical requirements on existing members. D) Require evidence of insurability

For 31 days

When an employee terminates coverage under a group insurance policy, coverage continues in force A) For 60 days. B) Until the employee can obtain coverage under a new group plan. C) Until the employee notifies the group insurance provider that coverage conversion policy is issued. D) For 31 days

Creditor is the policyowner

Which of the following is TRUE about credit life insurance A) Debtor is the policy beneficiary. B) Creditor is the policyowner. C) Debtor is the annuitant. D) Creditor is the insured

The purpose of the group was to purchase life insurance

A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why A) The group has not been established for long enough. B) The purpose of the group was to purchase life insurance. C) Their profession poses too high of a risk for the insurer. D) There are not enough people in the group to qualify for group life insurance

Premiums are determined by the age, sex and occupation of each individual certificate holder

All of the following are characteristics of group life insurance EXCEPT A) Amount of coverage is determined according to nondiscriminatory rules. B) Individuals covered under the policy receive a certificate of insurance. C) Certificate holders may convert coverage to an individual policy without evidence of insurability. D) Premiums are determined by the age, sex and occupation of each individual certificate holder

The payable premium amount steadily declines throughout the duration of the contract

All of the following are true regarding a decreasing term policy EXCEPT A) The contract pays only in the event of death during the term and there is no cash value. B) The face amount steadily declines throughout the duration of the contract. C) The payable premium amount steadily declines throughout the duration of the contract. D) The death benefit is $0 at the end of the policy term

The Guaranty Association

All of the following entities regulate variable life policies EXCEPT A) The Guaranty Association. B) Federal government. C) The SEC. D) The Insurance Department

Annually Renewable Term

All other factors being equal, the least expensive first-year premium payment is found in A) Increasing Term. B) Decreasing Term. C) Level Term. D) Annually Renewable Term

Single premium whole life

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called A) Single premium whole life. B) Modified Endowment Contract (MEC). C) Level term life. D) Graded premium whole life

Limited-pay Life

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 A) Variable Life B) Adjustable Life C) Graded Premium Life D) Limited-pay Life

Increases annually

Annually renewable term policies provide a level death benefit for a premium that A) Decreases annually. B) Remains level. C) Fluctuates. D) Increases annually

Adjustable Life

At age 30, an applicant wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit his needs A) Single Premium Whole Life B) Interest-sensitive Whole Life C) Decreasing Term D) Adjustable Life

For 20 years or until death, whichever occurs first

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid A) Until the policyowner's age 100, when the policy matures. B) For 20 years or until death, whichever occurs first. C) Until the policyowner's age 65. D) For 20 years

To keep the policy in force

What is the purpose of establishing the target premium for a universal life policy A) To pay up the policy faster B) To cover all policy expenses C) To keep the policy in force D) To accumulate cash value faster

Life Paid-up at Age 65

Which of the following is an example of a limited-pay life policy A) Renewable Term to Age 70 B) Level Term Life C) Straight Life D) Life Paid-up at Age 65

Universal Life - Option A

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit A) Equity Indexed Universal Life B) Variable Universal Life C) Universal Life - Option A D) Universal Life - Option B

Option B

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured A) Corridor option B) Variable option C) Option A D) Option B

Face amount

Which policy component decreases in decreasing term insurance A) Face amount B) Cash value C) Dividend D) Premium

Its premium steadily decreases over time, in response to its growing cash value

Which statement is NOT true regarding a Straight Life policy A) It has the lowest annual premium of the three types of Whole Life policies. B) Its premium steadily decreases over time, in response to its growing cash value. C) The face value of the policy is paid to the insured at age 100. D) It usually develops cash value by the end of the third policy year

Single Premium

Which type of life insurance policy generates immediate cash value A) Single Premium B) Level Term C) Decreasing Term D) Continuous Premium

Limited pay whole life

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client A) Life annuity with period certain B) Increasing term C) Limited pay whole life D) Interest-sensitive whole life

A group needing low-cost life insurance

All of the following could own group life insurance EXCEPT A) A group needing low-cost life insurance. B) A group sponsored by an employer. C) An alumni group. D) A debtor group

Joint Life

Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die A) Ordinary Life B) Joint Life C) Decreasing Term D) Whole Life

When the insured reaches age 100

When would a 20-pay whole life policy endow A) After 20 payments B) In 20 years C) When the insured reaches age 100 D) At the insured's age 65

Option A

Which Universal Life option has a gradually increasing cash value and a level death benefit A) Term insurance B) Option B C) Option A D) Juvenile life

The type of investment

In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT A) The length of coverage. B) The premium. C) The amount of insurance. D) The type of investment

Lower

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy A) Half the amount B) Lower C) Higher D) As high

The coverage period

An Adjustable Life policyowner can change which of the following policy features A) The insured B) The coverage period C) The mortality expense D) The investment account

She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan

An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy A) She will still be covered under the group plan, but will have to pay an individual policy premium. B) She can only convert her coverage without proof of insurability if she has the master policy. C) She must apply for a new policy, which requires her to provide proof of insurability. D) She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan

The insurer will pay the full death benefit from the group policy to the beneficiary

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen A) The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one. B) The insurer will pay the full death benefit from the group policy to the beneficiary. C) The insurer will pay a reduced death benefit to the beneficiary. D) The insurer will pay the death benefit minus one month's premium

Decreasing term

An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation A) Variable life B) Universal life C) Whole life D) Decreasing term

$100,000

An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy A) Nothing B) $50,000 C) $100,000 D) $200,000

The recommended amount to keep the policy in force throughout its lifetime

Which of the following best defines target premium in a universal life policy A) The maximum amount the policyowner may pay on a policy B) The minimum amount to make sure the policy is annually renewable C) The corridor of insurance D) The recommended amount to keep the policy in force throughout its lifetime

It is level term insurance

Which of the following best describes annually renewable term insurance A) It requires proof of insurability at each renewal. B) Neither the premium nor the death benefit is affected by the insured's age. C) It provides an annually increasing death benefit. D) It is level term insurance

Those who have been insured under the plan for at least 5 years

Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated A) Those who have worked in the company for at least 3 years B) Those who have dependents C) Those who have no history of claims D) Those who have been insured under the plan for at least 5 years

Survivorship life

Which of the following is called a "second-to-die" policy A) Family income B) Juvenile life C) Joint life D) Survivorship life

Straight Life

Which of the following policies would be classified as a traditional level premium contract A) Adjustable Life B) Universal Life C) Variable Universal Life D) Straight Life

The cost of coverage is based on the ratio of men and women in the group

Which of the following statements about group life is correct A) The premiums are higher than in an individual policy because there is no medical exam. B) The group sponsor receives a Certificate of Insurance. C) The policy can be converted to an individual term insurance policy. D) The cost of coverage is based on the ratio of men and women in the group

The insured may choose to convert to term or permanent individual coverage

An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT A) The premium for individual coverage will be based upon the insured's attained age. B) The insured may choose to convert to term or permanent individual coverage. C) The insured would not need to prove insurability for a conversion policy. D) The insured may convert coverage to an individual policy within 31 days

Target premium

Which of the following would help prevent a universal life policy from lapsing A) Corridor of insurance B) Target premium C) Face amount D) Adjustable premium

Required a premium increase each renewal

A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy A) Required a premium increase each renewal. B) Built cash values. C) Required proof of insurability every year. D) Decreased death benefit at each renewal

Attained age

An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his A) Experience Rating. B) Group rate. C) Insurer's scheduled rate. D) Attained age

Universal life

Which of the following Life Insurance policies would be considered interest sensitive A) Whole life B) Increasing term C) Universal life D) Adjustable life

Universal life

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount A) Variable life B) Adjustable life C) Universal life D) Flexible life

Creditor

Which of the following would be the beneficiary in credit life insurance A) Insured B) Company C) Borrower D) Creditor