Chapter 3 Exam Questions

A(n) ____ term life policy normally used when covering an insured's mortgage balance

Decreasing

K, age 45, and his wife, age 43, have three children. They purchase a Family Policy that covers K's wife to age 65. All of these situations will pay a death benefit EXCEPT

K's wife dies at age 66

K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?

Level

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

Modified Endowment Contract (MEC)

J is issued a Life Insurance policy with a death benefit of $100,000. She pays $600 per year in premium for the first 5 years. The premium then increases to $900 per year in the sixth year, and remains level thereafter. The policy's death benefit also remains at $100,000. Which type of Life Insurance policy is this?

Modified Premium Life

What advantage does the renewability feature give to a term policy?

The insured may extend the coverage period

Which of the following types of Term Life policies likely contains a renewability feature?

10 Year Convertible Term

Additional coverage can be added to a Whole Life policy by adding a(n)

Decreasing term rider

Credit Life Insurance is:

issued in an amount not to exceed the amount of the loan

Which of the following types of permanent life insurance policies offers the highest initial cash value?

Single Premium

S owns a life insurance policy with cash values that fluctuate according to the underlying investment performance of common stocks. Which of these policies does S own?

Variable Whole Life

Term Life Policies that have the ability to be converted to permanent coverage may do so during a specific time period. This conversion period

Varies according to the contract

A Universal Life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, expense charges, and the

cost of insurance

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

Decreasing Term

F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?

Decreasing Term Policy

Term insurance has which of the following characteristics?

Expires at the end of the policy period

If a 10-Year Term Life policy contains a Renewability provision, the policy will renew

Without evidence of insurability

All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for

Modified Whole Life

A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision?

Payor Provision

Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?

Conversion

Which statement about a whole life policy is true?

Cash value may be borrowed against

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

Universal Life

Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?

Variable Life

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

Convertible Term

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?

Modified Whole Life

Which of these characteristics is consistent with a Straight Life policy?

Premiums are payable for as long as there is insurance coverage in force

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

T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?

Ten-Year Endowment

S, age 40, is looking to buy a Life Insurance policy that will allow for increases or decreases in coverage as his needs change. The policy best suited for S would be

Universal Life

In order to sell a (n)____ Life policy, a producer is required to register with financial Industry Regulatory Authority (FINRA).

Variable