Chapter 3: Life Insurance Policies

The death protection component of Universal Life Insurance is always

annually renewable term

Which of the following statements about group life is correct?

the cost of coverage is based on the ratio of men and women in the group (as well as average age)

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?

limited-pay life

An individual purchased $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?

$100,000 (in joint life policies, the DB is paid upon the first death only)

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?

joint life - least expensive because premiums are based on average age and it only pays a death benefit at the first death

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

straight life

Which of the following is incorrect regarding a $100,000 20-year level term policy?

at the end of 20 years, the policy's cash value will equal $100,000

Which of the following is an example of a limited-pay life policy?

life paid-up at age 65

A universal life insurance policy is best describes as an

annually renewable term policy with a cash value account

The type of policy that can be changed from one that does not accumulate cash value to the one that does is a

convertible term policy

What are the two components of a universal policy

insurance and cash account

What is true regarding a policy issued to a labor union insuring members of the organization for the benefit of persons other than the union or organization?

the members eligible for insurance under the policy must all be members of the union or organization, the premiums for the policy must be paid either from funds of the union or from funds contributed by the insured members specifically for their insurance or from both, an insurer may exclude or limit the coverage on any person who provides unsatisfactory evidence of insurability to the insurer