Chapter 3: Part 1 - Type of Insurance Policies CRAM
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?
$20,000 death benefit
A potential client, age 40 would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?
20-Pay Life accumulates cash value faster than Straight Life
J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?
20-pay life
If X wants to buy $50,000 worth of permanent protection on his/her spouse and $25,000 worth of 10-year Term coverage on X under the same policy, the applicant should purchase
A Whole Life policy with an Other Insured Rider
Which of these is an element of a Variable Life policy?
A fixed, level premium
Which statement is True regarding a Variable Whole Life policy?
A minimum guaranteed Death benefit id provided
When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
Conversion provision
The Universal Life Policy is called an unbundled Life Policy because the policyholder can see expense charges, the interest earned, and the:
Cost of Insurance
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
Decreasing Term
A Family Income Policy is a combination of Whole Life and
Decreasing Term Insurance
Additional coverage can be added to a Whole Life policy by adding a(n)
Decreasing term rider
K purchased a $10,000 Life Policy that will pay the face amount to her if she lives to age 65, or to her beneficiary if she dies before age 65. K purchased which of the following types of policies?
Endowment at Age 65
S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?
Equity index insurance
Which of these statements describe a Modified Endowment Contract (MEC)?
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
A Renewable Term Policy is renewable at the option of the:
Insured
Which of the following statements is CORRECT about the period in which a Term Policy can be converted?
It varies according to the contracts
Which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death?
Joint Life
What type of life policy covers 2 lives and pays the face amount after the first one dies?
Joint Life Policy
L, aged 50, and L's spouse, 48, have one natural child and one adopted child. They purchase a Family Policy that covers L's spouse to age 65. A death benefit will NOT be paid in which of the following circumstances?
L's spouse dies at age 66
K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?
Level
D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?
Level term
Which of these would be considered a Limited-Pay Life policy?
Life Paid-Up at age 70
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Modified Endowment Contract
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for:
Modified Whole Life
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
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 of the following characteristics is CORRECT about Interest Sensitive Whole Life?
Premium payments can vary
Which of these characteristics is consistent with a Straight Life policy?
Premiums are payable for as long as there is insurance coverage in force
Which of the following actions is NOT possible with a Universal Life Policy?
Premiums may be applied as credit against income tax
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
What type of life policy covers two people and pays upon the death of the last insured?
Survivorship
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
What type of life insurance are credit policies issued as?
Term
What type of life insurance gives the greatest amount of coverage for a limited period of time?
Term Life
What kind of life insurance product covers children under their parent's policy?
Term rider
When applied to Whole Life insurance, the word "straight" denotes
The duration of premium payments
All of these statements about Equity Indexed Life Insurance are correct, EXCEPT:
The premiums can be lowered of raised, based on investment performance
How does a typical Variable Life Policy investment account grow?
Through mutual funds, stocks, bonds
What type of life insurance incorporates flexible premiums and an adjustable death benefit?
Universal Life
Which of the following types of policies BEST identifies one in which the cash value may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors?
Universal Life
A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as:
Variable 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
Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?
Variable Life
Which of the following policies combines investment choices with a form of Term coverage?
Variable Universal Life
What type of insurance offers permanent life coverage with premiums that are payable for life?
Whole Life
Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase?
Whole life policy with other insured rider
How long does the coverage normally remain on a limited-pay life policy?
age 100
Variable Whole Life Insurance can be described as:
both an insurance and securities product
A variable insurance policy:
does not guarantee a return on its investment accounts
All of these are characteristics of an Adjustable Life policy EXCEPT
face amount can be adjusted using policy dividends
What kind of special need would a policyowner require with an Adjustable Life insurance policy?
flexible premiums
Variable Life products require a producer to
hold a Life Insurance license and a Securities license
Credit life insurance is:
issued in an amount not to exceed the amount of the loan
What kind of premium does a Whole Life policy have?
level
Whole Life Insurance policies are contractually guaranteed to provide each of the following, EXCEPT:
partial withdrawal features beyond a surrender charge period
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
policyowner
The amount of coverage on a group credit life policy is limited to
the insured's total loan value
Under a Renewable Term policy,
the renewable premium is calculated on the basis of the insured's attained age
When is the face amount paid under a Joint Life and Survivor policy?
upon death of the last insured
A term life insurance policy matures:
upon the insured's death during the term of the policy