Chapter 3

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?

$100,000

In a group life insurance policy, the employer may select all the following

-the premium payor -the type of insurance -the amount of insurance

What percentage of a company's employees must take part in a noncontributory group life plan?

100%

If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?

A full death benefit

the LEAST expensive first-year premium is found in which of the following policies?

Annually Renewable Term

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B

Which of the following has the right to convert the existing term coverage to permanent insurance?

Policyowner

All the following are TRUE concerning Debtor Groups

-the debtors eligible for insurance under the policy shall all be the debtors of the creditor(s) -the premium for the policy shall be paid either from the creditor's funds, or from charges collected from the insured debtors, or from both -an insurer may exclude any debtors as to whom evidence of individual insurability is not satisfactory to the insurer

All of the following are variable products

-the minimum death benefit is guaranteed -the the cash value is not guaranteed -policyowners bear the investment risk

Which of the following is the required number of participants in a contributory group plan?

75%

A Straight Life policy has what type of premium?

A level annual premium for the life of the insured

For variable products, underlying assets must be kept in

A separate account

The death protection component of Universal Life Insurance is always

Annually Renewable Term

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

Attained age

Graded-Premium Whole Life policy premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will

Be level thereafter

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 characteristic makes whole life permanent protection?

Coverage until death or age 100

The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the load is repaid is called

Credit Life

Which of the following would be the beneficiary in credit life insurance?

Creditor

Which of the following is TRUE about credit life insurance?

Creditor is the policyowner

What is another name for interest-sensitive whole life insurance?

Current assumption life

In increasing and decreasing term policies, which policy component fluctuates during the policy term?

Death benefit

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?

Decreasing Term

What does "level" refer to in level term insurance?

Face amount

Which policy component decreases in decreasing term insurance?

Face amount

A young father would like a life insurance policy to provide coverage for all five family members at the lowest cost. Which type of policy would he most likely buy?

Family Protection Policy

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

For 20 years or until death, whichever occurs first

When an employee terminates coverage under a group insurance policy, coverage continues in force

For 31 days

The death benefit under the Universal Life Option B

Gradually increases each year by the amount that the cash value increases

Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?

Greatest

A Universal Life insurance policy has two types of interest rates that are called

Guaranteed and Current

In which of the following cases will the insured be able to receive the full face amount from a whole life policy?

If the insured lives to age 100

A Return of Premium term life policy is written as what type of term coverage?

Increasing

The type of insurance that provides increasing death benefits as the insured ages is

Increasing term

The type of term insurance that provides increasing death benefits as the insured ages is called

Increasing term

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?

Limited pay whole 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?

Limited-pay Life

The premium of a survivorship life policy compared with that of a join life policy would be

Lower

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Option A

In terms of policies, what happens to the premium throughout the term of the policy?

Premium always remains levels

Which of the following Life Insurance policies would be considered interest sensitive?

Universal Life

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?

Universal life

In a survivorship life policy, when does the insurer pay the death benefit?

Upon the last death

Which of the following types of policies allows for a flexible premium and a variable investment comonent?

Variable universal life insurance

Which of the following is a key distinction between variable whole life and variable universal life products?

Variable whole life has a guaranteed death benefit

Vision, Inc. employs 500 people. The company offers group life insurance to its employees after 90 days of service. Who is considered the policyholder of the life insurance policies Vision, Inc. offers?

Vision, Inc

Annually renewable term policies provide a level death benefit for a premium that

increases annually

A return of premium term life policy is written as what type of term coverage?

increasing

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may

require evidence of insurability

A Universal Life Insurance policy is best described as

Annually Renewable Term policy with a cash value amount

What type of life insurance is most commonly used for group plans?

Annually renewable term

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?

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

Which of the following determines the cash value of a variable life policy?

The performance of the policy portfolio

The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as

The policy contains sufficient cash value to cover the cost of insurance

Which of the following statements is correct regarding a whole life policy?

The policyowner is entitled to policy loans

Which of the following best defines target premium in a universal life policy?

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

What is the purpose of establishing the target premium for a universal life policy?

To keep the policy in force

In the event there is no beneficiary living at the time of death of an insured person, what is the maximum the Benefits Payments provision will pay to any person showing evidence of incurred funeral or other expenses incidental to the last illness or death of the insured person?

$2,000

The LEAST expensive first-year premium is found in which of the following policies?

Annually Renewable Term

What are two components of a universal policy?

Insurance and cash account

Which of the following is correct regarding credit life insurance?

It insures the life of a debtor.

Which of the following best describes annually renewable term insurance?

It is level term insurance

Which of the following bet describes annually renewable term insurance?

It is level term insurance

Which of the following would be considered an advantage of owning term insurance?

It provides the highest amount of coverage for a temporary time

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?

Joint Life 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?

Jumping juvenile policy

Variable Whole Life insurance is based on what type of premium?

Level fixed

A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?

Level term

Which of the following is NOT a type of whole life insurance?

Level term

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

Life Paid-up at Age 65

All of the following are types of term policies based on what happens to the face amount during the policy term EXCEPT

Renewable

A man decides to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy

Required a premium increase each renewal

If an agent wishes to sell variable life policies, what license must the agent obtain?

Securities

A domestic insurer issuing variable contracts must establish one or more

Separate accounts

Which type of life insurance policy generates immediate cash value?

Single Premium

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

Single premium whole life

Which of the following would help prevent a universal life policy from lapsing?

Target premium

A 27-year-old professional has limited income and can only budget $15 per month for life insurance. Which of the following life insurance policies would provide the largest face amount for that amount of premium?

Term insurance

The initial amount of credit life insurance may NOT exceed

The amount to be repaid under the contract

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

When would a 20-pay whole life policy endow?

When the insured reaches age 100

Which of the following types of policies will provide permanent protection?

Whole life

Credit Life Insurance

-the amount of insurance permissible is limited per borrower -premiums are usually paid by the borrower -benefits are paid to the creditor

An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined and the cash value fell to $10,000. If the insured dies, how much will be paid out?

$50,000

All the following are characteristics of a group life insurance plan

-a minimum number of participants is required in order to underwrite the plan -the cost of the plan is determined by the average age of the group -the participants receive a Cert of Insurance as their proof of insurance

All of the following entities regulate variable life policies

-the SEC -the insurance department -federal government

All of the following statements are correct regarding credit life insurance

-the amount of insurance permissible is limited per borrower -premiums are usually paid by the borrower -benefits are paid to the creditor