Chapter 3- Types of Life Insurance

In a single employer group plan, what is the name of a document that is issued to the employer? A. Master contract B. Certificate of insurance C. Certificate of authority D. Employer-insurer contract

A. Master contract

With a traditional whole life policy, the death benefit A. Remains constant over time. B. Increases over time. C. Decreases over time. D. Becomes pure death protection after 20 years.

A. Remains constant over time.

Which of the following is true regarding term insurance? A. If the insured dies during the term, the policy pays only the accumulated cash value. B. If the insured dies after the end of the term, there is no death benefit to the beneficiary. C. The policy provides the smallest amount of coverage for the highest premium. D. It cannot be renewed or converted to a permanent policy.

B. If the insured dies after the end of the term, there is no death benefit to the beneficiary.

If an agent wishes to sell variable life policies, what license must the agent obtain in addition to a life insurance license? A. Variable products B. Securities C. Broker D. Surplus lines

B. Securities

What type of life insurance is most commonly used for group plans? A. Whole life B. Decreasing term C. Annually renewable term D. Variable whole life

C. Annually renewable term

When the insured purchased a new home he wanted to purchase a life insurance policy that would protect his family against losing the home should he die before the mortgage was paid. The most inexpensive type of policy that would accomplish this need would be A. Flexible term. B. Level term. C. Decreasing term. D. Increasing term.

C. Decreasing term

An annually renewable term policy A. Increases in premium based on the insured's health. B. Maintains a level premium each year. C. Renews each year with an increased premium. D. Increases in coverage each year.

C. Renews each year with an increased premium.

An insurance policy that only requires a payment of premium at its inception and provides insurance protection for the life of the insured and endows at the insured's age 100, is called A. Enhanced whole life. B. Graded premium whole life. C. Single premium whole life. D. Straight whole life.

C. Single premium whole life.

The insured is also the policyowner of a whole life policy. What age must the insured attain in order to receive the policy's face amount? A. 62 B. 70 1/2 C. 95 D. 100

D. 100

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

D. Require evidence of insurability.

Which of the following is an example of a limited-pay life policy? A. Straight life B. Life paid-up at age 65 C. Renewable term to age 70 D. Endowment maturing at age 65

B. Life paid-up at age 65

Which of the following is true regarding a joint life policy? A. It pays a death benefit after the last insured's death. B. Premium is based on the average age of the insureds. C. It is a form of group life insurance. D. It is used to offset the liability of the estate tax upon the insured's death.

B. Premium is based on the average age of the insureds.

A policy that allows the beneficiary to collect both the death benefit and cash value upon the death of the insured is A. Universal Life, Option A. B. Universal Life, Option B. C. Variable Life. D. Whole Life.

B. Universal Life, Option B.

An insured receives a monthly summary regarding his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does he have? A. Adjustable B. Variable C. Term D. Whole Life

B. Variable

An individual owns an adjustable life policy. Sometime in the future he wants to increase the death benefit. Which of the following statements is correct regarding this change? A. The death benefit cannot be increased. B. The death benefit can only be increased when the policy has developed cash value. C. The death benefit can only be increased by exchanging the existing policy for a whole life. D. The death benefit can be increased by providing evidence of insurability.

D. The death benefit can be increased by providing evidence of insurability.