Chapter 4
Which of the following is not a characteristic of term insurance?
Cash value builds after 3 years
All are incorrect regarding Variable Life insurance except:
Cash value is not guaranteed
Which of the following is not a characteristic of Whole Life?
Is not considered a property
Which statement below is not correct with regard to Credit Life insurance?
The insured is also the beneficiary
Joe is a real estate salesman whose income dramatically fluctuates from year to year. Which Whole Life policy below would you probably recommend, due to his fluctuating income?
Adjustable Whole Life
Each is a true statement regarding Juvenile Insurance except:
Death benefit increase means premium increase
Permanent whole life protection with decreasing term insurance would be found in which policy below?
Family Income
Which of the following statements regarding Universal Life insurance is NOT correct?
It has a level premium with a cash value that fluctuates depending upon stock and bond market performance.
Which statement below is true with regard to Endowments?
Its primary focus is on an accelerated cash value.
A level term policy has all of the following characteristics except:
Loan Option
Which of the following life insurance policies would have the lowest first-year premiums?
Modified whole life
Which of the following items, if any are considered level in a Variable Life policy?
Premium
Term life insurance is a form of insurance that is typically less expensive initially than whole life insurance and provides pure or temporary protection for a limited period of time. Which of the following statements is not true?
The cash value endows at age 100.
Which of the following statements is TRUE regarding variable life insurance?
The cash value is not guaranteed.
When discussing Life or Health insurance policies, it is important to remember that:
There is no such thing as a standard Life or Health insurance contract.
The death benefit of a Joint Life policy pays:
When either insured dies.
Each year the owner of a Universal Life policy would receive all except:
Changes of Beneficiary form
Which life insurance policy below is a combination of death benefit protection, cash value buildup and the opportunity for premium flexibility?
Universal life
Which life insurance policy listed below has the greatest cash value growth potential?
Variable Life
Paul owns a $500,000 whole life insurance contract. He takes a $10,000 loan against the cash value. His premium is $6,000, which he pays annually on September 10th. He is tragically killed on September 12th while on his way to the post office to mail his overdue premium. The loan also has an accumulated interest amount of $500. How much benefit, if any, will be paid to his beneficiary?
$483,500 (500,000 - 10,000 - 6,000 - 500)
Which limited pay whole life contract would have the highest annual premium?
10 pay
A whole life or continuous premium whole life insurance policy includes a loan provision. Which of the following statements in INCORRECT?
If unpaid at time of death, only the loan amount is subtracted from the death benefit.
Which of the following statements regarding universal life insurance is NOT CORRECT?
It has a level premium with a cash value that fluctuates depending upon stock and bond market performance.
Which policy below would have the lowest first year premiums?
Modified Whole Life
Which of the following statements in incorrect regarding Whole Life policy loans?
Only fixed interest rates can be charged against the loan.
Which of the following items, if any, are considered level in a variable life policy?
Premium
The ability to continue a term insurance contract without having to provide evidence of insurability best describes what option?
Renewability
A Single Pay Whole life contract provides coverage until death or age ___?
100
Cash value growth potential based upon stock and bond performance would help describe which of the following policies?
Variable life
A combination policy that provides a large death benefit be paid upon the death of the last insured, and is typically utilized to pay estate taxes is called:
Survivorship life
Joe enters Sara's insurance office and makes the following statement: "I want to purchase a standard whole life insurance policy." Sara's initial reaction or thought would probably be:
"There is no such thing as a standard life insurance policy."
Which limited pay Whole Life contract below would have the lowest annual premium?
30 pay (highest)
A variable life policy can be characterized by investing cash values in stocks, bonds, or other investment-like vehicles. Which statement below is NOT TRUE regarding this kind of life insurance product?
Agents only need a life insurance license to sell this product.
Which policy/product below, sold to a 40 year old man, will mature or endow the soonest?
20 Year Endowment
Which policy/product below, sold to a 65-year-old man, will mature or endow the soonest?
20-year endowment
Each of the following is provided to the policyowner of a universal life policy on an annual basis except:
Change of beneficiary form
Cameron borrows $275,000 to buy a small beachfront vacation home. He wants to make sure that should he die, a death benefit is available to payoff the loan so that his wife can continue to use the vacation home. He has little additional cash for insurance, and wants the most economical policy available to cover his new debt. What type of life insurance policy would you recommend?
Decreasing Term
Larry, age 52 wishes to convert his level term policy to a whole life policy. He has owned the term policy for 10 years. His agent informs him that the insurance company could use age 42 to determine the future whole life premiums. What term describes this convertibility option?
Original age
A whole life policy has a level death benefit and premium. It also builds cash value. Another name for whole life is:
Straight