Chapter Exam 1

G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income?

10 years

A 15-year mortgage is best protected by what kind of life policy?

15-year decreasing term

What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?

Family Maintenance Policy

P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase?

Family Maintenance policy

A variable insurance policy

It does not guarantee a return on investment accounts

What type of life policy covers 2 lives and pays the face amount after the first one dies?

Joint Life Policy

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

Life insurance that covers an insured's whole life with level premiums paid over a limited time is called

Limited-Pay Life

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

Which of these life products is NOT considered interest-sensitive?

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 these characteristics is consistent with a Straight Life policy?

Premiums are payable for as long as there is insurance coverage in force

Which statement is correct regarding the premium payment schedule for whole life policies?

Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured

What type of life policy covers two people and pays upon the death of the last insured?

Survivorship

What kind of life insurance product covers children under their parent's policy?

Term rider

All of these statements about Equity Indexed Life Insurance are correct EXCEPT

The premiums can be lowered or 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

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 policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?

Variable Life

What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?

Whole Life

What type of insurance offers permanent life coverage with premiums that are payable for life?

Whole Life

A life insurance policy that provides a policyowner with cash value along with a level face amount is called

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

All of these are characteristics of an Adjustable Life policy EXCEPT

face amount can be adjusted using policy dividends

Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy?

increase face amount

What kind of premium does a Whole Life policy have?

level

Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?

policyowner

A Limited-Pay Life policy has

premium payments limited to a specified number of years

The investment gains from a Universal Life Policy usually go toward

the cash value

The amount of coverage on a group credit life policy is limited to

the insured's total loan value

Credit Life insurance is

"issued in an amount not to exceed the amount of the loan

What type of policy would offer a 40-year old the quickest accumulation of cash value?

20-pay Life

Which of these is an element of a Variable Life policy?

A fixed, level premium

Which is true concerning a Variable Universal Life policy?

Policyowner controls where the investment will go and selects the amount of the premium payment

What kind of special need would a policyowner require with an Adjustable Life insurance policy?

flexible premiums

The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is

the cost

When is the face amount paid under a Joint Life and Survivor policy?

upon death of the last insured

What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?

Convertible Term

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?

Decreasing term

F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?

Decreasing term policy

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

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

N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?

30 Pay Life

Which statement about a whole life policy is correct?

Cash value may be borrowed against

S is covered by a whole life policy. Which insurance product can cover his children?

Child term rider

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

Term insurance has which of the following characteristics?

Expires at the end of the policy period

What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death?

Face amount plus the policy's cash value

What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?

Family Maintenance Policy

Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?

Conversion

Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?

Conversion privilege

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

Conversion provision