Chapter One Exam - Life Policies

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? A. 30 Pay Life B. Term to Age 70 C. Universal Life D. Adjustable Life

A. 30 Pay Life

Variable Whole Life Insurance can be described as: A. Both an insurance and securities product B. An insurance product only C. A securities product only D. The insurance company assumes the investment risk

A. Both an insurance ans securities product

The combination of Whole Life and ______ Term insurance is referred to as a Family Income Policy. A. Decreasing B. Universal C. Variable D. Level

A. Decreasing

A father who dies within three years of purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provisions? A. Payor Provision B. Accelerated Benefits Provision C. Assignment Provision D. Waiver of Premium Provision

A. Payor Provision

In order to sell this life policy, a producer is required to register with the Financial Industry Regulator Authority (FINRA), which policy is this? A. Variable B. Adjustable C. Straight D. Term

A. Variable

Jay 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? A. Life paid up at age 70 B. 20 pay life C. Increasing term to age 65 D. Straight life

B. 20 pay life

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 paid the beneficiary? A. Returns of premiums paid B. Cash value plus interest C. $20,000 death benefit D. Face amount plus interest

C. $20,000 death benefit

Life insurance that covers insured's whole life with level premiums paid over a limited time is called? A. Adjustable Life B. Renewable Term C. Limited Pay Life D. Joint Life

C. Limited Pay Life

Which of the following is not possible with a universal life policy? A. Policies cash value may be used to pay premiums B. Premium payments may be made at unscheduled times C. Premiums may be applied as a credit against income tax D. Face amount may be adjusted

C. Premiums may be applied as a credit against income tax

All of these statements about Equity Indexed Life Insurance are correct, EXCEPT? A. Cash value has minimum rate of accumulation B. If the gain on the index goes beyond the policy's minimum rate of return, the cash value will mirror that of the index C. The premiums can be lowered or raised, based on investment performance D. Tied to an equity index such as the S&P 500

C. The premiums can be lowered or raised, based on investment performance

Under a Renewable Term policy, A. The face amount is automatically adjusted at the time of the renewal B. Evidence of the insurability must be provided at each renewal C. The renewal premium is calculated on the basis of the insured's attained age D. A new application must be completed at each renewal

C. The renewal premium is calculated on the basis of the insured's attained age

A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as? A. Adjustable life B. Graded-premium life C. Variable life D. Modified whole life

C. Variable life

Under an interest sensitive whole life policy, A. Premiums are determined by the policy owner B. No cash value ever accrues C. The policy normally renews every 10 years D. Cash values are determined by interest rates

D. Cash values are determined by interest rates.

A company that owns a life insurance policy on one of its key employees may do all of the following except? A. Borrow against cash value B. Change beneficiary C. Cancel policy D. Change the policy's interest rate

D. Change the policy's insurance rate

Which of the following features on a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability? A. Owner's Rights Clause B. Incontestable Period C. Insuring Agreement D. Conversion Privilege

D. Conversion Privilege

K buys a policy where the premium stays fixed for the first five years. The premium then increases in the year six and stays level thereafter, all while the death benefit remains the same. What kind of policy is this? A. Variable Life B. Adjustable Life C. Graded Premium Whole Life D. Modified Whole Life

D. Modified Whole Life

Whole life insurance policies are contractually guaranteed to provide each of the following except? A. Cash value that will ultimately replace the death benefit B. Non-forfeiture benefit options C. Premiums that remain fix for the life of the policy D. Partial withdrawal features be on a surrender charge period.

D. Partial withdrawal features be on a surrender charge period.

Term life policies that have the ability to be converted to permanent coverage may do so during a specific time period. This conversion period... A. May be altered by the policy owner B. Is controlled by the NAIC C. Is the same in all contracts D. Varies according to the contract

D. Varies according to the contract

What type of life insurance gives the greatest amount of coverage for a limited period of time?

Term life

Which of these statements describe a Modified Endowment Contract? A. Falls below the minimum amount of premiums that can be paid into a policy and still have it recognized as a life insurance contract. B. Exceeds the maximum amount of premiums that can be paid into a policy and still have it recognized as a life insurance contract. C. The 7-pay test is used to determine the minimum death benefit of the policy. D. The 7-pay test is used to determine the maximum death benefit of the policy.

B. Exceeds the maximum amount of premiums that can be paid into a policy and still have it recognized as a life insurance contract.

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? A. Family Lump Sum Policy B. Family Maintenance Policy C. Family Survivor Policy D. Family Income Policy

B. Family Maintenance Policy

J Is issued a life insurance policy with a death benefit of $100,000. She pays $600 per year in premium for the first five years. The premium then increases to the $900 per year in the six year, and remains level there after. The policies that benefit also remains at $100,000. Which type of life insurance policy is this? A. Endowment B. Graded Premium Life C. Straight Life D. Modified Premium Life

B. Graded Premium Life

An architect firm would stand to lose a lot of money in the event of the death of his project manager. Which type of policy shut the firm purchase on its project manager? A. Universal Life B. Key Person C. Graded D. Executive

B. Key Person

What type of policy is considered to be overfunded, as stated by IRS guidelines? A. Modified Whole Life B. Modified Endowment Contract C. Variable Universal Life D. Interest-Sensitive Whole Life

B. Modified Endowment Contract

Which of the following information is NOT required to be included in a Whole Life policy? A. Policy's loan interest rate B. Policy's guaranteed dividend table C. Policy's premium D. Policy's cash value table

B. Policy's guaranteed dividend table

What kind of life insurance products covers children under their parents policy? A. Family Maintenance Rider B. Term Rider C. Family Income Rider D. Payor Benefit

B. Term Rider

The amount of coverage on a group credit life policy is limited to? A. Half of the insured's total loan value B. The insured's total loan value C. 75% of the insured's total loan value D. $25,000

B. The insured's total loan value

K purchased a Life insurance policy in 1986 which paid 10% interest in the early years of the policy. Twenty years after the purchase, she received a notice from the insurer stating that the policy will soon terminate unless a much higher premium is paid because of the falling interest rates. The type of policy is known as? A. Whole B. Universal C. Graded D. Increasing

B. Universal

A ______ _______ Life Policy combines investment choices with a form of term coverage. A. Straight Whole B. Variable Universal C. Variable Term D. Adjustable Universal

B. Variable Universal

The investment gains from a universal life policy usually go towards

the cash value