Financial Planning Test Questions

The provision which states that both the policy and the copy of the application form the contract between the policy owner and the insurer is called:

entire contract

A universal life insurance policy has two types of interest rate.

guaranteed & current

If a life insurance policy increases significantly in face amount when the insured reaches a specified age, what is it?

jumping juvenile (usually 21)

Which non forfeiture option provides coverage for the longest period of time?

reduced paid up (would provide protection until the insured reaches 100, but the face amount is reduced til what the cash would buy

Which is true about a policy assignment?

transfers rights of ownership from the owner to another person

a policy owner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. this is due to what provision?

automatic premium loan,

The policy owner of an adjustable life policy wants to increase the death benefit

can be increased by providing evidence of insurability

Which is not a beneficiary designation?

specified is not a beneficiary designation

If a life insurance policy has an irrevocable beneficiary designation:

the beneficiary can only be changed by the written permission of the beneficiary

Upon the death of the insured the primary beneficiary discovers the insured chose the interest only option, what does this mean?

the beneficiary will only receive payments of the interest earned on the death benefit

Which of the following policies would have an IRS required corridor of gap between the cash value & death benefit?

universal life -option A (level death benefit)

How long will the beneficiary receive payments under the single life settlement option?

until the beneficiary's death

Both universal life & variable universal life have a

Flexible premium: contract pays only in the event of death during term and no cash value. Decreasing term policy: lower premium than level term/ face amount steadily declines throughout duration of contract. Universal Life Option A must maintain "corridor" or gap between cash value

An insured has a life insurance policy from a participating company and receives quarterly dividends, he's instructed the company to apply the policy dividends to increase the death benefit, the dividend option that the insured has chosen is called

Paid up additions

which of the following statements are true regarding irrevocable beneficiaries

they can only be changed with written consent of that beneficiary

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-yr period

level term

Jay applied for a life insurance policy on Jan 10. the policy was insured on Jan 31. Jay's agent was vacationing at the time the policy was issued, so Jay did not receive the policy until Feb 18. Jay decides he doesn't want the policy. When would Jay need to return the policy to the insurer in order to receive a full refund of premium paid?

Feb 28 or 10 days after the policy is delivered

when a policy is surrendered for its cash value:

coverage ends and the policy cannot be reinstated.

Which component increases in the increasing term insurance?

death benefit