GA LIFE INSURANCE EXAM- SECTION 2

what license or licenses are required to sell variable annuities?

Both a life insurance license and a securities license.

What are the two components of a universal policy?

Insurance (always annual renewable term insurance) and cash account (accumulates on a tax deferred basis each year

What are the two components of a universal policy?

Insurance and cash amount

During partial withdrawal from a universal life policy, which portion will be taxed?

Interest

Why is the equity indexed annuity considered to be a fixed annuity?

It has a guaranteed minimum interest rate.

Key Characteristics Whole life

1. level premium 2. death benefit 3. cash value 4. living benefits

Types of Whole Life Insurance

1. ordinary whole life 2. limited payment 3. single premium

Level Premium

A policy premium that remains the same over the period of time premiums are paid.

The death protection component of Universal Life Insurance is always

Annually Renewable term

Life Paid-up at Age 65

Example of a limited pay life policy.

The death benefit under the Universal Life Option B

Gradually increases each year by the amount that the cash value increases.

Variable Whole Life Insurance

Is a level fixed premium investment-based product.

Term Insurance

Life insurance coverage for a specified period of time, less expensive than whole

Universal Life Option A

Life option that has a gradually increasing cash value and a level death benefit.

Single Premium Whole Life

Paid up for life with one large premium payment, protects for life, matures at 100.

Universal Life Insurance

Policyholder can pay more or less than the planned premium.

Limited Pay Whole Life

Premium payments will cease at age 65, but coverage will continue to hear death or age 100.

Which of the following would help prevent a universal life policy from lapsing?

Target premium

Accumulation Period

The period of time which the annuity owner makes payments into an annuity during which the payments earn interest and grow tax deferred.

Living Benefits

The policy owner can borrow against the cash value while the policy is in effect, or can receive the cash value when the policy is surrendered.

variable contracts

The policyowner bears the investment risk (assets in a separate account).

Convertible Term Policy

The type of policy that can be changed by the policyowner from one that does not accumulate cash value to the one that does, is a...

What is the purpose of establishing the target premium for a universal life policy?

To keep the policy in force.

Which of the following types of policies allows for a flexible premium and a variable investment component?

Variable universal life insurance

Option B

What option for Universal Life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

When the insured reaches age 100

When would a 20-pay whole life policy endow?

Depreciation Period

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?

Separate Account

a domestic insurer issuing variable contracts must establish one or more __________________________

Variable Universal Life Insurance

a variable universal life insurance policy that combines a flexible premium with an investment component that allows or potentially great returns .

annually renewable term policies

annually renewable term policies provide a level death benefit for a premium that increases each year with the age of the insured.

Increases annually

annually renewable term policy provide a level death benefit for a premium that....

Straight Life (ordinary life or continuous premium whole life)

basic while life policy where policyowner pays the premium from the policy issue date to the insured's death or age 100. lowest annual premium.

Convertible Term Insurance

convertible without proof of insurability up to the full term death benefit. Upon conversion, the premium for the perm policy will be based on the insured's attained age. can be changed from one that does not accumulate cash value to on that does.

what characteristic makes whole life permanent protection?

coverage until death or age 100

Straight Life Policy

develops cash value by end of third policy, face value is paid at 100, lowest premium.

level

means face amount

20-pay whole life policy

premiums are paid during the first 20 years. if the insured dies before all of the planned premiums are paid, the beneficiary will receive the face amount as a death benefit.

renewable

provision that allows the policyowner the right to renew the coverage at the expiration date without evidence of insurability.

Universal Life Insurance

Allows withdrawals or partial surrenders.

Which of the following would help prevent a universal life policy from lapsing?

Target premium (he recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force)

During partial withdrawal from a universal life policy, which portion will be taxed?

interest

convertible

provision that provides the policyowner with the right to convert the policy

Death Benefit

the death benefit is guaranteed and also remains level for life.

Straight Life

A traditional level premium contract- have a level guarantee face amount and a level premium for the life of the insured.

Decreasing Term

A type of life insurance that features a level premium and a death benefit that decreases each year over the duration of the policy.

Return of Premium (ROP)

An increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid.

Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive

Nothing, the payment will cease.

whole life insurance

Offer level premium based on the issue age, guaranteed, level death benefit, cash value that is scheduled to equal the face amount at the insured's age 100, and living benefits, which include policy loans. 1. provides permanent protection. 2. policyowner is entitled to policy loans

Annually Renewable Term

The death protection component of Universal Life Insurance is always..

Level Premium

The premium for whole life policies is based on the issue age; therefore, it remains the same throughout the life of the policy.

Renewable term insurance

The premium increases annually according to the attained age.

Which of the following is a key distinction between variable whole life and variable universal life products?

Variable whole life has a guaranteed death benefit.

Decreasing Term Insurance

term insurance in which the annual premium remains constant but the face amount of the policy declines each year

cash value

the cash value, created by the accumulation of premium, face value age 100, paid to policyholder. Guaranteed interest rate. Li

Premiums on term life policies

the premium on a term life policy is level throughout the term of the policy. Only the amount of the death benefit may change.

Annually Renewable Term (ART)

the purest form of term insurance. The death benefit remains level, and the policy may be guaranteed to be renewable each year without proof of insurability, but the premium increases annually according to the attained age, as the probability of death increases.

Joint Life Policy

Covers the lives of two insured, rates are blended. Upon the death of the first insured he policy ends.

To sell variable life insurance policies, an agent must receive all of the following-

FINRA, securities license, life insurance license

Single Premium

Generates immediate cash value due to the lump sum payment made to the insurer.

Universal Life Option B

Gradually increases each year by the amount that the cash value increases.

Policyowner

Has the right to convert the existing term coverage to permanent insurance without evidence of insurability.

securtities

If agent wishes to sell variable life policies, what license must the agent obtain?

Convertible Term Policy

type of policy that can be changed from one that does not accumulate cash value to one that does.

Universal Life Insurance

whole life allows policyowner to skip premium payments as long as there is enough cash value in the policy to cover the premium.

Whole life insurance policies guarantee the death benefit as long as there are no outstanding loans. Provides permanent protection.

whole life policy