IL CHAPTER 2 - TYPES OF LIFE POLICIES

To sell variable life insurance policies, an agent must receive

A life insurance license A securities license FINRA registration

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

Interest

What determines the cash value of a variable life policy?

The performance of the policy portfolio

What best describes what the annuity period is?

The period of time during which accumulated money is converted into income payments

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?

Universal Life

Which policy would have an IRS required corridor or gap between the cash value and the death benefit?

Universal Life - Option A

The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as

The policy contains sufficient cash value to cover the cost of insurance.

What are the characteristics of whole life insurance?

- permanent to the insured's age 100 - has a cash value - has living benefits - policy loans - nonforfeiture options

What are the characteristics of a term life insurance?

- temporary - pure death protection - no cash value - no living benefits

The LEAST expensive first-year premium is found in which of the following policies?

Annually Renewable Term

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

Annually Renewable Term

If the annuitant dies during the accumulation period, who will receive the annuity benefits?

Beneficiary

What are the two components of a universal policy?

Insurance and cash account

An insured buys a 5-year level premium term policy. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?

It will increase because the insured will be 5 years older than when the policy was originally purchased

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-year period. What type of policy is this?

Level Term

Variable Whole Life insurance is based on what type of premium?

Level fixed

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited Pay Whole Life

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

Option B

Which type of life insurance policy generates immediate cash value?

Single Premium

Cash Value guarantees in a whole life policy are called...

nonforfeiture values

Which product provides income for a specified period of years or for life, and protects a person against outliving their money?

an annuity

An annuity owner is funding an annuity that will supplement her retirement. She would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)

Equity Indexed Annuity

Variable life insurance products are regulated by...

FINRA, The SEC & The Department of Insurance and/or Financial Services.

The death benefit under the Universal Life Option B

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

In which cases would the insured be able to receive the full face amount from a whole life policy?

If the insured lives to age 100