Life Exam Part 2
Greg age 35, has a $200,000 whole life policy with cash value of $18,000. At Greg's present age of 35, what is the amount of the pure protection element?
182,000 (200,00-18,000)
Sarah, age 20, purchases a $50,000 UL policy with $50,000 GPO Rider with six option dates. What is the maximum total life insurance benefit that Sarah can purchase?
350,000
Viatical Settlement involves:
Assignment of life insurance policy to third party
Jim Thompson has a $500,000 permanent life insurance policy. He has a $400,000 home with a $250,000 mortgage with Bank of America. The bank requires life insurance on Jim's life. What is the best way for Jim to use his life insurance policy to satisfy the bank's requirement?
Collateral assignment
Disadvantages of the variable life insurance include all of the following except:
Death benefit is provided only for a stated period such as 20 years
Recommended features of a term life policy include all of the following except:
Decreasing death benefit
Stanley Johnson needs substantial life insurance in order to protect his family in the event of premature death. Stanley should consider all of the following financial options except:
Deferred annuity plus decreasing term life insurance
The customary benefit trigger(s) for the Accelerated Death Benefit are:
Diagnosis of a terminal or chronic illness
A term life insurance conversion feature includes all of the following except:
Evidence of current insurability at the date of conversion
A legal reserve or cash value account in whole life insurance is a result of:
Excess premiums in the early policy years being invested at compound interest
Accidental Death Benefit will be triggered if insured dies from:
Falling asleep while driving
The beneficiary of a credit life policy is usually the:
Financial Institution that granted line of credit
A unique feature of variable universal life insurance as compared to variable life is:
Flexible premium
The death benefit (cash value plus decreasing protection) of a non-participating whole life policy will:
Increase over the life of the policy
Which of the following is a normal variable life insurance death benefit?
Multiple of cash value
The Life Insurance Accelerated Death Benefit involves:
Portion of death benefit advanced to the insured as a line of credit
The life insurance dividend option which enables the insured to increase the death benefit as well as the cash value account is:
Portion of death benefit advanced to the insured as a line of credit
Which of the following statements about the tax aspects of variable life insurance is false?
Realized gains from cash value withdrawals are taxable at capital gains rates
All of the following statements describe the flexibility available to the owner of a universal life insurance policy except:
Surrender charges do not apply, since expenses are deducted from the cash value account each year
A unique feature which differentiates variable life from universal life is:
The policyholder can select the investment options within separate investment accounts
In which of the following situations would a traditional whole life insurance policy be most appropriate?
To provide a death benefit for long term needs such as the need to guarantee a life income for a surviving spouse
Which life insurance policy provides a guaranteed minimum interest on the cash value accumulation but no premium payment flexibility?
Whole Life
Michael has a heart attack at age 66 and is unable to return to work. His whole life policy included Waiver of Premium when the policy was issued at Michael's age 40. Michael's life insurance policy premiums:
Will not be waived
Judy has a $100,000 life insurance policy on her life with a cash value of $12,000. During 2016, the cash value increased by $750 and the policy earned a dividend of $300. What amount of taxable income must Judy report on her income tax return for 2016? Assume no withdrawals of cash value have been made and the dividend was used to purchase paid up additional insurance.
$0
