Life Insurance
Renewable provision
Allows the policy owner the right to renew the coverage at the expiration date without evidence of insurability
Policy maturity
In life policies, the time when the face value is paid out
The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE
The beneficiary will receive the greater of the money paid into the annuity or the cash value.
endow
The cash value of a whole life policy has reached the contractual face amount
All of the following are true regarding the guaranteed insurability rider except
This rider is available to all insureds with no additional premium.
Earned Income
salary, wages, or commissions; but not income from investments, unemployment benefits, and similar sources of income's
The interest earned on policy dividends is
taxable
Which of the following types of insurance policies would perform the function of cash accumulation?
whole life
Rollover
withdrawal of the money from one qualified plan and placing it into another plan
Qualified Plan
A retirement plan that meets the IRS guidelines for receiving favorable tax treatment.
Which is not true about beneficiary designations?
The beneficiary must have insurable interest in the insured.
The insured is also the policy owner of a whole life policy. What age Must the insured attain in order to receive the policy's face amount ?
100
A Straight Life policy has what type of premium?
A level annual premium for the life of the insured
cash value
A policy's saving element or living benefit
suitability
A requirement to determine if an insurance products is appropriate for a customer
All of the following are examples of third party ownership of a life insurance policy?
An insured borrows money from the bank and makes collateral assignments of a part of the death benefit to secure the loan
Nonforfeiture Values
Benefits in a life insurance policy that the policy owner cannot lose even if the policy is surrendered or lapses
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?
Cash surrender
What does "liquidity" refer to in a life insurance policy?
Cash values can be borrowed at any time
Variable Life Insurance
Contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance
Fixed Life Insurance
Contracts that offer guaranteed minimum or fixed benefits
Liquidation of an estate
Converting a person's net worth into a cash flow
Which nonforfeiture option has the highest amount of insurance protection?
Extended term
An agent selling variable annuities must be registered with
FINRA
What does "level" refer to in level term insurance?
Face amount
permanent life insurance
General term used to refer to various forms of life insurance policies that build cash value and remain in effect for the entire life of the insured as long as the premium is paid
At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called
Guaranteed insurability
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future ? Which of the following options should be included in the policy ?
Guaranteed insurability option
If a life policy allows the policy owner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
Guaranteed insurability rider
Annually renewable term policies provide a level death benefit for a premium that
Increases annually
What are the two components of a universal policy
Insurance and cash account
Which of the following is true regarding the accumulation period of an annuity
It is a period during which the payments into the annuity grow tax deferred.
Which of the following is true about the premium on the children's rider in a life insurance policy ?
It remains the same no matter how many children are added to the policy
Which of the following statements is TRUE concerning the Accidental Death Rider?
It will pay double or triple the face amount
Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?
Joint Lifestyle
Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?
Life income with period certain
Return of Premium
Life insurance is an increasing term insurance policy that pays an additional death benefits to the beneficiary equal to the amount of the premiums paid
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
An insurer has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 yes old and not 43, as stated on the application. What will the company do ?
Pay a reduced death benefit
Decreasing terms
Policies features a level premium and a death benefits that decrease each year over the duration of the policy term
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?
Proof of insurability is not required.
whole life insurance
Provides lifetime protection, and includes a saving element or cash value.
Convertible Provision
Provides the policyowner with the right to convert the policy to a permanent insurance policy without evidence of insurability
An insured pays $1200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe ?
Reduction of premium
Which of the following is NOT one of the 3 basic types of coverages that are available, based on how face amount changes during the policy term?
Renewable
The ownership provision entitles the policy owner to do all of the following except
Set premium rates
An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured and matures at the insured age 100 is called
Single premium whole life
Term Insurance
Temporary protection because it only provides coverage for a specific period of time.
Pure Death Protection
Term insurance provides what is known as
Face Amount
The amount of benefit stated in the life insurance policy
The president of a company is starting an annuity and decides that his corporation who'll be annuitant.
The annuitant must be a natural person
Death benefits
The death benefit is guaranteed and also remains level for life
An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?
The insured may renew the policy for another 10 years, but at a higher premium rate
Attained Age
The insured's age at the time the policy is issued or renewed
In a life settlement contract, whom does the life settlement broker represent?
The owner
Which of the following determines the cash value of a variable life policy
The performance of the policy portfolio
The policy owner 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.
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.
Level Premium
The premium for the whole life policies is based on the issues Age; therefore, it remains the same throughout the life of the policy
Level Premium
The premium that does not change throughout the life of a policy
Vesting
The right of participant in a retirement plan to retain part of all of the benefits
What kind of policy allows withdrawals or partial surrenders?
Universal Life
Which of the following types of policies allows the policy owner to skip premium payments , provided that there is enough cash value in the policy to cover the premium amount ?
Universal Life
All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT
Upon conversion, the death benefit of the permanent policy will be reduced by 50%
If a policy includes a free look period of atleast 10 days , the buyer's guide may be delivered to the applicant
When Policy arrived
deferred
Withheld or postponed until a specified time or event in the future
Gross Income
a person's income before taxes or other deductions
non-profit organization
an organization that uses its surplus revenues to further achieve its purpose or mission
If a annuitant dies during the accumulation period, who will receive the annuity benefits?
beneficiary
Pretax contribution
contribution made before federal and/or state taxes are deducted from earnings
Cash value
created by the accumulation of premiums is scheduled to equal the face amount of the policy when the insured reaches age 100
surrender
early termination of a policy by the policyowner
Securities
financial instruments that may trade for value (for example, stocks, bonds, options)
Straight life
is the basic whole life policy
Level Term Insurance
is the most common type of temporary protection purchased. The word level refers to the death benefit that does not change throughout the life of the policy.
Annually Renewable Term
is the purest form of term insurance -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 probability of death increases
The premium of a survivorship life policy compared with that of a joint life policy would be
lower
Policy endowment
maturity date
LIFO
principle applied to asset management in life insurance products, under which it is assumed that the funds paid into the policy last will be paid out first
FIFO (first in, first out)
principle under which it is assumed that the funds paid into the policy first will be paid out first
Level Premium
provides a level death benefit and a level premium during the policy term