Life Insurance Policies Quiz

When would a 20-Pay Whole Life policy endow?

When the insured reaches age 100 (premium is completely paid off in 20 years)

In order to qualify for small group life insurance, a group must be formed for a purpose other than

Attaining life insurance

In a group life insurance policy, the employer may select all of the following EXCEPT: 1. The amount of insurance 2. The premium payor 3. The beneficiary 4. The type of insurance

3

In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT: 1. The premium 2. The amount of insurance 3. The type of investment 4. The length of coverage

3

An individual purchased a $100,000 joint life policy on himself and his wife. Eight years later he died in an automobile accident. How much will his wife receive from the policy?

$100,000 (death benefit is paid upon the first death only)

Which policy can be modified to accommodate insurance need changes as they occur?

Adjustable life (any increase in face amount requires proof of insurability)

Which term insurance has the least expensive first-year payment (compared to other term insurances with all other factors being equal), a level death benefit, and a premium increase each year with the insured's attained age?

Annually Renewable Term

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?

Lower

Synonym for endow

Mature

What determines the cash value of a variable life policy?

The performance of the policy portfolio

An individual just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy best suits this situation?

Decreasing term (face amount decreases as the amount of debt is reduced)

Which life insurance policy is considered a flexible premium policy AND interest sensitive?

Universal Life

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 life (least expensive bc the premiums are based on average age, and it would pay a death benefit only at the first death)

In credit life insurance, who is the policy owner & beneficiary and who is the insured?

The creditor is the policy owner & the beneficiary; the debtor is the insured

What is the target premium in a universal life policy?

The recommended amount that should be paid on a policy in order to cover the cost of insurance protection & to keep the policy in force throughout its lifetime

Variable life insurance is based on what kind of premium?

Level fixed

To sell variable life insurance policies, an agent must receive what three things?

1. A securities license 2. A life insurance license 3. A FINRA registration

A universal life policy has two components:

An insurance component and a cash account. The insurance component (or the death protection) of a universal life policy is always annual renewable term insurance.

Which of the following features of the Indexed Whole Life policy is NOT fixed? 1. Cash value growth 2. premium 3. death benefit 4. policy period

1 (The premium is fixed, and the death benefit is guaranteed. Cash value is dependent upon the performance of the equity index although a minimum cash value is guaranteed)

Which of the following is INCORRECT regarding a $100,000 20-year term level policy? 1. If the insured dies before the policy expired, the beneficiary beneficiary will receive $100,000 2. Policy will expire at the end of the 20-year period 3. At the end of 20 years, the policy's cash value will equal $100,000 4. The policy premiums will remain level for 20 years

3 (term policies do not develop cash values)

Which statement is NOT true regarding a straight life policy? 1. The face value of the policy is paid to the insured at age 100 2. it usually develops cash value by the end of the third policy year 3. it has the lowest annual premium of the three types of whole life policies 4. its premium steadily decreases over time, in response to its growing cash value

4 (straight life policies charge a level annual premium throughout the insured's lifetime and provide a level, guaranteed death benefit)

Which of the following types of policies will provide permanent protection? 1.Credit life 2. term life 3. group life 4. whole life

4. Whole life

If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?

A full death benefit. Whole life guarantees the death benefit. If the insured lives to the age of 100, the insurance company pays the owner the face amount (equal to cash value). However, if the insured dies prior to the policy maturity date, the death benefit is paid to the beneficiary.

Both Universal Life and Variable Universal Life have what kind of premium?

Flexible premium

An insured buys a 5-year level premium term policy with a face amount of $10,000. 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 bc the insured will be 5 years older than when the policy was originally purchased

The policy owner of a whole life policy must attain what age in order to receive the policy's face amount?

100

Which universal life option has gradually increasing cash value and a level death benefit?

Option A

An employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may

Require evidence of insurability

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

Securities

Which policy would be classified as a traditional level premium contract, with a level guaranteed face amount & a level premium for the life of the insured?

Straight Life

Which of the following statements about group life is INCORRECT?: 1. The premiums are usually lower than those in an individual policy 2. The group sponsor receives a master contract, while the participants receive certificates of insurance 3. The policy can be converted to an individual term insurance policy 4. The cost of coverage is based on the average age of the group & the ratio of men to women

3; (group life insurance can be converted to an individual whole life, not a term, policy)

If the master contract in a group life plan is terminated, how long would the insured have to be under the group plan in order to be allowed to convert to individual insurance of the same coverage?

5 years

When an employee terminates coverage under a group insurance policy, coverage continues in force

For 31 days (under the conversion privilege)

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

Concerning juvenile life insurance, which of the following statements is INCORRECT?: 1. It can be a limited premium policy 2. juvenile life is classified as any life insurance written on the life of a minor 3. juvenile life is classified as any life insurance purchased by a minor 4. usually a parent or guardian is the applicant for insurance on the life of a minor

3