LIFE ONLY_Chapter 4- Types of Life Policies

Which of the following are generally NOT considered when underwriting group insurance? A. The size of the group B. The insured's medical history C. The nature of the group D. The group's past claim experience

B. The insured's medical history

Which component increases in the increasing term insurance? A. Death benefit B. Cash value C. Interest on the proceeds D. Premium

A. Death benefit

What does "level" refer to in level term insurance? A. Face amount B. Premium C. Cash value D. Interest rate

A. Face amount

An employee quits his job on May 15 and doesn't convert his Group Life Policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen? A. The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one B. The insurer will pay the full death benefit from the group policy to the beneficiary c. The insurer will pay a reduced death benefit to the beneficiary D. The insurer will pay the death benefit minus one month's premium

B. The insurer will pay the full death benefit from the group policy to the beneficiary

An individual purchased a $100,000 Joint Life policy on himself and wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy? A. Nothing B. $50,000 C. $100,000 D. $200,000

C. $100,000

Both Universal life and Variable Universal Life have a A. Decreasing premium B. Increasing premium C. Flexible premium D. Level fixed premium

C. Flexible premium

The insured is also the policyowner of a whole life policy. What age must the insured attain in order to receive the policy's face amount? A. 65 B. 70 1/2 C. 90 D. 100

D. 100

Which policy component decreases in decreasing term insurance? A. Face amount B. Cash value C. Dividend D. Premium

A. Face amount

Which of the following statements about group life is correct? A. The cost of coverage is based on the ratio of men and women in the group B. The premiums are higher than in an individual policy because there is no medical exam C. The group sponsor receives a Certificate of Insurance D. The policy can be converted to an individual term insurance policy

A. The cost of coverage is based on the ration of men and women in the group

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? A. Universal Life- Option A B. Universal Life- Option B C. Equity Indexed Universal Life D. Variable Universal Life

A. Universal Life- Option A

Annually renewable term policies provide a level death benefit for a premium that A. Remains level B. Fluctuates C. Increases annually D. Decreases annually

C. Increases annually

Which of the following Life Insurance policies would be considered interest sensitive? A. Adjustable life B. Whole life C. Increasing term D. Universal life

D. Universal life

All of the following statements are true regarding group insurance EXCEPT A. Small groups such as labor unions are eligible for group insurance B. Participants in the policy each receive a policy C. The group sponsor is the policyholder D. Participants in a group insurance plan are issued certificates of insurance

B. Participants in the policy each receive a policy

What is the purpose of establishing the target premium for a universal life policy? A. To pay up the policy faster B. To cover all policy expense she C. To keep the policy in force D. To accumulate cash value faster

C. To keep the policy in force

Which type of life insurance is most commonly used for group plans? A. Whole life B. Flexible premium whole life C. Decreasing term D. Annually renewable term

D. Annually renewable term

A Return of Premium term life policy is written as what type of term coverage? A. Decreasing B. Renewable C. Level D. Increasing

D. Increasing

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? A. It will increase each year during the next 5 years as the face amount increases each year B. It will increase because the insured will be 5 years older than when the policy was originally purchased C. It will remain the same for the new 5-year term D. It will decrease for the new 5-year term since the insured is now a lesser risk to the company

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

Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources? A. Variable life B. Term C. Whole life D. Annuity

B. Term

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? A. Life annuity with period certain B. Increasing term C. Limited pay whole life D. Interest-sensitive whole life

C. Limited pay whole life

An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy? A. She can only convert her coverage without proof of insurability if she has the master policy B. She must apply for a new policy, which requires her to provide proof of insurability C. She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan D. She will still be covered under the group plan, but will have to pay an individual policy premium

C. She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan

The type of policy that can be changed from one that does not accumulate cash value to the one that does is a A. Whole Life Policy B. Convertible Term Policy C. Renewable Term Policy D. Decreasing Term Policy

B. Convertible Term Policy

An employee is joining a group insurance plan. In order to avoid having to prove insurability, what must the employee do? A. Join during the open enrollment period B. Provide medical records to the insurer C. Sign a statement of continued good health D. Nothing: proof of insurability is never required in group policies

A. Join during the open enrollment period

If an agent wishes to sell variable life policies, what license must the agent obtain? A. Surplus lines B. Personal Lines C. Securities D. Adjuster

C. Securities

A domestic insurer issuing variable contracts must establish one or more A. Annuity accounts B. General accounts C. Separate accounts D. Liability accounts

C. Separate accounts

An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his A. Experience Rating B. Group rate C. Insurer's scheduled rate D. Attained age

D. Attained age

Which of the following would help prevent a universal life policy from lapsing? A. Face amount B. Adjustable premium C. Corridor of insurance D. Target premium

D. Target premium

Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated? A. Those who have worked in the company for at least 3 years B. Those who have dependents C. Those who have no history of claims D. Those who have been insured under the plan for at least 5 years

D. Those who have been insured under the plan for at least 5 years

All of the following are true regarding a decreasing term policy EXCEPT A. The contract pays only in the event of death during the term and there is no cash value B. The face amount steadily declines throughout the duration of the contract C. The payable premium amount steadily declines throughout the duration of the contract D. The death benefit is $0 at the end of the policy term

C. The payable premium amount steadily declines throughout the duration of the contact

Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection? A. Least B. Most comprehensive C. Longest D. Greatest

D. Greatest

The type of term insurance that provides increasing death benefits as the insured ages is called A. Flexible term B. Interest-sensitive term C. Age-sensitive term D. Increasing term

D. Increasing term

The death benefit under the Universal Life Option B A. Decreases by the amount that the cash value increases B. Increases for the first few years of the policy, and then levels off C. Remains level D. Gradually increases each year by the amount that the cash value increases

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

Which Universal Life option has a gradually increasing cash value and a level death benefit? A. Option A B. Juvenile life C. Term insurance D. Option B

A. Option A

Which type of life insurance policy generates immediate cash value? A. Single premium B. Level Term C. Decreasing Term D. Continuous Premium

A. Single premium

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT A. Upon conversion, the death benefit of the permanent policy will be reduced by 50% B. Evidence of insurability is not required C. Most term polices contain a convertibility option D. Upon conversion, the premium for the permanent policy will be based upon attained age

A. Upon conversion, the death benefit of the permanent policy will be reduced by 50%

When would a 20-pay whole life policy endow? A. When the insured reaches age 100 B. At the insured's age 65 C. After 20 payments D. In 20 years

A. When the insured reaches age 100

Variable Whole Life insurance is based on what type of premium? A. Graded B. Level fixed C. Increasing D. Flexible

B. Level fixed

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may A. Increase medical requirements on existing members B. Require evidence of insurability C. Require a higher premium D. Prolong the open enrollment period

B. Require evidence of insurability

A Return of Premium term life policy is written as what type of term coverage? A. Renewable B. Level C. Increasing D. Decreasing

C. Increasing

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. A death benefit equal to the cash value of the policy B. 50% of the death benefit C. The face amount minus the premiums that would have been collected until the insured reached the age of 100 D. A full death benefit

D. A full death benefit

A Straight Life policy has what type of premium? A. An increasing annual premium for the life of the insured B. A decreasing annual premium for the life of the insured C. A variable annual premium for the life of the insured D. A level annual premium for the life of the insured

D. A level annual premium for the life of the insured

If a life insurance policy insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this? A. Limited pay whole life policy B. Modified life insurance policy C. Single premium policy D. Jumping juvenile policy

D. Jumping juvenile policy

Variable Whole Life insurance is based on what type of premium? A. Increasing B. Flexible C. Graded D. Level fixed

D. Level fixed

Which of the following is an example of a limited-pay life policy? A. Renewable Term to Age 70 B. Level Term Life C. Straight Life D. Life Paid-up at Age 65

D. Life Paid-up at Age 65

Which of the following has the right to convert the existing term coverage to permanent insurance? A. Insurer B. Beneficiary C. Producer D. Policyowner

D. Policyowner

Which of the following best defines target premium in a universal life policy? A. The maximum amount the policy owner may pay on a policy B. The minimum amount to make sure the policy is annually renewable C. The corridor of insurance D. The recommended amount to keep the policy in force throughout its lifetime

D. The recommended amount to keep the policy in forcce throughout its lifetime

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? A. Variable life B. Decreasing term C. Straight whole life D. Universal life

D. Universal life