NC Life: Different types of Life Insurance
What type of policy issues certificates of insurance to the insureds?
Group policy
Regarding taxation, how does the cash value of a universal life policy accumulate?
Tax deferred.
What type of life insurance policy offers pure death protection?
Term
Whole life insurance policies mature when the insured reaches the age 100. If the policy owner dies at 80 with no outstanding balances on the policy, what portion of the DB will be paid to the beneficiary?
100% DB
A policy states that it will pay a specified face amount if the insured dies during the 20 year premium, and nothing if the insured dies after the period is over. What type of insurance is this?
20-year level term
A policy states that it will pay a specified face amount 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?
20-year level term
Who is insured under a juvenile life policy?
A minor
The policy owner of a whole life insurance policy is also the insured. What age must the insured attain in order to receive the face amount?
Age 100
The death protection component of a universal life policy is expressed as what type of coverage?
Annually renewable Term
Group life insurance policies are written as what type of insurance?
Annually renewable term
How is the premium determined in a joint life insurance policy?
Based on an average of ages.
In a joint life policy, when is the death benefit paid?
Death of the first spouse.
An individual just borrowed $10k on a 5 year note from his bank. The note is due in installments. What type of insurance is best suited for his situation?
Decreasing Term
What type of life insurance is best suited to cover a mortgage?
Decreasing term
If an employee wants to join group life insurance coverage outside the open enrollment period, what must the employee provide?
Evidence of Insurability
When the amount of insurance is increased in an adjustable life policy, what will the insurer require from the insured?
Evidence of Insurability
What is the main advantage of converting from group life insurance to individual coverage?
Evidence of insurability is not required.
What does "level" refer to in level term insurance?
Face amount W
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid for what time period?
For 20 years, or until the insured's death. Whichever once comes first.
What type of premium is charged on a straight life policy?
Level premium for the life of the insured.
A whole life policy that requires the policy owner to only pay premiums for a specified number of years.
Limited-pay Whole Life
What type of life insurance policy is paid up at age 65?
Limited-pay Whole Life
What are the living benefits of whole life insurance?
Loan values
What universal life option has a gradually increasing cash value and a level death benefit?
Option A
What are the death benefit options in universal life policies?
Options A- Level death benefit, and Option B- Increasing Death Benefit
What happens to the premium in an annually renewable term life policy?
Premium increases with each term renewal
What is the major difference between the most common types of whole life policies? (Straight life, Limited Payment, and Single Payment)
Premium payment mode
What type of whole life insurance policy generates immediate cash value?
Single-premium Whole Life
What type of insurance only requires a single payment, and continues on for life?
Single-premium whole life
What elements of an adjustable life policy can be changed by the policy owner?
The amount and payment period of the premium, the face amount, and the period for protection
In variable universal life insurance, what does the term variable refer?
The cash value and death benefit
Under Option B in a universal life policy, what happens to the death benefit?
The death benefit increases each year by the amount of cash value increases.
Who owns a group life insurance contract?
The employer (also known as the sponsor of the group)
What component must decrease in a decreasing term insurance?
The face amount.
In annually renewable term policies, the annual premium is based upon what factors?
The insured attained age
Who is entitled to the cash values in a life insurance policy?
The policy owner
In term policies, what happens to the premium throughout the term of the policy?
The premium stays level
Why are policy loans not available on term insurance?
There's no Cash Value.
What is the purpose of establishing the target premium for a universal life policy?
To prevent the policy from lapsing
Between adjustable life and universal life policies, which one provides more flexibility to the policyowner?
Universal Life
In what type of policy can the policy owner skip premium payments without the policy lapsing?
Universal Life
An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?
Variable
When would a 20-pay whole life policy endow?
When the insured reaches age 100
When does an adjustable life policy accumulate cash value?
When the premiums payed are more than the cost of policy.
If an insured terminates membership in group life insurance, to what type of insurance can the insured convert the coverage?
Whole Life
What type of insurance policy provides permanent protection?
Whole Life
Whole life policies provide protection until the insured reaches what age?
Whole life or 100 years of age
What happens to the cash value when a whole life policy matures?
Cash Value is paid to policy owner.
In Variable Universal Life Insurance, to what component does the term variable refer?
Cash Value, and Death Benefit
What type of policy is typically issued without proof of insurability from the insured?
Group Policy
What are the characteristics of the group that underwriters will consider before issuing a group life policy?
Group's purpose, size, financial strength and turnover
Universal life policies have two interest rates. What are they?
Guaranteed and Current