Quiz: TYPES OF LIFE POLICIES

In a single employer group plan, what is the name of the policy issued to the employer?

Master contract In group insurance, the actual policy (master policy/contract) is issued to the sponsor of the group, which is often an employer.

What is a key distinction between variable whole life and variable universal life products?

Variable whole life has a guaranteed death benefit. Variable, universal life insurance may, or may not have a minimum death benefit, unlike variable whole life insurance, which guarantees a minimum death benefit.

The insured is also the policy owner of a whole life policy. What age must be insured attain in order to receive the policies face amount?

100 Whole life insurance policies, mature when the insured reaches the age of 100. The cash value at the time is scheduled to equal the face amount; therefore, when the insurance company pays the face amount, it also, in fact, pays the cash value.

An employee is insured under the employers group life plan. If she terminates her group coverage, which of the following statements is incorrect? A.The insured may choose to convert to term or permanent individual coverage B. The insured would not need to prove insurability for a conversion policy. C. The insured may convert coverage to an individual policy within 31 days D. The premium for individual coverage will be based upon the insurance attained age

A. The insured may choose to convert to term or permanent individual coverage. When group coverage is converted to an individual policy, the insurer will determine the type of coverage, usually permanent insurance.

Variable whole life insurance does not guarantee minimum death benefit. True or false?

False Variable whole life has a guarantee death benefit.

Do term policies build cash value?

No

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?

The full death benefit

What are the characteristics of a group life insurance plan?

The participants receive a certificate of insurance as they are proof of insurance. A minimum number of participants is required in order to underwrite the plan. The cost of the plan is determined by the average age of the group.

Variable universal life insurance may or may not have a minimum death benefit. True or false?

True

Which policies would have an IRS required corridor or gap between the cash value and the death benefit?

Universal Life- Option A

What type of life insurance policy allows the policy owner to pay more or less than the plan premium?

Universal life The policy owner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. In fact, the policy owner may even skip paying a premium, and the policy will not lapse as long as there is sufficient cash value at the time to compensate for the nonpayment of premium.

What life insurance policy allows the policy owner to get paying the premium as long as there is sufficient cash value at the time to compensate for the nonpayment of premium?

Universal life policy.

Fun Fact

Whole life, insurance policies, guarantee the death benefit. If the insured lives to the age of 100, the insurance company will pay the owner of the face amount. (equal the cash value) however, if the insured dies prior to the policy maturity date, the death benefit is paid to the beneficiary.

Variable whole life insurance is based on what type of premium?

level fixed premium Variable whole life insurance is a level fix premium investment based-product

Which of the following is incorrect regarding a $100,000 20-year level term policy? A. The policy premiums will remain level for 20 years. B. If the insured dies before the policy expired, the beneficiary will receive $100,000. C. The policy will expire at the end of the 20 year period. D. At the end of 20 years, the policy's cash value will equal $100,000.

D. At the end of 20 years the policy's cash value will equal $100,000. Term policies do not develop cash values. All other statements are true.

There is a requirement to prove insurability on the part of the participants in a group life insurance plan. True or false?

False There is no individual underwriting for group life insurance.

In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?

Five years If the master contract is terminated, every individual who has been on the plan for at least five years will be allowed to convert to individual insurance of the same coverage.

What type of premium do both Universal Life and Variable Universal Life policies have?

Flexible Variable universal life, like universal life itself, has a flexible premium that can be increased or decreased as the policyowner chooses, as long as there is enough value in the policy to fund the death benefit.

What does it mean to have a flexible premium in a life insurance policy?

Flexible premiums can be increased or decreased as a policy owner chooses, as long as there is enough value in the policy to find the death benefit.

Domestic insurer, issuing variable contracts, must establish one or more

Separate accounts. Any domestic insurer issuing variable contracts must establish one or more separate accounts. The insurer must maintain in each separate account assets with a value at least equal to the reserves and other contract liabilities connected to the account.

What best defines target premium in a universal life policy?

The recommended amount to keep the policy in force throughout its lifetime The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection, and to keep the policy in force throughout its lifetime.

All of the following are true about variable products, except A. The cash value is not guaranteed. B. Policy owners bear the investment risk. C. The premiums are invested in the insures general account. D. The minimum death benefit is guaranteed.

The premiums are invested in the insurer's general account. Insurer's selling variable products invest their customers monies in a separate account, which is very similar to a mutual fund. Since there is no guaranteed rate of return, customers must bear the investment risk.