Types of Insurance Policies - Chapter Exam Answers

F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?

decreasing term policy

A variable insurance policy

does not guarantee a return on its investment accounts

S is covered by a whole life policy. Which insurance product can cover his children?

child term rider

Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?

conversion

Which of the following features of a group term life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?

conversion privilege

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

conversion provision

What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?

convertible term

Which type of term policy allows the policyowner to switch to permanent insurance?

convertible term

Michael has a universal life policy with an increasing death benefit option. With an initial face amount of $50,000 and a value of $5,000, what would the actual death benefit be?

$55,000

G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income?

10 years

At what age is the insured for life insurance considered statistically dead

100

A 15-year mortgage is best protected by what kind of life policy

15 year decreasing term

An insurance producer must have which of the following in order to sell variable life insurance policies?

Registered with FINR, License for variable life and annuities contracts, a valid insurance license

T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?

Renewable

Which of the following life insurance policies will build up cash value the fastest?

Single premium

At what point does a whole life policy pay the face amount?

Upon the insured's death ot reaching the age of 100

What type of policy would offer a 40-year-old the quickest accumulation of cash value?

20-pay life

N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?

30 Pay Life

What kind of life insurance product covers children under their parent's policy?

A term rider

Which statement about a whole life policy is correct?

Cash value may be borrowed against

Mortgage protection is typically covered with

Decreasing term

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?

Decreasing term

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

Universal Life

Which of these statements accurately portray a whole life policy?

Endows at age 100 and paid up at stated time

Paula has an insurance policy that has a guaranteed minimum cash value, a guaranteed death benefit, fixed premiums, and grows at a rate reflected by a selected fund index. Which type of life policy fits this description?

Equity Indexed Life

Which of these statements describe a Modified Endowment Contract (MEC)?

Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract

What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death?

Face amount plus the policy's cash value

P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase?

Family Maintenance Policy

What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?

Family Maintenance Policy

What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?

Family Maintenence Policy

Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy?

Increase face amount

Tim has a Universal Life policy. The cash value growth in his policy is:

Interest sensitive

What type of life policy covers 2 lives and pays the face amount after the first one dies?

Joint life policy

D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?

Level term

Which of these would be considered a Limited-Pay Life policy?

Life Paid-Up at age 70

Life insurance that covers an insured's whole life with level premiums paid over a limited time is called

Limited-Pay Life

Which type of policy is considered to be overfunded, as stated by IRS guidelines?

Modified Endowment Contract

K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?

Modified Whole Life

Which of these life products is NOT considered interest-sensitive?

Modified Whole Life

A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision?

Payor provision

Which type of life insurance policy combines insurance protection with an accumulation of cash value?

Permanent Insurance

Which is true concerning a Variable Universal Life policy?

Policyowner controls where the investment will go and selects the amount of the premium payment

Which of these characteristics is consistent with a Straight Life policy?

Premiums are payable for as long as there is insurance coverage in force

Which statement is correct regarding the premium payment schedule for whole life policies?

Premiums are payable throughout the insured's lifetime and coverage lasts until death of the insured

T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?

Ten-year endowment

Which of the following provisions may NOT be adjusted in an adjustable life policy?

The insured

What does renewable term guarantee?

The insured's insurability

All of these statements about Equity Indexed Life Insurance are correct EXCEPT

The premiums can be lowered or raised, based on investment performance

How does a typical Variable Life Policy investment account grow?

Through mutual funds, stocks and bonds

A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as

Variable life

Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?

Variable life

Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase?

Whole life policy with other insured rider

Which of these is an element of a Variable Life Policy?

a fixed, level premium

How long does the coverage normally remain on a limited-pay life policy?

age 100

One-year renewable term insurance provides

an increasing premium every year

A policyowner can collect the face amount on what type of policy

endowment policy

Term insurance has which of the following characteristics?

expires at the end of the policy period

All of these are characteristics of an Adjustable Life policy EXCEPT

face amount can be adjusted using policy dividends

What kind of special need would a policyowner require with an Adjustable Life insurance policy?

flexible premiums

Credit Life Insurance is

issued in an amount not to exceed the amount of the loan

What kind of premium does a Whole Life policy have?

level

With term life insurance, which of the following types of premium remains the same for the entire policy period?

level premium

All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for

modified whole life

Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?

policyowner

A Limited-Pay Life policy has

premium payments limited to a specified number of years

What type of life policy covers two people and pays upon death of the last insured?

survivorship

A husband and wife purchases a life insurance policy that covers both of them. The policy paid nothing when the husband died. Two years later, the wife dies and a death benefit is paid to the beneficiary. Which type of policy is this?

survivorship life policy

What type of life insurance are credit policies issued as?

term

In which of the following ways does term life insurance and whole life insurance differ

term insurance does not build cash value

What type of life insurance gives the greatest amount of coverage for a limited period of time?

term life

The investment gains from a Universal Life Policy usually go toward

the cash value

The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is

the cost

The amount of coverage on a group credit life policy is limited to

the insured's total loan value

What describes a level term policy?

the premium and the protection remain constant for the term of the policy

With renewable term insurance...

the premium increases at renewal

Albert surrenders his Whole Life policy ten years after it was purchased. What can he expect?

to pay taxes on the cash value in excess of premium paid

When is the face amount paid under a Joint Life and Survivor policy?

upon the death of the last insured

A life insurance policy that provides a policyowner with cash value along with a level face amount is called

whole life

What kind of life policy either pays the face value upon death of the insured or when the insured reaches age 100

whole life

What type of insurance offers permanent life coverage with premiums that are payable for life?

whole life

The option to convert term life insurance to a permanent form of coverage can normally be executed:

without proof of insurability