Types of Life Insurance Policies

Which of the following is TRUE for both equity indexed annuities and fixed annuities?

They have a guaranteed minimum interest rate.

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?

Universal life

The main difference between immediate and deferred annuities is

When the income payments begin.

Fixed annuities provide all of the following EXCEPT

Hedge against inflation.

Equity indexed annuities

Seek higher returns.

When an annuity is written, whose life expectancy is taken into account?

Annuitant

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?

100

Which of the following is INCORRECT regarding a $100,000 20-year level term policy?

At the end of 20 years, the policy's cash value will equal $100,000.

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

A policy will pay the death benefit 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?

Level term

An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?

Limited-pay Life

Which of the following is another term for the accumulation period of an annuity?

Pay-in period

A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy

Required a premium increase each renewal.

Which type of life insurance policy generates immediate cash value?

Single Premium

Who bears all of the investment risk in a fixed annuity?

The insurance company

An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?

The insured may renew the policy for another 10 years, but at a higher premium rate.

Which of the following is TRUE regarding the premium in term policies?

The premium is level.

All of the following are true about variable products EXCEPT

The premiums are invested in the insurer's general account.

The minimum interest rate on an equity indexed annuity is often based on

An index like Standard & Poor's 500.

In which of the following cases will the insured be able to receive the full face amount from a whole life policy?

If the insured lives to age 100

Which statement is NOT true regarding a Straight Life policy?

Its premium steadily decreases over time, in response to its growing cash value.

Which of the following is an example of a limited-pay life policy?

Life Paid-up at Age 65

What does "level" refer to in level term insurance?

Face amount

Why is an equity indexed annuity considered to be a fixed annuity?

It has a guaranteed minimum interest rate.

All of the following are true regarding a decreasing term policy EXCEPT

The payable premium amount steadily declines throughout the duration of the contract.

An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)

Equity Indexed Annuity.

An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an

Interest-sensitive Whole Life.

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?

Limited pay whole life

Which two terms are associated directly with the way an annuity is funded?

Single payment or periodic payments

The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?

The annuitant must be a natural person.

The policyowner 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.

A Return of Premium term life policy is written as what type of term coverage?

Increasing

If the annuitant dies during the accumulation period, who will receive the annuity benefits?

The beneficiary

Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be

Adjusted to the insured's age at the time of renewal.

Which of the following is a feature of a variable annuity?

Benefit payment amounts are not guaranteed.

If an annuitant dies before annuitization occurs, what will the beneficiary receive?

Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount

All of the following are true of an annuity owner EXCEPT

The owner must be the party to receive benefits.

The term "fixed" in a fixed annuity refers to all of the following EXCEPT

Death benefit

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

The LEAST expensive first-year premium is found in which of the following policies?

Annually Renewable Term

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

A Straight Life policy has what type of premium?

A level annual premium for the life of the insured

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?

Depreciation period

An agent selling variable annuities must be registered with

FINRA.

Which of the following is NOT one of the three basic types of coverages that are available, based on how the face amount changes during the policy term?

Renewable

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called

Single premium whole life.

Which of the following policies would be classified as a traditional level premium contract?

Straight Life

Both Universal Life and Variable Universal Life have a

Flexible premium.

Which of the following is TRUE regarding variable annuities?

The annuitant assumes the risks on investment.

In an annuity, the accumulated money is converted into a stream of income during which time period?

Annuitization period

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT

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

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 20 years or until death, whichever occurs first.

Which of the following is NOT true regarding the accumulation period of an annuity?

It would not occur in a deferred annuity.

Which of the following is NOT true regarding the annuitant?

The annuitant cannot be the same person as the annuity owner.

The premium of a survivorship life policy compared with that of a joint life policy would be

Lower.

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

Securities

Which policy component decreases in decreasing term insurance?

Face amount

The death benefit under the Universal Life Option B

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

When would a 20-pay whole life policy endow?

When the insured reaches age 100

Which of the following types of policies will provide permanent protection?

Whole life

The type of policy that can be changed from one that does not accumulate cash value to the one that does is a

Convertible Term Policy.

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?

Universal life

The death protection component of Universal Life Insurance is always

Annually Renewable Term

Annually renewable term policies provide a level death benefit for a premium that

Increases annually.

Which of the following best describes annually renewable term insurance?

It is level term insurance.

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Option A

Which of the following best defines target premium in a universal life policy?

The recommended amount to keep the policy in force throughout its lifetime

A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?

Immediate annuity

A domestic insurer issuing variable contracts must establish one or more

Separate accounts.

Which of the following would help prevent a universal life policy from lapsing?

Target premium

Which of the following is NOT true regarding Equity Indexed Annuities?

They earn lower interest rates than fixed annuities.

What is the purpose of establishing the target premium for a universal life policy?

To keep the policy in force

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

Universal Life - Option A

In a survivorship life policy, when does the insurer pay the death benefit?

Upon the last death