Types of Life Insurance
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
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.
All of the following are types of term policies based on what happens to the face amount during the policy term EXCEPT
renewable
If a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this?
Jumping juvenile policy
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
What do Modified Life and Straight Life policies have in common?
Accumulation of cash value
Your customer doesn't mind paying a higher premium as long as he gets a life insurance product that would allow for a faster growth of the cash value. What kind of policy would you recommend?
An endowment policy
What characteristic makes whole life permanent protection
Coverage until death or age 100
In increasing and decreasing term policies, which policy component fluctuates during the policy term?
Death benefit
Which component increases in the increasing term insurance?
Death benefit
A Return of Premium term life policy is written as what type of term coverage?
increasing
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
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
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 full death benefit
A Straight Life policy has what type of premium?
A level annual premium for the life of the insured
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.
Which statement is NOT true regarding a Straight Life policy?
Its premium steadily decreases over time, in response to its growing cash value.
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 type of life insurance policy generates immediate cash value?
Single Premium
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
When would a 20-pay whole life policy endow?
When the insured reaches age 100
The LEAST expensive first-year premium is found in which of the following policies?
annually renewable term
Which of the following features of the Indexed Whole Life policy is NOT fixed?
cash value growth
Which of the following policies is characterized by a provision where the premiums are lower in the early years of the policy and increase over time to a point where they become level for the remainder of the policy?
Graded premium whole life
Annually renewable term policies provide a level death benefit for a premium that
Increases annually
The type of term insurance that provides increasing death benefits as the insured ages is called
Increasing Term
Which of the following would be considered an advantage of owning term insurance?
It provides the highest amount of coverage for a temporary period of time
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.
Which of the following is TRUE regarding an indeterminate premium whole life policy?
The premium can be raised up to a guaranteed maximum rate.
In term policies, what happens to the premium throughout the term of the policy?
The premium remains level
Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?
greatest
All of the following are true regarding a decreasing term policy EXCEPT
the payable premium amount steadily declines throughout the duration of the contract
Which of the following types of policies will provide permanent protection?
whole life
What type of whole life insurance policy has premiums that are adjusted so that during the first years of the policy, the premiums are lower than those of a straight whole life policy, and in subsequent years the premiums are higher than those of a straight whole life policy?
Modified life
What characteristic makes whole life permanent protection?
Coverage until death or age 100
What does "level" refer to in level term insurance?
Face amount
In Modified Life policies, what happens to the premium?
It is level at the beginning and increases after the first few years
Which of the following best describes annually renewable term insurance?
It is level term insurance
Which of the following is NOT a type of whole life insurance?
Level term
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?
Term
A 27-year-old professional has limited income and can only budget $15 per month for life insurance. Which of the following life insurance policies would provide the largest face amount for that amount of premium?
Term insurance
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 statements is correct regarding a whole life policy?
The policyowner is entitled to policy loans
