Types of life policies

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 ABased on the issue age of the insured. BDiscounted. CAdjusted to the insured's age at the time of renewal. DDetermined by the health of the insured.

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

Which of the following is INCORRECT regarding a $100,000 20-year level term policy? AThe policy premiums will remain level for 20 years. BIf the insured dies before the policy expired, the beneficiary will receive $100,000. CThe policy will expire at the end of the 20-year period. DAt the end of 20 years, the policy's cash value will equal $100,000.

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

The type of policy that can be changed from one that does not accumulate cash value to the one that does is a AConvertible Term Policy. BRenewable Term Policy. CDecreasing Term Policy. DWhole Life Policy.

Convertible Term Policy.

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen? AThe insurer will pay a reduced death benefit to the beneficiary. BThe insurer will pay the death benefit minus one month's premium. CThe insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one. DThe insurer will pay the full death benefit from the group policy to the beneficiary.

The insurer will pay the full death benefit from the group policy to the beneficiary.

What is the purpose of establishing the target premium for a universal life policy? ATo pay up the policy faster BTo cover all policy expenses CTo keep the policy in force DTo accumulate cash value faster

to keep the policy in force

Which policy component decreases in decreasing term insurance? ACash value BDividend CPremium DFace amount

Face amount

Which of the following Life Insurance policies would be considered interest sensitive? AAdjustable life BWhole life CIncreasing term DUniversal life

Universal life

What are the two components of a universal policy? ASeparate account and policy loans BInsurance and cash account CInsurance and investments DMortality cost and interest

insurance and cash account

A Return of Premium term life policy is written as what type of term coverage? ADecreasing BRenewable CLevel DIncreasing

increasing

Annually renewable term policies provide a level death benefit for a premium that AFluctuates. BIncreases annually. CDecreases annually. DRemains level.

increases annually

All of the following are characteristics of a group life insurance plan EXCEPT AThere is a requirement to prove insurability on the part of the participants. BThe participants receive a Certificate of Insurance as their proof of insurance. CA minimum number of participants is required in order to underwrite the plan. DThe cost of the plan is determined by the average age of the group.

There is a requirement to prove insurability on the part of the participants.

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? AUniversal life BVariable life CDecreasing term DStraight whole life

Universal 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? ATerm to specified age BOrdinary life policy CLimited pay whole life DLevel term

level term

For variable products, underlying assets must be kept in AA money market account. BA general account. CA separate account. DA revenue account.

seperate account

What characteristic makes whole life permanent protection? ACoverage until death or age 100 BGuaranteed death benefit CGuaranteed level premium DLiving benefits

Coverage until death or age 100

The death benefit under the Universal Life Option B AGradually increases each year by the amount that the cash value increases. BDecreases by the amount that the cash value increases. CIncreases for the first few years of the policy, and then levels off. DRemains level.

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

A Universal Life insurance policy has two types of interest rates that are called AOption A and Option B. BFixed and Variable. CMinimum and Target. DGuaranteed and Current.

Guaranteed and current

Which statement is NOT true regarding a Straight Life policy? AIts premium steadily decreases over time, in response to its growing cash value. BThe face value of the policy is paid to the insured at age 100. CIt usually develops cash value by the end of the third policy year. DIt has the lowest annual premium of the three types of Whole Life policies.

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

The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as AThe next month's premium is sufficient to cover both the current premium amount and the skipped amount. BThe policy contains sufficient cash value to cover the cost of insurance. CThe previous premium payments were high enough to create an excess of premium. DThe policyowner cannot skip premiums without the policy lapsing.

The policy contains sufficient cash value to cover the cost of insurance.

Which of the following statements is correct regarding a whole life policy? AThe policy premium is based on the attained age. BThe death benefit may increase or decrease during the policy period. CThe policyowner is entitled to policy loans. DCash values are not guaranteed.

The policyowner is entitled to policy loans.

Variable Whole Life insurance is based on what type of premium? AFlexible BGraded CLevel fixed DIncreasing

level fixed

Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value? ADecreasing term life BVariable universal life CIncreasing term life DCredit term life

variable universal life

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? AThe death benefit can be increased by providing evidence of insurability. BThe death benefit cannot be increased. CThe death benefit can be increased only when the policy has developed a cash value. DThe death benefit can be increased only by exchanging the existing policy for a new one.

The death benefit can be increased by providing evidence of insurability.

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT AUpon conversion, the premium for the permanent policy will be based upon attained age. BUpon conversion, the death benefit of the permanent policy will be reduced by 50%. CEvidence of insurability is not required. DMost term policies contain a convertibility option.

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

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount? AFlexible life BVariable life CAdjustable life DUniversal life

Universal life

Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection? ALeast BMost comprehensive CLongest DGreatest

greatest

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? AOption A BOption B CCorridor option DVariable option

Option B

An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy? AShe can only convert her coverage without proof of insurability if she has the master policy. BShe must apply for a new policy, which requires her to provide proof of insurability. CShe can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan. DShe will still be covered under the group plan, but will have to pay an individual policy premium.

She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan.

Which of the following best describes annually renewable term insurance? AIt requires proof of insurability at each renewal. BNeither the premium nor the death benefit is affected by the insured's age. CIt provides an annually increasing death benefit. DIt is level term insurance.

it is level term insurance

A Universal Life Insurance policy is best described as a/an AAnnually Renewable Term policy with a cash value account. BVariable Life with a cash value account. CWhole Life policy with two premiums: target and minimum. DFlexible Premium Variable Life policy.

Annually Renewable Term policy with a cash value account.

Which component increases in the increasing term insurance? ACash value BInterest on the proceeds CPremium DDeath benefit

death benefit

The LEAST expensive first-year premium is found in which of the following policies? AIncreasing Term BDecreasing Term CLevel Term DAnnually Renewable Term

annually renewable term