Types of Life Policies Pt.2
What do Modified Life and Straight Life policies have in common?
Accumulation of cash value
A Universal Life Insurance policy is best described as a/an
Annually Renewable Term policy with a cash value account.
Which of the following elements in an Indexed Universal Life policy is tied to an index?
Cash Values
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.
What is another name for interest-sensitive whole life insurance?
Current assumption life
Which component increases in the increasing term insurance?
Death benefit
Which of the following types of insurance covers the whole family in a single contract?
Family Policy
What kind of policy does NOT typically require proof of insurability?
Group insurance
Which of the following is correct regarding credit life insurance?
It insures the life of a debtor.
In Modified Life policies, what happens to the premium?
It is level at the beginning and increases after the first few years.
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
Which of the following is an example of a limited-pay life policy?
Life Paid-up at Age 65
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
The premium of a survivorship life policy compared with that of a joint life policy would be
Lower
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?
Option B
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 is called a "second-to-die" policy?
Survivorship life
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?
The death benefit can be increased by providing evidence of insurability.
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 an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT
The type of investment
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%.
Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value?
Variable universal life
When would a 20-pay whole life policy endow?
When the insured reaches age 100
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
An employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds
50,000
For variable products, underlying assets must be kept in
A separate account
A Straight Life policy has what type of premium?
A level annual premium for the life of the insured
Graded-Premium Whole Life policy premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will
Be level thereafter.
All of the following statements are correct regarding credit life insurance EXCEPT
Benefits are paid to the borrower's beneficiary.
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?
Decreasing term
What kind of policy issues certificates of insurance to insureds?
Group insurance
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.
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 the insurance amount in a credit life policy?
The creditor can only insure the debtor for the amount owed.
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?
The insured's premiums will be waived until she is 21.
Which of the following types of policies allows for a flexible premium and a variable investment component?
variable universal life
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
At age 30, an applicant wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit his needs?
Adjustable life
