Types of Policies

Term Insurance

Is temporary protection b/c it only provides coverage for a specific period of time. aka pure life insurance. they provide the greatest amount of coverage for the lowest premium as compared to any other form of protection

Which of the following is true regarding the accumulation period of annuity

It is a period during which the payments into the annuity grow tax deferred.

Which of the following is TRUE regarding the annuity period?

It may last for the lifetime of the annuitant. The Annuity period is the time during which accumulated money is converted into an income stream. It may last for the lifetime of the annuitant or for a shorter specified period of time depending on the benefit payment option selected.

A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that?

Joint Life policy Joint life policies cover the lives of 2 insureds; rates are blended. upon the death of the first insured, the policy ends.

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

Whole life Whole life polices are referred to as permanent protection, since as long as the premium is paid coverage will continue for the life of insured. Both the premiums and death benefit are guaranteed and will remain level for life.

Which of the following statements is correct regarding whole life policy?

the policyowner is entitled to policy loans. Whole life policies offer level premium on the issue age, guaranteed, level death benefit, cash value that is scheduled to equal the face amount at the insured's age 100, and living benefits which include policy loans.

Fixed life insurance

Contracts that offer guaranteed minimum or fixed benefits

Liquidation of an estate

Converting a person's net worth into cash flow

Variable Universal life insurance

A flexible premium that can be increased, decreased or skipped as long as there is enough value in the policy to fund the death benefit; increasing and decreasing the amount of insurance; and cash withdrawals or policy loans.

The equity in an equity index is linked to

An index like standard & Poor's 500 Like a fixed annuity, the equity indexed annuity has a guaranteed minimum interest rate. The current interest rate that is actually credited is often tied to a familiar index like the Standard & Poor's 500

which of the following is incorrect regarding $100,000 20-year level term policy?

At the end of 20 years, the policy's cash value will equal 100,000 Term policies do not develop cash values.

Which of the following must an agent receive in order to sell variable life insurance polices?

FINRA Registration Agents selling variable life products must be registered with FINRA, and must be licensed within the state to sell life insurance. SEC registration is for securities, not agents.

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: an anuity purchased with a single lump-sum payment, with a 25 year fixed period distribution will be most suitable for this arrangement.

Annuallly renewable term (ART) policies provide a level death benefit for a premium that

Increases annually this is the purest from of term insurance. The death benefit remains level, and the policy may be guaranteed to be renewable each year w/out proof of insurability, but the premium increases annually according to the attained age, as the probability of death increases.

A return of premium term life policy is written as what type of term coverage?

Increasing

A policy will pay the death benefit if the insured dies during the 20-yr premium payin gperiod, and nothing if death occurs after the 20-yr 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 thi?

Limited-pay Life; in limited pay life policies, the premium for coverage will be completely paid up well before age 100

Which universal life option has a gradually increasing cash value and level death benefit?

Option A Under option A, the benefit remains level while the cash value gradually increases. The death benefit will increase at a later date in order to maintain a gap between the cash value and death benefit before the policy matures.

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

Pay-in Peroid; it is the period of time over which the annuitant makes payments (premiums) into an annuity.

which type of life insurance policy generates immediate cash value?

Single premium SPWL endows for the face amount of the policy if the insured lives until the age of 100. The distinguishing feature of a SPWL is the fact that it generates immediate cash value, due to the lump-sum payment made to the insurer

Face Amount

The amount of benefit stated in the life insurance policy

which of the following is not true regarding the annuitant

The annuitant cannot be the same person as the annuity owner; Whle they don't have to be, the annuitant and annuity owner are often the same person, the annuitant is the person who receives benefits or payments from the annuity and for whom the annuity is written. Since the annuitant's life expectancy is taken in consideration, the annuitant must be a natural person.

Endow

The cash value of a whole life policy has reached the contractual face amount

Attained Age

The insured's age at the time the policy is issued or renewed

All of the following are characteristics of a Universal Life Policy EXCEPT

The planned premium pays for mortality charges and expenses and any excess is returned to the policy owner. Any premium amounts not required to pay for mortality and expenses, create the cash amount.

Level Premium

The premium that does not change throughout the life of a policy

Deferred

Withheld or postponed until a specified time or event in the future

If the owner of a whole life policy who is also the insured dies at age 80, and there is no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary

a full death benefit Whole life insurance policies guarantee the death benefit. If the insured lives to the age of 100 the insurance company pay the owner of the face amount (equal the cash value). However if the insured dies prior to the policy maturity date, the death benefit is paid to the beneficiary.

periodic payments of accumulated funds best describes

an annuity

the death protection component of universal life insurances is always

annually renewable term A universal policy has two components: an insurance component and a cash ammount. The insurance component (or the death protection) of universal life is always annual renewable term insurance

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

either the amount paid into the plan or cash value of the plan, whichver is the greater amount

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

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

if the insured lives to age 100

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 under option b the death benfit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases. At any point in time, the total death benefit will always be equal to the face amount of the policy plus the current amount of cash value.

A man decided to purchase a $100,000 annually renewable term life policy to provide additional protection until his children finished collge, he discovered his policy

required a premium increase each renewal; annually renewable term policies premiums are adjusted each year to the insured's attained age; however the policy may be guaranteed 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 Single premium whole life requires the entire premium to be paid in one lump sum at the policy's inception

a straight life policy has what type of premium?

A level annual premium for the life of the insured. straight life policies charge a level annual premium for the lifetime of the insured and provide a level, guaranteed death benefit

Cash Value

A policy's savings element or living benefit

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

Depreciation period The annuitization period is the time during which accumulated money is converted into an income stream. it is also referred to as the annuity, liquidation or pay-out period.

nonforfeiture values

benefits in a life insurance policy that the policy owner cannot lose even if the policy is surrendered or lapses.

liquidation of an estate

converting a person's net worth into cash flow

what characteristic makes who life permanent protection?

coverage until death or age 100

Whole life insurance characteristics

level premium, death benefit, cash value, living benefits

Types of Term life Insurance

level, increasing, and decreasing based on how the face amouunt (death benefit) changes during the policy term

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

life paid-up at age 85

equity indexed annuities

seek higher returns are fixed annuities that invest on a relatively aggressive basis

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

target premium is a recommended amount that should be paid ona policy in order to cover the coast of insurance protection and keep the policy in force throughout its lifetime

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 annuity owner dies while the annuity is still in the accumulation state. Which of the following is true?

the benefciary will receive the greater of the money paid into the tha annuity or the cash value. The benefciary receives benefits from annuity; either the amount paid into the plan or the cash value, whichever is greater.

who bears all of the investment risk in a fixed annuity

the insurance company Fixed annuities guarantee a minimum amount of interest to be credited to the purchase payment. Income payments do not vary from one payment to the next.

an insured purchased a 10-year level term life policy that is guarnanteed 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

all of the following are true regarding decreasing term policy except

the payable premium amount steadily declines throughout the duration of the contract Premiums remain level with a decreasing term policy; only face amount decreases

Which of the following statements is current regarding a whole life policy?

the policyowner is entitled to policy loans. Whole life policies offere level premium based on the issue age, guaranteed, level death benefit, cash value that is scheduled to equal face amount at the insured's age 100, and living benefits, which include policy loans.

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 There are 3 basic types of term coverage available, based on how the face amount (death benefit) changes during the policy term: Level, increasing, and decreasing

Second to die policy

Survivorship life: is much the same as joint life that it insures 2 or more lives for a premium that is based on a joint age.

Permanent Life insurance

is a general term used to refer to various forms of life insurance policies that build cash value and remain in effect for the entire life of the insured; or until age 100 as long as the premium is paid. Most common type of permanent insurance is whole life