Ch. 2 Types of life Insurance Policies

All of the following are True regarding the convertibility option under a term life insurance policy EXEPT A. Upon conversion, the death benefit of the permanent policy will be reduced by 50% B. Evidence of insurability is not required C. Most term policies contain a convertibility option D. Upon conversion, the premium for the permanent policy will be based upon attained age

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

An agent selling variable annuities must be registered with A. FINRA B. Department of Insurance C. The Guaranty Association D. The SEC

A. FINRA

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 A. Based on the issue age of the insured B. Discounted C. Adjusted to the insured's age at the time of renewal D. Determined by the health of the insured

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

What kind of policy allows withdrawals or partial surrenders? A. Term policy B. Variable whole life C. Universal life D. 20-pay life

C. Universal life

The least expensive first-year premium is found in which of the following policies? A. Increasing Term B. Decreasing Term C. Level Term D. Annually renewable Term

D. Annually Renewable Term

Which of the following policies would be classified as a traditional level premium contract? A. Variable universal life B. Straight life C. Adjustable life D. Universal life

B. Straight life

Which of the following best describes what the annuity period is? A. The period of time from the effective date of the contract to the date of its termination B. The period of time during which accumulated money is converted into income payments C. The period of time from the accumulation period to the annuitization period D. The period of time during which money is accumulated in an annuity

B. The period of time during which accumulated money is converted into income payments

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? A. Universal life B. Whole life C. Decreasing term D. Variable life

C. Decreasing term

Which of the following is called a "second-to-die" policy A. Juvenile life B. Joint life C. Survivorship life D. Family income

C. Survivorship life

When would a 20-pay whole life policy endow? A. After 20 payments B. In 20 years C. When the insureds age reaches 100 D. At the insured's age 65

C. When the insureds age reaches 100

When an annuity is written, whose life expectancy is taken into account? A. Beneficiary B. Life expectancy is not a factor when writing an annuity C. Owner D. Annuitant

D. Annuitant

A straight life policy has what type of premium? A. An increasing annual premium for the life of the insured B. A decreasing annual premium for the life of the insured C. A variable annual premium for the life of the insured D. A level annual premium for the life of the preferred

D. A level annual premium for the life of the insured

During partial withdrawal from a universal life policy, which portion will be taxed? A. Loan B. Interest C. Cash value D. Principal

B. Interest

Which of the following is NOT true regarding the accumulation period of an annuity? A. It is also known as the pay-in-period B. It would not occur in a deferred annuity C. It is the period during which the annuity payments earn interest D. It is the period over which the owner makes payments into an annuity

B. It would not occur in a deferred annuity

Which of the following types of policies allows for a flexible premium and a variable investment component? A. Guaranteed issue variable life insurance B. Variable whole life insuracne C. Whole life insurance D. Variable universal life insurance

D. Variable universal life insurance

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? A. Deferred interest annuity B. Immediate annuity C. Variable annuity D. Flexible payment annuity

B. Immediate annuity

Which of the following types of policies will provide permanent protection? A. Term Life B. Group life C. Whole life D. Credit life

C. Whole life

Which universal life option has gradually increasing cash value and a level death benefit? A. Option A B. Juvenile life C. Term insurance D. Option B

A. Option A

Which of the following is NOT one of the three types of term coverage based on what happens to the face amount during the policy term? A. Renewable B. Decreasing C. Level D. Increasing

A. Renewable

What license or licenses are required to sell variable annuities? A. No license is required B. Both a life insurance license and a securities license C. Only a life insurance license D. Only a securities license

B. Both a life insurance and a securities license

What does "level" refer to in level term insurance? A. Interest rate B. Face amount C. Premium D. Cash value

B. Face amount

Question 5 of 15 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? A. Universal life B. Flexible life C. Variable life D. Adjustable life

A. Universal life

For variable products, underlying assets must be kept in A. A separate account B. A revenue account C. A money market account D. A general account

A. A separate account

What characteristic makes whole life permanent protection? A. Living benefits B. Coverage until death or age 100 C. Guaranteed death benefit D. Guaranteed level premium

B. Coverage until death or age 100

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? A. Limited-pay life B. Variable Life C. Adjustable Life D. Graded Premium Life

A. Limited pay life

Which of the following would help prevent a universal life policy from lapsing? A. Corridor of insurance B. Target premium C. Face amount D. Adjustable premium

B Target premium

Which of the following is INCORRECT regarding a $100k 20-year level term policy? A. The policy will expire at the end of the 20 year period. B. At the end of 20 years, the policy's cash value will equal $100k C. The policy premiums will remain level for 20 years D. If the insured dies before the policy expired, the beneficiary will receive $100k

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