CH3: Life Insurance Policies
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 A Required a premium increase each renewal. B Built cash values. C Required proof of insurability every year. D Decreased death benefit at each renewal.
A Required a premium increase each renewal
A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why? A The group has not been established for long enough. B The purpose of the group was to purchase life insurance. C Their profession poses too high of a risk for the insurer. D There are not enough people in the group to qualify for group life insurance.
B The purpose of the group was to establish life insurance
Which of the following best defines target premium in a universal life policy? A The minimum amount to make sure the policy is annually renewable B The corridor of insurance C The recommended amount to keep the policy in force throughout its lifetime D The maximum amount the policyowner may pay on a policy
C The recommended amount to keep the policy in force throughout its lifetime
A Universal Life Insurance policy is best described as a/an A Variable Life with a cash value account. B Whole Life policy with two premiums: target and minimum. C Flexible Premium Variable Life policy. D Annually Renewable Term policy with a cash value account.
D annually renewable term policy with a cash value account
Which policy component decreases in decreasing term insurance? A Face amount B Cash value C Dividend D Premium
A face amount
Which of the following best describes annually renewable term insurance? A It is level term insurance. B It requires proof of insurability at each renewal. C Neither the premium nor the death benefit is affected by the insured's age. D It provides an annually increasing death benefit.
A it is level term insurance
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? A Jumping juvenile policy B Limited pay whole life policy C Modified life insurance policy D Single premium policy
A jumping juvenile policy
Which of the following is NOT true regarding a Variable Universal Life policy? A The death benefit is fixed. B The policyowner can participate in some of the investment decisions. C The minimum death benefit is guaranteed. D The cash values are not guaranteed.
A the death benefit is fixed
Which of the following is an example of a limited-pay life policy? A Life Paid-up at Age 65 B Renewable Term to Age 70 C Level Term Life D Straight Life
A life paid up at 65
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 A Graded premium whole life. B Single premium whole life. C Modified Endowment Contract (MEC). D Level term life.
B single premium whole life
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined and the cash value fell to $10,000. If the insured dies, how much will be paid out? A $10,000 B $40,000 C $50,000 D $60,000
C $50,000
In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years? A 1 B 3 C 5 D 10
C 5
Variable Whole Life insurance is based on what type of premium? A Flexible B Graded C Level fixed D Increasing
C level fixed
Which of the following statements is correct regarding a whole life policy? A Cash values are not guaranteed. B The policy premium is based on the attained age. C The death benefit may increase or decrease during the policy period. D The policyowner is entitled to policy loans.
D the policyowner is entitled to policy loans
Which of the following policies would be classified as a traditional level premium contract? A Adjustable Life B Universal Life C Variable Universal Life D Straight Life
D straight life
Which of the following types of policies will provide permanent protection? A Credit life B Term life C Group life D Whole life
D whole life
Which statement is NOT true regarding a Straight Life policy? A Its premium steadily decreases over time, in response to its growing cash value. B The face value of the policy is paid to the insured at age 100. C It usually develops cash value by the end of the third policy year. D It has the lowest annual premium of the three types of Whole Life policies.
A Its premium steadily decreases over time, in response to its growing cash value.
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? A Option B B Corridor option C Variable option D Option A
A Option B
All of the following could own group life insurance EXCEPT A A group needing low-cost life insurance. B A group sponsored by an employer. C An alumni group. D A debtor group.
A a group needing low-cost life insurance
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 Decreasing term B Variable life C Universal life D Whole life
A decreasing term
The premium of a survivorship life policy compared with that of a joint life policy would be A Half the amount. B Lower. C Higher. D As high.
B Lower
An Adjustable Life policyowner can change which of the following policy features? A The insured B The coverage period C The mortality expense D The investment account
B the coverage period
All of the following are characteristics of group life insurance EXCEPT A Individuals covered under the policy receive a certificate of insurance. B Certificate holders may convert coverage to an individual policy without evidence of insurability. C Premiums are determined by the age, sex and occupation of each individual certificate holder. D Amount of coverage is determined according to nondiscriminatory rules.
C premiums are determined by the age, sex, and occupation of each individual certificate holder
Which component increases in the increasing term insurance? A Cash value B Interest on the proceeds C Premium D Death benefit
D death benefit
What are the licensing requirements for someone who sells variable universal life insurance? A Life insurance B Securities C Universal life and variable products D Life insurance and securities
D life insurance and securities
If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may A Require a higher premium. B Prolong the open enrollment period. C Increase medical requirements on existing members. D Require evidence of insurability.
D require evidence of insurability
The death benefit in a variable universal life policy A Depends on the performance of a separate account. B Is guaranteed to be higher than when the policy is originally issued. C Is fixed. D Always equals the face amount stated in the policy.
A depends on the performance of a separate account
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? A Limited pay whole life B Interest-sensitive whole life C Life annuity with period certain D Increasing term
A limited pay whole life
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a A Whole Life Policy. B Convertible Term Policy. C Renewable Term Policy. D Decreasing Term Policy.
B Convertible term policy
To sell variable life insurance policies, an agent must receive all of the following EXCEPT A FINRA registration. B A securities license. C A life insurance license. D SEC registration.
D SEC registration
