Chapter 3 Quiz Questions part 1
Which of the following types of Term Life policies most likely contains a Renewability feature?
10 Year Convertible Term
A(n) _______ term life policy is normally used when covering an insured's mortgage balance
Decreasing
Credit life insurance is typically issued with which of the following types of coverage?
Decreasing Term
Term insurance has which of the following characteristic
Expires at the end of the policy period
What does a Face Amount Plus Cash Policy pay upon the insured's death?
Face amount plus cash value policy
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance Policy
What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?
Family Maintenance Policy
P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase?
Family Maintenance policy
Who has the option to renew a Renewable Term policy
Insured
An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager
Key person insurance
K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?
Modified Whole Life
Which of these life products is NOT considered interest-sensitive?
Modified Whole Life
Whole Life insurance policies are contractually guaranteed to provide each of the following EXCEPT:
Partial withdrawal features beyond a surrender charge period
T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?
Ten-Year Endowment
The amount of coverage on a group credit life policy is limited to :
The insured's total loan value
A variable insurance policy
does not guarantee a return on its investment accounts
Variable Life products require a producer to
hold a Life Insurance license and a Securities license
Credit Life Insurance is
issued in an amount not to exceed the amount of the loan
What type of life policy covers two people and pays upon the death of the last insured
survivorship
Under a Renewable term policy
the renewal premium is calculated on the basis of the insured's attained age
A term life insurance policy matures:
upon the insured's death during the term of the policy
What type of policy would offer a 40 year old the quickest accumulation of cash value
20-pay life
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Modified Endowment Contract
J is issued a Life Insurance policy with a death benefit of $100,000. She pays $600 per year in premium for the first 5 years. The premium then increases to $900 per year in the sixth year, and remains level thereafter. The policy's death benefit also remains at $100,000. Which type of Life Insurance policy is this?
Modified Premium Life
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
Policyowner
K is shopping for a permanent life insurance policy that will offer her the MOST protection per dollar of annual premium. Which of these policies best fits her needs?
Straight Life
Which of the following is considered an element of a variable life policy
Underlying equity investment
The cash value in a(n) ________ Life policy may fluctuate to reflect changing assumptions regarding morality cost, interest, and expense factors.
Universal
Which of these is an element of a Variable Life policy?
A fixed, level premium
Which of the following types of policies pays a benefit if the insured goes blind?
Accidental death and dismemberment
K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?
Adjustable
Variable Whole Life Insurance can be described as
Both an insurance and securities product
S owns a life insurance policy with cash values that fluctuate according to the underlying investment performacne of common stock.
Endowment
Life Insurance that covers an insured's whole life with level premiums paid over a limited time is called
Limited Pay Life
Which of the following information is NOT required to be included in a Whole Life policy?
Policy's guaranteed dividend table
Which statement is correct regarding the premium payment schedule for whole life policies
Premiums are payable throughout the insured's lifetime/coverage lasts until death of the insured
Which of the following actions is NOT possible with a universal life policy
Premiums may be applied as a credit against income tax
Which of the following types of permanent life insurance policies offers the highest inital cash value
Single premium
The investment gains from a Universal Life Policy usually go toward:
The Cash Value
The most important factor to consider when determining whether to convert term insurance at the insured's attained age to the insured's original age is:
The Cost
A universal Life Policy is sometimes referred to as an unbundled life policy because the owner can see the interest earned, expense charges, and
The cost of Insurance
Term life policies that have the ability to be converted to permanent coverage may do so during a specific time period. This conversion period
Varies according the contract
At what point does a Whole Life Insurance policy endow?
When the Cash value equals the death benefit
A Policy that becomes a Modified Endowment Contract (MEC):
Will lose many of its tax advantages
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?
$20,000 death benefits
G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income?
10 years
J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?
20-pay life
N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?
30 Pay life
Under an interest Sensitive whole life policy
Cash values are determined by interest rates
The combination of Whole Life and ______Term insurance is referred to as a Family Income Policy
Decreasing
What type of life policy has a benefit that adjusts periodically and is written for a specific period of time?
Decreasing Term
What kind of premium does a Whole Life policy have?
Level
D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?
Level Term
When a life insurance policy exceeds certain IRS table values, the result would create which of the following?
Modified Endowment Contract
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for
Modified Whole Life
Which is true concerning a variable universal life policy
Policyowner controls where the investment will go and selects the amount of the premium payment
T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?
Renewable
What type of life insurance are credit policies issued as?
Term
Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary time period.
Term Life
What type of life insurance gives the greatest amount of coverage for a limited period of time?
Term Life
Under a Graded Premium Whole Life Policy
The premium increases each year during the early years of the contract and remains the same after that time
A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as
Variable Life
Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit?
Variable Life
Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?
Variable Life
Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?
Variable life
Which of the following policies is characterized by a flexible premium and death benefit and allows the policyowner control of the investment aspect of the plan?
Variable universal life
When is the face amount of a whole Life policy paid
When the insured dies or at the policy's maturity date, whichever happens first
A life insurance policy that provides a policy owner with cash value along with a level face amount is called:
Whole Life
What type of insurance offers permanent life coverage with premiums that are payable for life?
Whole Life
Y purchased $100,000 worth of permanent protection on himself and $50,000 worth of 10-year Term coverage for his wife on the same policy. Which of these policies did Y purchase?
Whole Life policy with an Other Insured Rider
Which statements is TRUE regarding a variable Whole Life Policy
A minimum guaranteed Death benefit is provided
What kind of life insurance product covers children under their parent's policy?
A term rider
When is the face amount paid under a Joint Life and Survivor policy?
Upon the death of the last insured
Whole Life Insurance is sometimes referred to as "Straight Life". What does the word "Straight" indicate when using this phrase
The duration of premium payments
If a 10-year Term life policy contains a Renewability provision, the policy will renew
without evidence of insurability
A company that owns a life insurance policy on one of its key employees may do all of the following EXCEPT:
Change the policy's interest rate
Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?
Conversion
Which of the following features of a group term life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability
Conversion privilege
When a policy owner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
Conversion provision
A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision?
Payor Provision
Which of these characteristics is consistent with a Straight Life Policy
Premiums are payable for as long as there is insurance coverage in force
Stranger-Owned Life Insurance is when a person purchases life insurance only to sell to a(n)
Third-party with no insurable interest
How does a typical Variable Life Policy investment account grow?
Through mutual funds, stocks, bonds
In order to sell a(n) ________ Life Policy, a producer is required to register with the Financial Industry Regulatory Authority (FINRA).
Variable
A life policy that contains a monthly mortality charge as well as self-directed investment choices is called a(n)
Variable Universal Life policy
A Limited-Pay Life policy has:
premium payments limited to a specified number of years
A 15-year mortgage is best protected by what kind of life policy?
15-year decreasing term
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?
20-Pay life accumulates cash value faster than Straight Life
S is covered by a whole life policy. Which insurance product can cover his children?
Child Term rider
What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?
Convertible Term
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
Decreasing Term
F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?
Decreasing Term policy
P owns $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own?
Endowment at Age 70
How long does the coverage normally remain on a limited-pay life policy?
age 100
Which Statement about Whole Life policy is true?
Cash value may be borrowed against
S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?
Equity index insurance
Which of these statements describe a Modified Endowment contract?
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contracgt
All of these are characteristics of an Adjustable Life policy EXCEPT
Face amount can be adjusted using policy dividends
Under a Graded Premium policy, the premiums
are higher during the policy's early years
Additional coverage can be added to a Whole Life policy by adding a(n)
Decreasing term rider
Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy?
Increase face amount
Which of these needs is satisifed by Adjustable Life Insurance?
Insured's need for flexible premiums
What type of life policy covers 2 lives and pays the face amount after the first one dies?
Joint Life Policy
K, age 45, and his wife, age 43, have three children. They purchase a Family Policy that covers K's wife to age 64. All of these situations will pay a death benefit EXCEPT:
K's wife dies at age 66
Which of these would be considered a Limited-Pay policy?
Life Paid-Up at age 70
Which of the following Life insurance policies combine term insurance with an investment element?
Universal
S, age 40, is looking to buy a Life insurance policy that will allow for increases or decreases in coverage as his needs change. The policy best suited for S would be
Universal Life
What type of life insurance incorporates flexible premiums and an adjustable death benefit?
Universal Life
Which of the following life insurance policies combine term insurance with an investment element
Universal Life
A(n) ________Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities
Variable