Chapter 4 - Life Insurance

Which term policy has increasing premiums and a level face amount? a. Decreasing term b. Level premium term c. Annual renewable term d. Convertible term

c. Annual renewable term

___________ policies have premiums that fluctuate between the current rate and maximum rate, as stated in the policy. a. Increasing b. Interim c. Indeterminate premium d. Decreasing

c. Indeterminate premium

Pure death protection only is provided by which life insurance policy? a. Term life insurance b. Whole life insurance c. Annuities d. None of the above

a. Term life insurance

Term life insurance provides ________________. Whole life insurance provides _______________. a. pure death protection only; pure death protection only. b. pure death protection; death benefit and living benefits. c. death benefit and living benefits; pure death protection only. d. death benefit and living benefits; death benefit and living benefits.

b. pure death protection; death benefit and living benefits.

Mortgage protection insurance uses what type of life insurance coverage? a. Level premium term b. Convertible term c. Decreasing term d. Annual renewable term

c. Decreasing term

What part of a mortgage reduction policy decreases over time? a. Policy premiums b. Cash value c. Face amount d. Policy term

c. Face amount

Which life insurance policy has annual increasing premiums and does not build cash value? a. Annual renewable term b. Level premium term c. Decreasing term d. Increasing term

a. Annual renewable term

All of the following are characteristics of term insurance, EXCEPT: a. Cash value b. Pure death protection c. Premiums increase upon policy renewals d. Policies provide temporary death protection

a. Cash value

Sheldon wants a life insurance policy with premiums that do not increase over time. Which of the following policies would you recommend to him? a. Increasing term b. Annual Renewable term c. Indeterminate Premium term d. Convertible term

a. Increasing term

Which of the following policies has a level face amount with level premiums? a. Level premium term b. Convertible term c. Decreasing term d. Annual renewable term

a. Level premium term

What are the two major types of life insurance? a. Term and whole b. Permanent and whole c. Temporary and term d. None of the above

a. Term and whole

All of the following statements are true regarding annual renewable term (ART) policies, EXCEPT: a. ART policies have a level face amount. b. ART is guaranteed renewable on an annual basis with proof of insurability. c. ART usually has a maximum age after which policies are not renewable. d. ART premiums increase each time the policy is renewed.

b. ART is guaranteed renewable on an annual basis with proof of insurability.

Which of the following life insurance policies is most appropriate for mortgage protection? a. Increasing term b. Decreasing term c. Convertible term d. Ordinary whole life

b. Decreasing term

Which type of life insurance coverage is used to provide mortgage protection? a. Increasing term b. Decreasing term c. Ordinary whole life d. Variable universal life

b. Decreasing term

Which of the following policies is most appropriate for a 23-year old who wants a year of life insurance protection before getting married? a. Reentry term b. Interim term c. Convertible term d. Annual renewable term

b. Interim term

Which type of life insurance provides pure death protection? a. Whole b. Term c. Conventional d. No life insurance policy provides pure death protection.

b. Term

Which of the following is not a characteristic of decreasing term life insurance? a. The policy face decreases to zero by the end of the policy period. b. The premium decreases to zero by the end of the policy period. c. The face amount equals zero on the day of policy expiration. d. Decreasing term insurance is often used to insure a mortgage.

b. The premium decreases to zero by the end of the policy period.

Term insurance is categorized by all of the following, EXCEPT: a. Temporary protection b. Premiums increase each time the policy is renewed c. Policy cash value grows tax-deferred d. Provides the largest amount of protection for the least amount of premium

c. Policy cash value grows tax-deferred

All of the following are false regarding convertible term policies, EXCEPT: a. Convertible term allows term life policyowners to convert their term insurance into permanent policies by showing proof of insurability. b. The conversion option is part of every term life insurance policy. c. The converted policy's premiums will be based on the insured's attained or original age. d. If the original age is used, the premiums will be higher than if the attained age is used.

c. The converted policy's premiums will be based on the insured's attained or original age.

Wesley purchases an increasing term life insurance policy. Which of the following elements must increase in Wesley's policy? a. The premium b. The interest rate c. The death benefit d. The dividend options

c. The death benefit

All of the following are drawbacks of term life insurance, EXCEPT: a. Term insurance can be increasingly expensive. b. Each time a term life insurance policy is renewed, the premium increases. c. Living benefits are available to the policyholder in the form of cash accrual. d. If term insurance must be discarded due to expense or the insured has surpassed the maximum age limit, then the insured may be left without any life insurance protection when it is needed most.

c. Living benefits are available to the policyholder in the form of cash accrual.

Which of the following policies allows a policyowner to renew a term policy and receive a lower premium by providing proof of insurability? a. Decreasing term b. Level premium level term c. Reentry term d. Renewable and convertible term

c. Reentry term

All of the following characterize term life insurance, EXCEPT: a. Term life insurance provides the largest amount of coverage for the lowest amount of premium. b. Term life insurance provides pure death protection. c. Term life insurance provides living benefits (cash accrual). d. Term life insurance usually cannot be renewed beyond a certain age, usually 75.

c. Term life insurance provides living benefits (cash accrual).

Which of the following characteristics does not describe convertible term life insurance policies? a. No matter which age is used, premiums will be higher when the policy is converted. b. Most converted term policies use the insured's attained age to determine the new premium. c. The attained age is the insured's age upon purchase of the term life insurance policy. d. The terms of the conversion option are clearly stated in the policy.

c. The attained age is the insured's age upon purchase of the term life insurance policy.

All of the following term life insurance policies have level premiums, EXCEPT: a. Level b. Decreasing c. Increasing d. Annual renewable term

d. Annual renewable term

Blake just bought a home and needs insurance to cover his mortgage. He does not have a lot of money to spend on this coverage. What policy would you recommend to Blake? a. Variable life b. Increasing term c. Ordinary whole life d. Decreasing term

d. Decreasing term

Which term policy has level premiums and a level face amount? a. Annual renewable term b. Decreasing term c. Increasing term d. Level premium term

d. Level premium term

What are the benefits of a convertible and renewable term life insurance policy? a. Lower premiums for higher face amounts b. Increasing face amount with a level premium c. Decreasing face amount with a level premium d. Proof of insurability is not required to convert or renew coverage.

d. Proof of insurability is not required to convert or renew coverage.

Kara is interested in purchasing a life insurance policy that has steady premiums. She doesn't want to pay higher premiums when she is older. What policy should you not recommend to her? a. Increasing term b. Decreasing term c. Variable life insurance d. Renewable and convertible term

d. Renewable and convertible term

All of the following statements regarding renewable term life insurance policies are false, EXCEPT: a. Renewable term life insurance policies can only be renewed by the insurance company, and the insured must provide evidence of insurability. b. Renewable term life insurance policies are always convertible. c. Renewable term life insurance policies may be renewed by the insured as long as evidence of insurability is provided. d. Renewable term life insurance policies are renewable at the insured's option.

d. Renewable term life insurance policies are renewable at the insured's option.