Ins chapter 2 Life Insurance Policies quizzes

Which of the following is the required number of participants in a contributory group plan? A. 50% B. 75% C. 100% D. 25%

B. 75%

Which component increases in the increasing term insurance A. Death benefit B. Cash value C. Interest on the proceeds D. Premium

A. Death benefit

Which of the following features on a variable life insurance policy is guaranteed? A. Death benefit up to the policy face value B. Issuance of the policy C. Market value of investments D. Cash accumulation from stocks

A. Death benefit up to the policy face value

An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his A. Experience rating B. Group rate C. Insurer's scheduled rate D. Attained age

D. Attained age

Universal Life insurance policy has 2 types of interest rates A. Guaranteed and current B. Option A and Option B C. Fixed and variable D. Minimum and target

A. Guaranteed and current

The premium of a survivorship policy compared with that of a joint life policy would be A. Lower B. Higher C. As high D. Half the amount

A. Lower

Which is called a "second to die" policy? A. Survivorship life B. Family income C. Juvenile Life D. Joint life

A. Survivorship life

Which of the following statements about group life is correct? A. The cost of coverage is based on the ratio of men and women in the group B. The premiums are higher than in an individual policy because there is no medical exam C. The group sponsor receives a certificate of insurance D. The policy can be converted to an individual term insurance policy

A. The cost of coverage is based on the ratio of men and women in the group

All of the following statements concerning the use of life insurance as an Executive Bonus are correct EXCEPT A. The policy is owned by the company B. Any type of insurance policy may be used C. The employer pays a bonus to a selected employee to fund the policy D. It is considered a nonqualified employee benefit

A. The policy is owned by the company

All are TRUE regarding convertibility option under a term life insurance policy EXCEPT 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%

Type of policy that can be changed from one that does not accumulate cash value to one that does is A. Whole life policy B. Convertible term policy C. Renewable term policy D. Decreasing term policy

B. Convertible term policy

When an employer offers to give an employee wage increase in the amount of the premium on a new life ins policy, this is called A. Aleatory contract B. Executive bonus C. Key person policy D. Fraternal association

B. Executive bonus

All of the following are business uses of life insurance EXCEPT A. Funding business continuation agreements B. Funding against company's general financial loss C. Compensating executives D. Funding against financial loss caused by the death of a key employee

B. Funding against the company's general financial loss

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. Single premium policy B. Jumping juvenile policy C. Limited pay whole life policy D. Modified life insurance policy

B. Jumping juvenile policy

Which of the following statements is true concerning whole life insurance? A. Policy loans are tax deductible B. Lump-sum death benefits are not taxable C. Dividend interest is not taxable D. Premiums are tax deductible

B. Lump-sum death benefits are not taxable

If an employee wants to join group life insurance coverage outside of the open enrollment period, to reduce adverse selection, the insurer may A. Increase medical requirements on existing members B. Require evidence of insurability C. Require a higher premium D. Prolong the open enrollment period

B. Require evidence of insurability

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 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 employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? A. The premium for individual coverage will be based upon the insured's attained age B. The insured may choose to convert to term or permanent individual coverage C. The insured would not need to prove insurability for a conversion policy D. The insured may convert coverage to an individual policy within 31 days

B. The insured may choose to convert to term or permanent individual coverage

The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as A. Next month's premium is sufficient to cover both the current premium amount and skipped amount B. The policy contains sufficient cash value to cover the cost of insurance C. The previous premium payments were high enough to create an excess of premium D. The policyowner cannot skip premiums without the policy lapsing

B. The policy contains sufficient cash value to cover the cost of insurance

In a survivorship life policy, when does the insurer pay the death benefit? A. If the insured survives to age 100 B. Upon the last death C. Upon the first death D. Half at the first death, and half at the second death

B. Upon the last death

An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in a car accident. How much will his wife receive from the policy? A. Nothing B. $50,00 C. $100,000 D. $200,000

C. $100,000

All other factors being equal, which of the following lists from the largest annual premium to the smallest A. 20 year endowment, 20 year level term, 20 year decreasing term, 20 pay life B. 20 year endowment, 20 year decreasing term, 20 year level term, 20 pay life C. 20 year endowment, 20 pay life, 20 year level term, 20 year decreasing term D. 20 pay life, 20 year level term, 20 year decreasing term, 20 year endowment

C. 20 year endowment, 20 pay life, 20 year level term, 20 year decreasing term

All of the following could own a group life insurance EXCEPT A. An alumni group B. A debtor group C. A group needing low-cost life insurance D. A group sponsored by an employer

C. A group needing low cost life insurance

Graded-premium whole life policy premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will A. Return to the initial premium amount B. Decrease again C. Be level thereafter D. Continue to increase

C. Be level thereafter

Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount? A. Key Person Agreement B. Split dollar agreement C. Buy-sell agreement D. Profit and loss agreement

C. Buy-sell agreement

A key person insurance policy can pay for which of the following? A. Workers comp B. Hospital bills of the key employee C. Costs of training a replacement D. Loss of personal income

C. Costs of training a replacementd

Which policy component decreases in decreasing term insurance? A. Dividend B. Premium C. Face amount D. Cash value

C. Face amount

Universal life insurance policy has two types of interest rates called A. Fixed and variable B. Minimum and Target C. Guaranteed and current D. Option A and Option B

C. Guaranteed and Current

An insured has a Modified Endowment Contract. He wants to withdraw some money in order to pay medical bills. Which of following is true? A. He will not have to pay a penalty regardless of his age B. He cannot withdraw money from his MEC before age 59 1/2 C. He will have to pay a penalty if he is younger than 59 1/2 D. He will have to pay a penalty regardless of his age

C. He will have to pay a penalty if he is younger than 59 1/2

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes a A. Endowment B. Nonqualified annuity C. Modified endowment contract D. Accelerated benefit policy

C. Modified endowment contract

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

C. Option A

An insured has a level term life insurance policy that is guaranteed renewable and also includes a re-entry provision. The re-entry provision would allow the insured to renew the policy and A. Pay a lower renewal premium without evidence of insurability B. Change the type of insurance without evidence of insurability C. Pay a lower renewal premium by proving insurability D. Change the type of insurance by providing insurability

C. Pay a lower renewal premium by proving insurability

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

An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy? A. She can only convert her coverage without proof of insurability if she has the master policy B. She must apply for a new policy, which requires her to provide proof of insurability C. She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan D. She will still be covered under the group plan, but will have to pay an individual policy premium

C. She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? A. The death benefit can be increased only when the policy has developed a cash value B. The death benefit can be increased only by exchanging the existing policy for a new one C. The death benefit can be increased by providing evidence of insurability D. The death benefit cannot be increased

C. The death benefit can be increased by providing evidence of insurability

Who is the owner and who is the beneficiary on a Key Person Life insurance policy? A. The key employee is the owner and beneficiary B. The key employee is the owner and the employer is the beneficiary C. The employer is the owner and the beneficiary D. The employer is the owner and the key employee is the beneficiary

C. The employer is the owner and the beneficiary

All of the following statements concerning the use of life insurance as an Executive Bonus are true EXCEPT A. The employer pays a bonus to a selected employee to fund the policy B. It is considered a nonqualified employee benefit C. The policy is owned by the company D. Any type of insurance policy may be used

C. The policy is owned by the company

Which of the following employees insured under a group life plan would be all be allowed to convert to individual coverage of the same coverage once the plan is terminated? A. Those who have dependents B. Those who have no history of claims C. Those who have been insured under the plan for at least 5 years D. Those who have worked in the company for at least 3 years

C. Those who have been insured under the plan for at least 5 years

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

C. Variable universal life insurance

Which of the following is a key distinction between variable whole life and variable universal life products? A. Variable whole life allows policy loans from the cash value B. Variable Universal life has a fixed premium C. Variable Whole life has a guaranteed death benefit D. Variable universal life is regulated solely through FINRA

C. Variable whole life has a guaranteed death benefit

Which of the following is a key distinction between whole life and variable universal life products A. Variable whole life allows policy loans from the cash value B. Variable universal life has a fixed premium C. Variable whole life has a guaranteed death benefit D. Variable universal life is regulated solely through FINRA

C. Variable whole life has a guaranteed death benefit

All of the following are true regarding a decreasing term policy EXCEPT A. The contract only pays in the event of death during the term and there is no cash value B. The face amount steadily declines throughout the duration of the contract C. The payable premium steadily declined throughout the duration of the contract D. The death benefit is at $0 at the end of the policy term

C. the payable premium amount steadily declines throughout the duration of the contract

B just bought a new car, which he anticipates will be paid for 4 years from now. He also wants to buy a life insurance policy, but is financially limited until the car is paid off. Which of the following types of policies would be best for B? A. Limited Term B. Limited Pay C. Interest sensitive Whole Life D. Modified Life

D. Modified Life

An insured owns a term policy with a guaranteed renewable option. When the policy draws near, the insured answers medial questions in order to prove insurability and qualifies for a discounted premium rate. That is this scenario? A. Preferred premium reduction B. Contract review C. Revision of consideration D. Re-entry

D. Re-entry

A man decided to purchase $100,000 Annually Renewable Term Life policy until his kid finished college. He discovered his policy A. Built cash value B. Required proof of insurability every year C. Decreased death benefit at each renewal D. Required a premium increase each renewal

D. Required a premium increase each renewal

Which of the following are generally NOT considered with underwriting group insurance A. The nature of the group B. The group's past claim experience C. The size of the group D. The insureds' medical history

D. The insureds' medical history

Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE A. Distributions before age 59 1/2 incur a 10% penalty on policy gains B. Policy loans are taxable distributions C. Accumulations are tax deferred D. Withdrawals are not taxable

D. Withdrawals are not taxable

All of the following are characteristics of group life insurance EXCEPT A. Certificate holders may convert coverage to an individual policy without evidence of insurability B. Premiums are determined by the age, sex and occupation of each individual certificate holder C. Amount of coverage is determined accordingly to nondiscriminatory rules D Individuals covered under the policy receive a certificate of insurance

Premiums are determined by the age, sex and occupation of each individual certificate holder

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

Concerning Juvenile Life insurance, which of the following statements is INCORRECT? A. Juvenile Life is classified as any life insurance purchased by a minor B. Usually a parent or guardian is the applicant for the insurance on the life of a minor C. It can be a limited premium payment policy D. Juvenile Life is classified as any life insurance written on the life of a minor

A. Juvenile Life is classified as any life insurance purchased by a minor

Type of life insurance policy allows the policyowner to may more or less than the planned premium? A. Straight whole life B. Universal life C. Variable life D. Decreasing term

B. Universal life

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

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

Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement? A. Term insurance only B. Permanent insurance only C. Universal life insurance only D. Any form of life insurance

D. Any form of life insurance

Variable Whole Life insurance is based on what type of premium? A. Increasing B. Flexible C. Graded D. Level fixed

D. Level fixed

To sell variable life insurance policies, an agent must receive all of the following EXCEPT A. A securities license B. A life insurance license C. SEC Registration D. FINRA Registration

C. SEC Registration

Which of the following types of policies allow the policyholder to skip premium payments, provided there is enough cash value to cover the premium amount? A. Variable life B. Adjustable life C. Universal life D. Flexible life

C. Universal life

When an employee terminates coverage under a group ins policy, coverage continues in force A. For 60 days B. Until the employee can obtain coverage under a new group plan C. Until the employee notifies the group insurance provider that coverage conversion policy is issued D. For 31 days

D. For 31 days

Which of the following policies is characterized by a provision where the premiums are lower in the early years of the policy and increase over time to a point where they become level for the remainder of the policy? A. Indeterminate premium whole life B. Enhanced whole life C. Minimum deposit whole life D. Graded premium whole life

D. Graded premium whole life

What is the main purpose of the Seven-pay Test? A. It requires level premium payment for 7 years B. It ensures that the policy benefits are paid out in 7 years C. It guarantees the minimum interest D. It determines if the insurance policy is a MEC

D. It determines if the insurance policy is a MEC

In group life insurance policy, the employer may select all of the following EXCEPT A. The type of insurance B. The amount of insurance C. The premium payor D. The beneficiary

D. The beneficiary