Life Insurance Chapter 2

limited pay life insurance

A form of whole life insurance characterized by premium payments only being made for a specified or limited number of years.

Joint Life

A single policy that is designed to insure two or more lives.

Universal Life Option A

Level death benefit

Single Premium

Lifetime coverage purchased with a single premium

Which component increases in the increasing term insurance?

death benefit

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?

limite-pay life

what does the word level refer to in level term insurance

the death benefit that does not change through out the life of the policy

what is the main use of annuities

to provide retirement income

Which statement is NOT true regarding a Straight Life policy?

A)It usually develops cash value by the end of the third policy year. B)It has the lowest annual premium of the three types of Whole Life policies. C)Its premium steadily decreases over time, in response to its growing cash value. D)The face value of the policy is paid to the insured at age 100.

Term policies are available as Level, Increasing, and Decreasing. What policy component fluctuates depending on the policy type?

Death benefit

An agent selling variable annuities must be registered with

FINRA

Universal life option B

Increasing death benefit

If an insured skips a premium payments on a universal life policy, the missing premium may be deducted from the policy's cash value. The policy will _____ lapse

NOT

Universal life is also an interest-sensative policy. The insurer guarantees a contract interest rate (usually between 3-6 percent) there is also potential for current interest rate which is _______ guaranteed in the contract

NOT

Convertible Provision

Provides the policyowner with the right to convert the policy to a permanent insurance policy without evidence of insurability

Most term insurance policies are

Renewable, Convertible or Renewable and Convertible (R&C)

Insurability

The acceptability of an applicant who meets an insurance company's underwriting requirements for insurance.

Ordinary (Straight) Life

The type of whole life insurance where premiums are payable over the whole life of the insured to age 100 is called

When would a 20-pay whole life policy endow?

When the insured reaches age 100

Renewable provision

allows the policy owner the right to renew the coverage at the expiration date without evidence of insurability

what are the two components of a universal life policy

an insurance component and a cash account

Term insurance has no _____ value

cash

an individual has just borrowed $10k from his bank on a five-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation

decreasing term

For joint life the death benefit is paid upon the _______ death only

first

Term insurance provides the ________ amount of coverage for the _________ premium

greatest, lowest

Annually renewable term policies provide a level death benefit for a premium that

increases annually, with the age of the insured

decreasing term policies feature a _______ premium and a death benefit that ________ each year over the duration of the policy term (usually used to insure payments of a mortgage or other debts)

level, decreases

Increasing term features _________ premiums and a death benefit that ________ each year of the duration of the policy term. (often used by insurance companies to fund certain riders that provide a refund of premiums)

level, increase

If an agent wishes to sell variable life policies, what license must the agent obtain?

securities

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

single premium whole life

which of the following policies would be classified as a traditional level premium contract?

straight life

Which of the following best describes annually renewable term insurance?

A)It provides an annually increasing death benefit. B)It is level term insurance. C)It requires proof of insurability at each renewal. D)Neither the premium nor the death benefit is affected by the insured's age.

Endowment policy

An insurance product that pays out a lump sum after a specified term or if the insured person dies before the end of the term. Endowment policies are often used as a way of saving over the long term.

Which of the following policies would be classified as a traditional level premium contract?

Straight Life

all other factors being equal, the least expensive first year premium payment is found in

annually renewable term

a universal life insurance policy is best described as a/an

annually renewable term policy with a cash value account

which of the following is a feature of a variable annuity

benefit payment amounts are not guaranteed

Which policy component decreases in decreasing term insurance?

face amount(death benefit)

permanent life insurance

insurance policies that build cash value and remain in effect for the entire life of the insured (or until age 100) as long as the premium is paid

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

the benefit can be increased by providing evidence of insurability

which of the following determines the cash value of a variable life policy

the performance of the policy portfolio

Universal Life Insurance

the policyowner has the flexibility to increase the amount of premium paid into the policy and to later decrease it again. In fact, the policyowner may even skip paying a premium and the policy will not lapse as long as there is sufficient cash value at the time to cover the monthly deductions for cost of insurance. If the cash value is too small, the policy will expire.

Survivorship Life

Two or more insureds. Pays upon death of the last

how are the premium rates on a joint life policy determined

by averaging the ages of both insureds

an individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it

deferred

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid

for 20 years or until death, which ever occurs first

annually renewable term policies provide a level death benefit for a premium that

increases annually

The type of term insurance that provides increasing death benefits as the insured ages is called

increasing term

annuity

is a contract that provides income for a specified period of years, or for life.

An insured buys a 5-year level premium term policy with a face amount of $100,000. The policy also contains renewability and convertibility options. When the insured renews the policy in five years

it will increase because the insured will be 5 years older than when the policy was originally purchased.

what is the most common type of temporary protection purchased

level term insurance

What are the three basic types of term coverage available (based on how the face amount (death benefit changes during the policy term)

level, increasing, and decreasing

Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?

longest,greatest,least or most comprehensive

the premium of a survivorship life policy compared with that of a joint life policy would be

lower

Two types of premiums for Universal Life

minimum premium, make the policy perform as an annually renewable term product.. target premium, cover the cost of insurance protection and to keep the policy in force through out its lifetime

In term policies, what happens to the premium throughout the term of the policy?

premium always remains level

whole life insurance

provides lifetime (permanent) protection and accumulates cash value

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

required a premium increase each renewal

which type of life insurance policy generates immediate cash value

single premium

What are the three basic forms of whole life insurance

straight whole life, limited-pay whole life, and single premium whole life