Life Insurance Exam Ch 3

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT

Upon conversion, the death benefit of the permanent policy will be reduced by 50%

The death benefit under the Universal Life Option B

Gradually increases each year by the amount that the cash value increases

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?

Jumping juvenile policy

Which of the following statements is correct regarding a whole life policy?

The policyowner is entitled to policy loans

A policy will pay the death benefit if the insured dies during the 20 year premium-paying period, and nothing if death occurs after the 20 year period. What type of policy is this?

Level term

The LEAST expensive first-year premium is found in which of the following policies?

Annually Renewable Term

Which of the following is INCORRECT regarding a $100,000 20-year level term policy?

At the end of 20 years, the policy's cash value will equal $100,000

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

Greatest

A Universal Life insurance policy has two types of interest rates that are called

Guaranteed and Current

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

Increases annually

What are the two components of a universal policy?

Insurance and cash account

Which of the following best describes annually renewable term insurance?

It is level term insurance

Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?

Joint Life

In a single employer group plan, what is the name of the policy issued to the employer?

Master contract

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Option A

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

Straight Life

Which of the following would help prevent a universal life policy from lapsing?

Target premium

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

The death benefit can be increased by providing evidence of insurability

Which of the following are generally NOT considered when underwriting group insurance?

The insureds' medical history

All of the following are true about variable products EXCEPT

The premiums are invested in the insurer's general account

Which of the following Life Insurance policies would be considered interest sensitive?

Universal life

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?

Universal life

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?

Universal life

All of the following are types of term policies based on what happens to the face amount during the policy term EXCEPT

Renewable

In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT

The type of investment

What does "level" refer to in level term insurance?

Face amount

All of the following are characteristics of group life insurance EXCEPT

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

All of the following entities regulate variable life policies EXCEPT

The Guaranty Association

A Return of Premium term life policy is written as what type of term coverage?

Increasing

All of the following statements are true regarding group insurance EXCEPT

Participants in the policy each receive a policy

An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT?

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

Which of the following is a key distinction between variable whole life and variable universal life products?

Variable whole life has a guaranteed death benefit

All of the following are characteristics of a group life insurance plan EXCEPT

There is a requirement to prove insurability on the part of the participants