Life Insurance- Intro-Chp 2
A 15-year mortgage is best protected by what kind of life policy?
15-year decreasing term
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 benefit
A potential client, age 40, would like to purchase Whole Life Policy that will accumulate cash value faster in the early years of the policy. Which of these statements are correct?
20-Pay life accumulated cash value faster than straight life.
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 accumulated faster than Straight life
what type of policy would offer a 40-year old the quickest accumulation of cash value?
20-pay life
A Term Life rider offers the insured
Additional life coverage
S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased except:
Beneficiary's age
All of the following are considered to be typical characteristics describing the nature of an insurance contract, except:
Bilateral
A policy loan is made possible by which of these life insurance policy features?
Cash Value provision
Under an interest sensitive Whole life policy,
Cash values are determined by interest rates
S is covered by a whole life policy. Which insurance product can cover his children?
Child term rider
Insurance contracts are known as _____ because certain future conditions or acts must occur before any claims can be made
Conditional
Which of the following consists of an offer, acceptance, and consideration?
Contract
Insurance policies are offered on a "take it or leave it basis", which makes them:
Contracts of adhesion
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
What type of policy has a death benefit that adjusts periodically and is written for a specific period of time?
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
What does a Face Amount Plus Cash Value Policy pay upon the insured's death?
Face amount plus the policy's cash value
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance Policy
In regards to representations or warranties which of these statements is TRUE?
If material to the risk, false representatives will void a policy
A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following?
Inability of the insured to perform more than 2 Activities of Daily Living (ADL's)
When must insurable interest exist for a life insurance contract to be valid?
Inception of the contract
A life insurance policy would be considered a wagering contract without:
Insurable interest
Who makes the legally enforceable promises in a unilateral insurance policy?
Insurance company
If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?
Insured
Which of these needs is satisfied by Adjustable Life Insurance?
Insured's need for flexible premiums
In a Life Insurance contract, an insurance company's promise to pay stated benefits is called the:
Insuring clause
Which of these arrangements allows one one to bypass insurable interest laws?
Investor-Orientated Life Insurance
A life insurance arrangement which circumvents insurable interest statutes is called:
Investor-Originated Life Insurance
Dividends paid from a life insurance policy are
Issued by the Insurer
What type of policy covers 2 lives and pays the face amount after the first one dies?
Joint Life Policy
Stranger Originated life insurance (STOLI) has been found to be in violation of which of the following contractual elements?
Legal Purposes (insurable interest)
What kind of premium does a Whole Life Policy have?
Level (fixed)
When a life insurance policy exceeds certain IRS table values, the result would create which of the following?
Modified Endowment Contract
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
P is the insured on a participating life policy. which statement is true if P's premiums are waived due to a disability?
P will still receive declared dividends
K owns a Whole Life policy. If K wants an increasing Death benefit to protect against inflation, which Dividend Option should she choose?
Paid-Up Additional Insurance
Whole Life Insurance policies are contractually guaranteed to provide each of the following except:
Partial withdrawal features beyond a surrender charge period.
All of the following statements are true regarding a policy's Grace period, except:
Past due premiums are waved
M had an annual life insurance premium payment due January 1. She dies January 10 without making the premium payment. what action will the insurer take?
Pay the face amount minus the past due premium
A provision in a life insurance policy that pays the policy owner an amount that does not surpass the guaranteed cash value is called the:
Policy Loan provision
M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the:
Policy proceeds
Which of the following 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.
What benefit does the Payor clause on a Juvenile Life policy provide?
Premiums are waived if the payor becomes disabled
What is the consideration given by an insurer in the Consideration clause of a life policy?
Promise to pay a death benefit to a names beneficiary
Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called:
Representations
Which type of permanent life insurance policy offers the highest initial cash value?
Single Premium
Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary amount of time. Which is best for him?
Term Life
The investment gains from a Universal Life Policy usually go toward:
The cash value
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
A policy of adhesion can only be modified by whom?
The insurance company
What advantage does the renewability feature give to a term policy?
The insured may extend the coverage period
The amount of coverage on a group credit life policy is limited to:
The insured's total loan value
The consideration clause of an insurance contract includes:
The schedule and amount of premium payments
How does a typical Variable Life Policy investment account grow?
Through mutual funds, stocks and bonds
A ____ Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities.
Variable
In order to sell a(n) ___ Life Policy, a producer is required to register with the Financial Industry Regulatory Authority (FINRA).
Variable
Life Insurance immediately created an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit?
Variable Life
A life policy that contains monthly mortality charge as well as self-directed investment choices is called a(n)___
Variable Universal Life policy
A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of of rider attached?
Waiver of Premium
The part of a life insurance policy guaranteed to be true is called
Warranty
At what point does an informal agreement become a binding contract?
When consideration is provided by one of the parties in the contract.
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 contract where one party either accepts or rejects the terms of a contract written by another party is called a contract of
adhesion
The Automatic Premium Loan provision is designed to:
avoid a policy lapse
Credit life insurance is typically issued with which of the following types of coverage?
decreasing term
Variable Life products require a producer to
hold a life insurance license and a securities license
When must insurable interest be present in order for a life insurance policy to be valid?
when the application is made
A policy that becomes a Modified Endowment Contract (MEC)
will lose many of its tax advantages
