Life Insurance Licensing Chapter 2
All other factors being equal, the least expensive first-year premium payment is found in
Annually Renewable Term
The death protection component of Universal Life Insurance is always
Annually Renewable Term
The type of policy that can be changed form one that does not accumulate cash value to the one that does is a
Convertible Term Policy
Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?
Deprecation period
An agent selling variable annuities must be registered with
FIRNA
Fixed annuities provide all of the following EXCEPT
Hedge against inflation
A Return of Premium term life policy is written as what type of term coverage?
Increasing
During partial withdrawal from a universal life policy, which portion will be taxed?
Interest
Which of the following is TRUE regarding the accumulation period of an annuity?
It is a period during which the payments into the annuity grow tax deferred
A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. What policy is that?
Joint Life Policy
Variable Whole Life insurance is based on what type of premium?
Level fixed
Which of the following is another term for the accumulation period of an annuity?
Pay-in period
Which two terms are associated directly with the way an annuity is funded?
Single payment or periodic payments
The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?
The beneficiary will receive the greater of the money paid into the annuity or the cash value
All of the following are true of an annuity owner except
The owner must be the party to receive benefits
Which of the following determines the cash value of a variable life policy?
The performance of the policy portfolio
All of the following are true about variable products EXCEPT
The premiums are invested in the insurer's general account
Which of the following is NOT true regarding Equity Indexed Annuities?
They earn lower interest rates than fixed annuities
Which of the following is TRUE for both equity indexed annuities and fixed annuities?
They have a guaranteed minimum interest rate
When would a 20-pay whole life policy endow?
When the insured reaches age 100
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
Adjusted to the insured's age at the time of renewal
In an annuity, the accumulated money is converted into a stream of income during which time period?
Annuitization period
Which of the following is a feature of a variable annuity?
Benefit payment amounts are not guaranteed
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?
Decreasing term
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change form those shown in the policy at issue time. The policy is a/an
Interest-sensitive Whole Life
Which of the following best describes annually renewable term insurance?
It is level term insurance
Which of the following is TRUE regarding the annuity period?
It may last for the lifetime of the annuitant
Which statement is NOT true regarding a Straight Life policy?
Its premium steadily decreases over time, in response to its growing cash value
Which of the following is an example of a limited-pay life policy?
Life paid-up at age 65
Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?
Limited pay whole life
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?
Limited-pay life
The premium of a survivorship life policy compared with that of a joint life policy would be
Lower
Equity indexed annuities
Seek higher returns
A domestic insurer issuing variable contracts must establish one or more
Separate accounts
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
An insurance policy that only requires a payment of premium at its inception, provides insurance protections 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 is called a "second-to-die" policy?
Survivorship life
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?
Universal Life
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, whichever occurs first
Which of the following has the right to convert the existing term coverage to permanent insurance?
policyowner
