Life Insurance Policies
What type of Life insurance has a rate of return that may keep up with inflation, but will never fall below the minimum guaranteed in the policy: A. Equity indexed life B. Adjustable life C. Whole life D. Variable life
Equity indexed life
When an insured purchases a Decreasing Term policy, which of the following decreases each year: A. The premium B. The cash value C. The face amount D. The reserve
The face amount
Which statement is true about the premium payment schedule for a Whole Life policy: A. Premiums are payable until the insured's retirement only, after which coverage is continued automatically until the insured's death B. One premium, in the amount of the insured's choice, is payable at the time of application, and the balance of the premiums is deducted from the face amount of the policy at the time of the insured's death C. Premiums are payable throughout the insured's lifetime, and coverage continues until the insured's death D. Premiums are payable for a designated period of time only, after which coverage is no longer provided
Premiums are payable throughout the insured's lifetime, and coverage continues until the insured's death
A Whole Life policy furnishes a form of Permanent protection because it never has to be: A. Used for a loan B. Reduced C. Renewed or converted D. Reinstated
Renewed or converted
All of the following statements about Credit Life insurance are true, EXCEPT: A. The maximum policy period can't exceed the life of the loan B. The coverage is unlimited C. It is often sold by car dealers, banks and other creditors D. It is a type of decreasing term
The coverage is unlimited
A person who enters into a viatical settlement is known as a: A. Viatical settlement agent B. Viator C. Viatical settlement provider D. Viatical settlement broker
Viator
Which of the following is NOT true regarding Universal Life insurance policies: A. They have a guaranteed minimum cash value B. Loans are prohibited C. The cash value is debited to pay for the increased cost of mortality D. They have a guaranteed minimum interest rate
Loans are prohibited
All of the following are true regarding graded premium whole life policies, EXCEPT: A. They are purchased by those who expect their future income to increase B. The premium increases gradually, then levels off C. They are also known as adjustable whole life D. The face amount remains level
They are also known as adjustable whole life
Joint life can be written as all of the following, EXCEPT: A. Universal life insurance B. AD&D C. Whole life insurance D. Term insurance
AD&D
An employee's evidence of participation in a Group Life plan is the: A. Master contract B. Proof of Employment C. Certificate of Insurance D. Policy
Certificate of Insurance
An insurance prospect wants to purchase a policy that will accumulate the largest amount of cash by the age of 65. Which policy would be most likely to satisfy the prospect's needs: A. Life Paid-Up at age 65 B. Yearly Renewable Term C. Endowment at age 65 D. A combination Term and Whole Life
Endowment at age 65
A single premium used to buy a Whole Life policy will pay up the policy: A. To age 65 B. For the life of the policy C. For 1 year D. For 3 years
For the life of the policy
All of the following are true regarding Variable life insurance, EXCEPT: A. Insurers maintain cash values in a separate account B. It has a flexible premium feature C. The cash values are invested primarily in equities D. Producers are required to have a FINRA securities license to sell it
It has a flexible premium feature
Which statement about a Renewable Term policy is true: A. It's renewable at the option of the insurance company B. It's It is renewable at the option of the insured, w/ proof of insurability C. It's renewable at the option of the insured D. It's renewable at the option of the insurance company, w/ proof of insurability
It's renewable at the option of the insured
Life settlement contracts are between the: A. Policy holder and the insurer B. Policy holder and the beneficiary C. Policy holder and a third party D. Agent and the policy holder
Policy holder and a third party
All of the following are true about Universal Life insurance, EXCEPT: A. Once a cash value develops, loans may be taken B. A policy that has a cash value can't lapse for non-payment C. Expense charges must be stated separately in the policy D. Proceeds payable to a beneficiary are taxable
Proceeds payable to a beneficiary are taxable
Pamela has a $100,000 ten year level term policy. If she dies three years into the term, how much will her beneficiary receive: A. $70,000 B. $30,000 C. $100,000 D. Zero
$100,000
An insured has a 30 year decreasing term life insurance policy w/ a $90,000 policy limit. If they die 20 years into the policy period, how much will the insurer pay: A. $90,000 B. Zero C. $60,000 D. $30,000
$30,000
Which of the following is an example of a Limited-Pay life policy: A. Life Paid-Up at age 65 B. Whole Life C. Renewable Term to age 70 D. Endowment maturing at age 65
Life Paid-Up at age 65
If an insured makes an assignment to a third party for an amount less than the death benefit of the policy, it is known as a: A. Collateral assignment B. Revocable designation C. Life settlement D. Reduce paid-up option
Life settlement
What type of life insurance has limits on either the number of years premiums must be paid or the age by which all premiums must be paid: A. Variable life B. Limited pay whole life C. Traditional whole life D. Universal life
Limited pay whole life
Which of the following best describes the normal Conversion benefit available to terminated employees under a Group Life insurance policy? A. The employee may convert to an indiv Permanent Life policy w/in 31 days by submitting evidence of insurability B. The employee may convert to an indiv Term policy w/in 31 days without submitting evidence of insurability C. The employee may convert to an indiv Permanent Life policy w/in 31 days w/o submitting evidence of insurability D. The employee may convert to an indiv Term policy w/in 31 days by submitting evidence of insurability
The employee may convert to an indiv Permanent Life policy w/in 31 days w/o submitting evidence of insurability
If a client buys a new $50,000 life insurance policy and dies 1 month later: A. Only 1/12th of the face amount will be paid B. The insurer must pay the claim C. There is no coverage, but the premium will be refunded D. There is no coverage since the claim occurred in the contestability period
The insurer must pay the claim
All of the following are true regarding Universal life insurance policies, EXCEPT: A. They have a flexible premium B. They have no minimum guaranteed rate of return C. Partial surrenders are permitted without paying tax on the earnings D. They are also known as "interest sensitive" whole life
They have no minimum guaranteed rate of return
All of the following are true regarding survivorship life insurance policies, EXCEPT: A. They pay a death benefit only when the first party dies B. They are usually written to cover both husband and wife C. They are purchased mainly to pay taxes D. They are less expensive than buying two separate policies
They pay a death benefit only when the first party dies
Which policy provides the greatest amount of protection for an insured's premium dollar as well as some cash accumulation: A. Term B. Limited-Pay Life C. Annuity D. Whole Life
Whole life
Cheryl, age 27, is advised by her producer to purchase life insurance to cover a 20-year-amortized $50,000 business-improvement loan. Which plan would adequately protect Cheryl at the minimum premium outlay: A. A $50,000 20-Year Endowment policy B. A $50,000 Decreasing Term policy for 20 years C. A $50,000 Whole Life policy D. A $50,000 Level Term policy for 20 years
A $50,000 Decreasing Term policy for 20 years
The plan of Permanent Life insurance that offers cash value at the lowest premium is: A. Limited-Pay Life policy B. Term policy C. An Annuity contract D. Whole Life policy
Whole Life policy
The insured can receive the face amount of an Endowment policy if they are still living when the policy's: A. Cash value exceeds the premiums paid B. Premiums paid exceed the face amount C. Cash value equals the premiums paid D. Cash value equals the face amount
Cash value equals the face amount
Which of the following policies provides only a Death benefit that declines over a definite and limited period of time: A. Joint Life B. Endowment C. Annuity D. Decreasing Term
Decreasing Term
Which type of Life insurance is written as whole life: A. Single premium B. Group C. Mortgage redemption D. Credit
Single premium
On term life insurance, the re-entry option is contingent upon: A. Buying another policy B. Being able to pass a physical exam C. Paying an increased premium D. Adding an accidental death benefit rider
Being able to pass a physical exam
All of the following is true about Universal Life, EXCEPT: A. Taking out a loan will affect cash value accumulation B. The death benefit paid to the beneficiary is taxable as ordinary income C. Loans are permitted D. Insurance company administrative costs are subtracted from the cash value
The death benefit paid to the beneficiary is taxable as ordinary income
At age 30, Clark wishes to purchase a W.L policy. His producer explains that he can pay for the policy in many ways. One method is called 20-Pay Life, and another, Straight Life. Clark wishes to know which plan will accumulate cash value at a faster rate in the early years of the policy. Which of the following would be the producer's most appropriate response: A. "The rate of cash-value accumulation depends on the profitability of the insurance company." B. "Both plans will accumulate cash value at the same rate." C. "20-Pay Life will accumulate cash value faster." D. "Straight Life will accumulate cash value faster."
"20-Pay Life will accumulate cash value faster."
Francisco purchases a 5 year non-renewable level term policy w/ a $100,000 policy limit and dies 8 years later. How much will his beneficiary receive: A. $100,000 B. $0 C. $60,000 D. $80,000
$0
Sean owns a 30-Pay life policy that he purchased at the age of 30. The cash value will equal the face amount of the policy when he reaches the age of: A. 120 B. 65 C. 60 D. 70
120
When a corporation establishes a contributory Group Term contract, what percentage test must be met for participation: A. 75% B.100% C. 50% D. 67%
75%
Which of the following statements about Adjustable Whole Life is true: A. In order to increase the face amount of coverage a physical exam is required B. Adjusting the premium will also adjust the face amount C. Reducing the premium will increase the face amount D. Increasing the premium will lengthen the premium payment period
Adjusting the premium will also adjust the face amount
All of the following are true regarding traditional straight whole life insurance, EXCEPT: A. Cash surrenders may be taxable B. Premiums are level and coverage is provided until death or age 120, whichever occurs first C. Death benefits are taxable to the beneficiary D. It can't be reinstated if it was surrendered for cash
Death benefits are taxable to the beneficiary
Which policy is generally used to accumulate funds for education: A. Term B. Life Paid-Up at age 65 C. Endowment D. 20-Pay Life
Endowment
Which type of insurance policy would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources: A. Endowment B. Whole Life C. Term D. Annuity
Term
An employee becomes ineligible for the group plan. The employee has the option to convert their $10,000 of group coverage to indiv coverage w/in 31 days. Which of the following is true: A. The employee can convert to a max of $10,000 of Whole Life coverage w/o a physical exam, w/ the premium based on the insured's age at conversion B. The employee is subject to underwriting for the indiv policy C. The employee can convert to a max of $10,000 of whole life coverage w/o a physical exam, w/ the premium based on the insured's age when they enrolled in the group plan D. The employee can convert to a new indivi term policy with a face amount of $50,000
The employee can convert to a max of $10,000 of Whole Life coverage w/o a physical exam, w/ the premium based on the insured's age at conversion
Which of the following is NOT true regarding employer group life insurance: A. Employees receive Certificates of Insurance B. The employer is the beneficiary C. The employer may require employees to pay the premium for dependents D. If the employer pays all of the premium, 100% of eligible employees must enroll
The employer is the beneficiary