LIFE INSURANCE POLICIES #1

Which of the following is not ordinary life insurance?

*A group life insurance policy* A 30-year deceasing term policy A life paid up to 65 A 20-year endowment policy

Insurers make an adjustment to the cash value of an account of a universal life policy each time a payment is made. They add the premium paid and:

*Adjust for mortality and expenses, then credit interest* Mortality and general expense charges A general expense charge Current interest

The insured, age 65, owns a $100,000 non-participating whole life policy. The policy is paid-up as of today. When would the cash value reach $100,000?

*Age 100* Age 85 Never Today

In accidental death and dismemberment insurance policy, which of the following would not be considered accidental?

*Employee requires abdominal surgery after food poisoning in the lunch room* Employee loses sight in one eye from falling object in the shop Employee dies when falling from a ceiling hoist Employee severs hand while installing sheet rock at a building site

In the event of an accidental death, the principal sum in a disability policy will be paid:

*In one lump sum* As a monthly indemnity On a sliding schedule Over the course of a set period

Characteristic of a limited payment whole life insurance policy:

*It becomes a fully paid up policy prior to maturity* Proceeds may be paid only to a primary beneficiary, not to any other individual or party Cash value withdrawals are permitted only for a limited number of years Death benefits are payable for a limited period of time

Which of the following policies is an interest-sensitive permanent plan of insurance?

*Universal Life* Modified whole life Limited pay life Graded premium whole life

What does the Securities Exchange Commission (SEC) manage and govern?

*Variable life policies* Universal life policies Monetary exchange rates Participating whole life policies

Renewable term insurance can be best described as:

A level death benefit with a decrease in premium *A level death benefit with an increase in premium* A decreasing death benefit with a level premium An increasing death benefit with a level premium

Which of the following is not a characteristic of an endowment contract?

A level face value throughout the policy term/period *One of the least expensive types of life insurance* Cash value accumulates more rapidly than whole life insurance A specified maturity date at some time prior to age 100

The owner of a non-participating whole life policy never misses a payment, never borrows from the policy cash value, and finally reaches the age 100. What cash value is the person entitled to in comparison to the face amount?

About 50% of the cash value as the date of the birthday None of theses *100% of the cash value, which is now the same as the face amount* None of the cash value, the person has not died

The adjustments that an insurer makes in a cash value account in a universal life policy each time a payment is made includes all of the following, except:

Add the current interest *Subtract the policy surrender charges* Subtract from mortality and general expense charges Add the current premium paid

All of the following are true concerning the children's protection on a Family policy, except:

All children living with the family are covered even if born or adopted after the policy is issued *Evidence of insurability is required if coverage for children is permanent insurance* The coverage is term insurance for a fixed amount There is no additional charge for covering new additions to the family

In order to receive the principal sum benefit for death from a disability policy or an AD&D policy, the death must occur:

Any time during a rehabilitation period Any time during a total dismemberment period Within the policy period from any cause *Within a specified number of days after injury*

An individual with low income and high insurance need should buy?

Endowment insurance Universal life insurance *Term insurance* Whole life insurance

Bert and Ernie are 25 year old identical twins. They are both in excellent health. Both buy life insurance policies that have $500 annual premiums. Bert buys a 5-year renewable term policy. Ernie buys a whole life policy. Which statement is not true?

Ernie's whole life policy will develop a larger cash value Ernie's whole life premium will remain the same. Bert's premium will increase every 5 years Ernie has the option of using his cash value to purchase a reduced amount of paid-up whole life insurance *Ernie's whole life policy will have a larger death benefit if he dies during the first 5 years*

Which of the choices below is false regarding a family life policy that provides coverage for children?

Evidence of insurability is not required for the conversion of the children's coverage to a permanent plan. A family life policy consists of a whole life policy on the breadwinner of the family, and term insurance on the dependents All children of the family life policy are covered automatically, and coverage usually continues up to stated age in the contract such as 18 *The children's coverage is not considered pure protection*

Which type of insurance policy provides a death benefit that matches the projected outstanding debt on an individual's home?

Family protection Joint life *Mortgage protection* Level term

Which of the following is a correct statement about life insurance policy types?

Group life insurance is offered only to employees who provide evidence of insurability Universal life policies have a structured premium payment schedule that must be followed during the entire contract period *The initial premium for term insurance is lower than the initial premium for whole life insurance* Limited payment whole life policies stay in effect only for as long as the premium is paid

Term insurance is typically characterized by:

High premiums and no cash value *Low premiums and no cash value* Low premiums and high cash value High premiums and high cash value

Term insurance is frequently used to pay the unpaid balance of a mortgage (mirrors the mortgage amount), only upon death of the mortgage holder. Which type of policy would you recommend to an insured who wants to pay off a mortgage upon death?

Homeowners insurance policy Increasing term insurance Level term insurance *Decreasing term insurance*

Your client has a nonparticipating paid up at age 65 life insurance policy. At the end of the premium payment period, the cash value:

Is greater than the fact amount of the policy Equals the face amount of the policy A nonparticipating policy has no cash value *Is less than the face amount of the policy*

Which of the following statements about a renewable term policy is correct?

It is renewable at the option of the insurance company, with proof of insurability It is renewable at the option of the insurance company *It is renewable at the option of the insured* It is renewable at the option of the insured, with proof of insurability

All of the following apply to a term policy except:

It provides temporary death protection only It provides no living benefits It may be converted to another type of policy *It pays at the end of a stated period*

Which of the following is true about the net insurance protection provided by a whole life insurance policy?

It remains level throughout the policy term It is flexible and changes with interest rate fluctuations in the economy It increases in direct proportion to the growth of cash value *It decreases as the cash value increases*

In which of the following contracts is the death benefit called the principal sum?

Joint Life *AD&D* Survivorship annuity Decreasing term

Which type of insurance guarantees the right to renew the policy each year, regardless of health, but at an increased premium?

Level term Decreasing term Convertible term *Renewable term*

Which of the following is considered ordinary life insurance?

Mortgage insurance *Continuous premium whole life Group insurance* 30-year decreasing term insurance

Which type of life insurance policy gives the policy owner the right to share in the insurer's surplus?

Nonparticipating Decreasing term *Participating* Level term

A policyowner makes an additional premium payment to their Adjustable Life policy, the policy may be affected in all of the following ways except the:

Premium paying period may decrease Face amount may increase Length of coverage may increase *Value of the nonforfeiture options may decrease*

Twin brothers, Joe and Moe, apply for life insurance with exactly the same premium of $700 per month. Joe buys a whole life policy, and Moe buys a 10-year renewable term policy. Both are standard risks with no difference in their health rating. Select the statement below, which is true?

Stopping premium payments on the term life plan may trigger an option of having the cash value pay for premiums. This will have the effect of reducing the overall death benefit The term policy will generate a larger cash value *The term policy will pay a higher amount to the beneficiary should the insured die in the first 10 years of the policy* The whole life policy will pay higher amount to the beneficiary should the insured die within the first 10 years of the policy

Which of the following types of policies is designed primarily for the accumulation of funds within a specified period of time and provides protection in the amount of the contract's face value during that time?

Term Whole Life *Endowment* Annuity

A policy owner makes the last premium on his $250,000 nonparticipating whole life policy today. The owner is 70 years of age. When will the cash value reach $250,000?

The cash value is $250,000 today Never, he didn't pay up to age 100 *When he reaches age 100* About 25 years from now

In an AD&D policy, the term capital sum refers to:

The monthly disability income paid if an insured loses a limb or the sight in one or both eyes A lump sum payment made when disease causes the amputation of an arm or a leg The benefit paid for death caused by a dread disease *A lump sum payment made for a accidental dismemberment*

From the descriptions below, identify which one is a term policy.

The policy contains a provision that provides nonforfeiture options The policy states premiums are to be paid every year. At the end of 20 years the cash value represents about 35% of the total face amount *Each year the premium increases as the insured grows older. After several years the coverage and premiums end simultaneously. Cash value is not created* The premium increases after 5 years then remains the same until it is paid up at 65 years of age

All of the following statements about survivorship life insurance are true, except:

The policy face amounts are usually more than $1,000,000 It offers premiums that are quite low compared to what is charged on separate policies *The policy face amount is paid out only upon the death of the first insured to die* It is particularly well suited to meet the needs of estate taxes

Which of the four policies listed below would be considered a term policy?

The policy premium increases after three years and then it remains the same until the policy is paid up at age 55 *The policy has a face amount of $100,000. Every five years, the premium paid increases. After 10 years, the policyholder stops paying premiums and the coverage stops. The policy has no cash value* The policy face amount of $100,000. The policy holder pays premiums annually. At the end of 10 years the cash value is $25,000 The policy premiums must be paid for 20 years. Afterwards, the policy continues with no additional premiums paid. The policy has nonforfeiture values

The SEC is involved in the regulation of:

Universal life policies Interest sensitive life policies All annuities *Variable life policies*

The usual amount of death benefit in an industrial life insurance policy is:

$10,000 - $25,000 *Less than $2000* $25,000 - $50,000 Less than $10,000

An insured bought a $150,000 non-participating whole life policy many years ago. The insured never missed a premium payment and never borrowed from the cash value. Today, the insured is 100 years old. The cash value in the policy would be:

$50,000 *$150,000* $0 $100,000