Primerica chapter 2
An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy?
$100,000
What is another name for interest-sensitive whole life insurance?
Current assumption life
Which of the following best describes annually renewable term insurance?
It is level term insurance.
Which of the following is NOT true regarding the accumulation period of an annuity?
It would not occur in a deferred annuity.
Which of the following is an example of a limited-pay life policy?
Life Paid-up at Age 65
Which of the following is NOT true about a joint and survivor annuity benefit option?
Payments stop after the first death among the annuitants.
Which of the following would help prevent a universal life policy from lapsing?
Target premium
All of the following entities regulate variable life policies EXCEPT
The Guaranty Association
Which of the following is NOT true regarding the annuitant?
The annuitant cannot be the same person as the annuity owner.
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?
The annuitant must be a natural person.
The death benefit in a variable universal life policy
depends on the performance of a separate account
Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?
fixed amount
A Return of Premium term life policy is written as what type of term coverage?
increasing
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 from those shown in the policy at issue time. The policy is a/an
interest-sensitive whole life
Which of the following is called a "second-to-die" policy?
survivorship life
All of the following are true regarding a decreasing term policy EXCEPT
the payable premium amount steadily declines throughout the duration of the contract
All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT
It is a life contingency option.
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy
Required a premium increase each renewal.
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
SEC registration
Which type of life insurance policy generates immediate cash value?
Single Premium
Which two terms are associated directly with the way an annuity is funded?
Single payment or periodic payments
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
Which of the following types of annuities will generally provide the highest monthly income?
Straight life
Which of the following is NOT true regarding a Variable Universal Life policy?
the death benefit is fixed
Before he died, an annuitant had received $12,500 in monthly benefits from his $25,000 straight life annuity. He was also the insured under a $50,000 paid-up whole life policy that named his wife as primary beneficiary. Considering both contracts, how much will the annuitant's spouse receive in benefits?
$50,000
The term "fixed" in a fixed annuity refers to all of the following EXCEPT
Death benefit
Annually renewable term policies provide a level death benefit for a premium that
Increases annually
Which of the following is NOT true regarding Equity Indexed Annuities?
They earn lower interest rates than fixed annuities.
Which of the following products requires a securities license?
Variable annuity
The main difference between immediate and deferred annuities is
When the income payments begin.
When would a 20-pay whole life policy endow?
When the insured reaches age 100
The death protection component of Universal Life Insurance is always
annually renewable term
Which of the following features of the Indexed Whole Life policy is NOT fixed?
cash value growth
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a
convertible term policy
The premium of a survivorship life policy compared with that of a joint life policy would be
lower
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.
What license or licenses are required to sell variable annuities?
Both a life insurance license and a securities license
What are the two components of a universal policy?
Insurance and cash account
A couple receives a set amount of income from their annuity. When the wife dies, the husband no longer receives annuity payments. What type of annuity did the couple buy?
Joint Life
Which of the following has the right to convert the existing term coverage to permanent insurance?
Policyowner
A lucky individual won the state lottery, so the state will be sending him a check each month for the next 25 years. What type of annuity products are they likely to use to provide these benefits?
Immediate annuity
Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be?
Installments for a fixed period
Which statement is NOT true regarding a Straight Life policy?
Its premium steadily decreases over time, in response to its growing cash value
If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a
Joint life annuity.
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%
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%.
In a survivorship life policy, when does the insurer pay the death benefit?
Upon the last death
Which of the following is NOT true regarding the Life with Guaranteed Minimum annuity settlement option?
It does not guarantee that the entire principal amount will be paid out.
Why is an equity indexed annuity considered to be a fixed annuity?
It has a guaranteed minimum interest rate.
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
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. Which policy is that?
Joint Life Policy
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
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?
Universal Life - Option A
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
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
Under a straight life annuity, if the annuitant dies before the principal amount is paid out, the beneficiary will receive
Nothing; the payments will cease.
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
A Straight Life policy has what type of premium?
A level annual premium for the life of the insured
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
The current interest rate on an equity indexed annuity is often based on
An index like Standard & Poor's 500
If an annuitant dies before annuitization occurs, what will the beneficiary receive?
Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount
An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)
Equity indexed annuity
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.
The death benefit under the Universal Life Option B
Gradually increases each year by the amount that the cash value increases
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.
An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?
The insured may renew the policy for another 10 years, but at a higher premium rate.
All of the following are true of an annuity owner EXCEPT
The owner must be the party to receive benefits.
All of the following statements are true regarding installments for a fixed amount EXCEPT
The payments will stop when the annuitant dies.
Which of the following best describes what the annuity period is?
The period of time during which accumulated money is converted into income payments
All of the following are true about variable products EXCEPT
The premiums are invested in the insurer's general account.
Which of the following best defines target premium in a universal life policy?
The recommended amount to keep the policy in force throughout its lifetime
The LEAST expensive first-year premium is found in which of the following policies?
Annually Renewable Term
When an annuity is written, whose life expectancy is taken into account?
Annuitant
