TL&H 3 - Types of Insurance Policies
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
Which of the following types of Term Life policies most likely contains a Renewability feature?
10 Year Convertible Term
G purchased a Family Income policy at age 40. The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income?
10 years
A 15-year mortgage is best protected by what kind of life policy?
15-year decreasing term
J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?
20-Pay 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 oft these statements made by the producer would be correct?
20-Pay Life accumulates cash value faster than Straight Life
N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?
30 Pay Life
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
An ____________ term life policy is normally used when covering an insured's mortgage balance.
Decreasing
The combination of Whole Life and ______________ Term insurance is referred to as a Family Income Policy Decreasing
Decreasing
Credit life insurance typically issued with which of the following types of coverage?
Decreasing Term
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
Decreasing Term
What type of life 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
Additional coverage can be added to a Whole Life policy by adding a(n) ____________?
Decreasing term rider
P owns a $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own?
Endowment at Age 70
S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?
Equity index insurance
Which of these statements describe Modified Endowment Contract (MEC)?
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
Term insurance has which of the following characteristics?
Expires at the end of the policy period
What does a Face Amount Plus Cash Value Policy pay upon the insured's death?
Face amount plus the policy's cash vaue
P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase?
Family Maintenance policy
Variable Life products require a producer to ____________?
Hold a life insurance license and a Securities license
Which of the following actions require a policyowner to provide proof of insurability in Adjustable Life policy?
Increases face amount
Who has the option to renew a Renewable Term policy?
Insured
Which of these needs is satisfied by Adjustable Life insurance?
Insured's need for flexible premiums
Credit Life insurance is _____________?
Issued in an amount not to exceed the amount of the loan
What type of policy covers two lives and pays the face amount after the first one dies?
Joint Life Policy
K, age 45, and his wife, age 43, have three children. They purchase a Family Policy that covers K's wife to age 65. All of these situations will pay a death benefit EXCEPT _____________?
K's wife dies at age 66
What kind of premium does a Whole Life policy have?
Level
D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?
Level term
Which of these would be considered a Limited-Pay Life policy?
Life Paid-Up to Age 70
Life insurance that covers an insured's whole life with level premiums paid over a limited time is called _____________?
Limited Pay Life
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Modified Endowment Contract
When a life insurance policy exceeds certain IRS table values, the result would create which of the following?
Modified Endowment Contract (MEC)
K is most shopping for a permanent life insurance policy that will offer her the MOST protection per dollar of annual premium. Which of these policies best fits her needs?
Straight life
What type of life policy covers two people and pays upon the death of the last insured?
Survivorship
T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?
Ten-Year Endowment
What type of life insurance are credit policies issued as?
Term
Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary time period. Which of these policies should Q purchase?
Term Life
What type of life insurance gives the greatest amount of coverage for a limited period of time?
Term life
What kind of life insurance product covers children under their parent's policy?
Term rider
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
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
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
The policyowner
All of these statements about Equity Indexed Life Insurance are correct EXCEPT ___________?
The premiums can be lowered or raised, based on an investments performance
Under a Renewable Term policy, _____________?
The renewal premium is calculated on the basis of the insured's attained age
Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n): _____________?
Third-party with no insurable interest
How does a typical Variable Life Policy investment account grow?
Through mutual funds, stocks, bonds
Which of the following is considered an element of a Variable Life Policy?
Underlying equity investment
K purchased a Life insurance policy in 1986 which paid 10% interest in the early years of the policy. Twenty years after the purchase, she received a notice from the insurer stating that the policy will soon terminate unless a much-higher premium is paid because of falling interest rates. This type of policy is known as a(n) _________ life policy.
Universal
What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?
Whole Life
What type of insurance offers permanent life coverage with premiums that are payable for life?
Whole Life
Y purchased $100,000 worth of permanent protection on himself and $50,000 worth of 10-year Term coverage for his wife on the same policy. Which of these policies did Y purchase?
Whole Life policy with Other Insured Rider
A life insurance policy that provides a policyowner with cash value along with a level face amount is called ___________?
Whole life
If a 10-Year Term Life policy contains a Renewability provision, the policy will renew ____________?
Without evidence of insurability
Which statement is TRUE regarding a Variable Whole Life policy?
A minimum guaranteed Death benefit is provided
Which of the following types of policies pays a benefit if the insured goes blind?
AD&D
Under a Graded Premium policy, the premiums ___________?
Are lower during the policy's early years
Variable Whole Life insurance can be best described as ___________?
Both an insurance and securities product
Which statement about a whole life policy is true?
Cash value may be borrowed against
Under an interest-sensitive whole life policy, ____________?
Cash values are determined by the interest rates
A company that owns a life insurance policy on one of its key employees may do all of the following EXCEPT ____________?
Change the policy's interest rate
S is covered by a whole life policy. Which insurance product can cover his children?
Child term rider
Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?
Conversion
Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?
Conversion privilege
When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
Conversion provision
What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?
Convertible Term
J is issued a Life Insurance policy with a death benefit of $100,000. She pays $600 per year in premium for the first 5 years. The premium then increases to $900 per year in the sixth year, and remains level thereafter. The policy's death benefit also remains at $100,000. Which type of Life Insurance policy is this?
Modified Premium Life
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for _____________?
Modified Whole Life
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
Which of these life products is NOT considered interest-sensitive?
Modified Whole Life
Whole Life insurance policies are contractually guaranteed to provide each of the following EXCEPT ______________?
Partial withdrawal features beyond a surrender change period
A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision?
Payor provision
Which of the following information is NOT required to be included in a Whole Life policy?
Policy's guaranteed dividend table
Which is true concerning a Variable Universal Life policy?
Policyowner controls where the investment will go and selects the amount of the premium payment
A Limited-Pay Life policy has __________?
Premium payments limited to a specified number of years
Which of these characteristics is consistent with a Straight Life policy?
Premiums are payable for as long as there is insurance coverage in force
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
Which of the following actions is NOT possible with a Universal Life policy?
Premiums may be applied as a credit against income tax
T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?
Renewable
Which of the following types of permanent life insurance policies offers the highest initial cash value?
Single premium
The cash value in an _________ Life policy may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors.
Universal
S, age 40, is looking to buy a Life Insurance policy that will allow for increases or decreases in coverage as his needs change. The policy best suited for S would be _____________?
Universal Life
What type of life insurance incorporates flexible premiums and an adjustable death benefit?
Universal Life
Which of the following Life insurance policies combine term insurance with an investment element?
Universal Life
When is the face amount paid under a Joint Life and Survivor policy?
Upon death of the last insured
A term life insurance policy matures ____________?
Upon the insured's death during the term of the policy
A life policy with a death benefit and cash value that can fluctuate according to the performance of its underlying investment portfolio is referred to as _____________?
Variable Life
Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?
Variable Life
An ___ ___ life policy combines investment choices with a form of term coverage
Variable Universal
A life policy that contains a monthly mortality charge, as well as self-directed investment choices, is called a(n) ___________?
Variable Universal Life policy
S owns a life insurance policy with cash values that fluctuate according to the underlying investment performance of common stocks. Which of these policies does S own?
Variable Whole Life
Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit?
Variable life
Which of the following policies is characterized by a flexible premium and death benefit and allows the policyowner control of the investment aspect of the plan?
Variable universal life
Term Life Policies that can be converted to permanent coverage may do so during a specific time period. This conversion period __________?
Varies according to the contract
At what point does a Whole Life Insurance policy endow?
When the cash value equals the death benefit
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
