type of insurance policies and provisions, options, and riders
which of the following types of term life policies most likely contains a renewability feature
10 year convertible term
a 15 year mortgage is best protected by what kind of policy
15-year decreasing term
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
T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay?
50,000 because the suicide occurred outside the suicide clause period (normally 1-2 years)
an insurer may normally delay the payment of a cash value loan or surrender value for up to
6 months
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
P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?
P will still receive declared dividends
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
a return of premium life insurance policy is
Whole life and Increasing term
which statement is true regarding a variable whole life policy
a minimum guaranteed death benefit is provided
a policyowner may generate taxable income from which of the following dividend options
accumulation of interest
a cost of living rider gives the insured
additional death benefits
B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of
additional whole life coverage at specified times
how long does the coverage normally remain on a limited-pay life policy
age 100
Automatic Premium Loan
allows the insure to automatically use the policy cash value to pay an overdue premium
The Consideration clause in a life insurance contract contains what pertinent information?
amount of premiums and when they are due
under a graded premium policy, the premiums
are lower during the policy's early years
how is accumulated interest earned on dividends from an insurance policy taxed
as ordinary income
what action can a policy owner take if an application for a bank loan requires collateral
assign policy ownership to the bank
when does a guaranteed insurability rider allow the insured to buy additional coverage
at future dates specified in the contract with no evidence of insurability required
the automatic premium loan provision is designed to
avoid a policy lapse
a policy loan is made possible by which of these life insurance policy features
cash value consideration
under an interest sensitive whole life policy:
cash values are determined by interest rates
Whose life is covered on a life insurance policy that contains a payor benefit clause?
child
N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take?
claim will be denied
When a policy owner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
conversion provision
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
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
additional coverage can be added to a whole life policy by adding a
decreasing term rider
How are surrender charges deducted in a life policy with a rear-end loaded provision?
deducted when the policy is discontinued
which of these statements about a guaranteed insurability option rider is not true
evidence of insurability is required when the option is exercised
D owns a whole life policy that was purchased 10 years ago. if the premium payments suddenly stop and D takes no additional action, which nonforfeiture option will the insurer likely proceed with
extended term
which of the following Nonforfeiture options offers the highest death benefit
extended term
What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?
family maintenance policy
a nonforfeiture clause gives the policy owner
guaranteed values even if the policy has lapsed
how are policy owner dividends treated in regards to income tax
interest on accumulations is taxed
What kind of premium does a Whole Life policy have?
level
which of these are not an example of a nonforfeiture option
life income
which of these would be considered a limited pay life policy
life paid up at age 70
An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?
long term care
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
modified endowment contract
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 the following statements is correct about accelerated death benefits
must have terminal illness to qualify
whole life insurance policies are contractually guaranteed to provide each of the following except:
partial withdrawal features beyond a surrender charge period
A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waiver under which provision
payor provision
Policy Loan Provision
pays the policy owner an amount that does not surpass the guaranteed cash value
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
policy owner
M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the
policy proceeds
a limited pay 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 of these Nonforfeiture Options continue a build-up of cash value?
reduced paid up
S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?
return of premium rider
What type of life policy covers 2 lives 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
a --- rider may be used to include coverage for children under their parents life insurance policy
term
The investment gains from a Universal Life Policy usually go toward
the cash value
What is the 7-pay test?
the cumulative premiums paid during the first 7 years of the policy must not exceed the total amount of net level premiums that would be required to pay the policy up using guaranteed mortality costs and interest
D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive?
the full face amount
collateral assignment
the partial or temporary transfer of rights to another person or entity
under a graded premium whole life policy:
the premium increases each year during the early years of the contract and remains the same after that time
Under a Renewable Term policy,
the renewal premium is calculated on the basis of the insured's attained age
the cash value in a ______ life policy may fluctuate to reflect changing assumptions regarding mortality cost, interest and expense factors
universal
a term life insurance policy matures
upon the insured's death during the term of the policy
a _ _ life policy combines investment choices with a form of term coverage
variable universal
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
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 type of policy did Y buy
whole life policy with an other insured rider
a policy that become a modified endowment contract (MEC)
will lose many of its tax advantages
if a 10-year term life policy contains a renewability provision, the policy will renew
without evidence of insurability
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
P purchases a $50,000 whole life insurance policy in 2005. One of the questions on the application asks if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary?
$50,000 minus any outstanding policy loans
the option that provides an additional death benefit for a limited amount of tie at the lowest possible cost is called an
AD&D rider
S is covered by a whole life policy. Which insurance product can cover his children?
Child term rider