Types of Life Insurance Policies
Joint Life
A family in which both parents work and, therefore, are in need of the same amount of coverage, would be a candidate for which of the following plans?
Joint Life
Carlos and Jenna both work to support their family. To provide the same amount of life insurance protection in the event either dies, they should consider purchasing which of the following plans?
Limited-pay
A whole life policy that makes it possible to stop premium payments at the end of a specified time without a reduction in the death benefit is called
5-year level term
Brian, a 45-year-old general contractor, wants financial protection for his family while $300,000 of his assets are tied up in a building project for the next 5 years. Which of the following types of life insurance policies would give him that protection at the lowest cost?
Graded Premium
Sean has a young family and needs affordable whole life insurance. He is looking for a policy with lower initial premiums but is not averse to paying more at a later time. What type of whole life insurance variation would be suitable for him?
It provides insurance benefits that vary according to the investment experience of separate accounts maintained by the insurer.
Which of the following statements describes variable life insurance?
Both limited-pay life and whole life policies endow at age 100.
Which of the following statements pertaining to limited-pay life policies is CORRECT?
Term insurance provides protection for only a temporary period.
Which of the following statements pertaining to term insurance is CORRECT?
Variable life insurance cannot be proposed in a sales situation unless the proposal is preceded or accompanied by a prospectus.
Which of the following statements pertaining to variable life insurance is CORRECT?
UL premiums are fixed, however the policyowner may increase or decrease the death benefit.
Which of the following statements regarding universal life is INCORRECT?
Variable Life
Which of the following types of life insurance requires that the agent be licensed by FINRA before selling the policy?
Universal life
While a policy loan is generally an available option with any form of permanent life insurance, a partial withdrawal of cash value from the policy is available only with which of the following types of life insurance?
The premium for the renewal period will be higher than the initial period.
Willa purchases a 5-year $50,000 level term policy with an option to renew. Which of the following statements about the policy's renewability is CORRECT?
the cash value fluctuates in accordance with interest rates
With interest-sensitive whole life insurance,
Variable contracts and their distribution are regulated separately but in a fairly coordinated fashion between the Department of Insurance, the SEC, and FINRA.
With respect to the regulation of variable contracts and those who sell them, which of the following
Do not require repayment
Withdrawals from a universal life policy
Decreasing Term
Amanda took out a $250,000 home mortgage when she purchased her house 5 years ago. What type of life insurance policy would be the best choice to insure the remaining balance on her home mortgage?
Limited-pay
An individual wishes to purchase whole life insurance but does not wish to pay premiums past retirement age. Which of the following policies should the person buy?
100,000
Darlene owned a $100,000 whole life policy that had a $75,000 cash value when she died at the age of 75. The amount paid by the insurance company as a death benefit was
Level Term
Michelle has a term insurance policy in which the amount of protection remains constant during the term period. Which kind of term insurance does Michelle have?
The policyowner
The party to whom the life insurance policy cash values belong is
The premium will be lower during the next few years and then be increased to a higher, constant level.
Helen has just taken out a modified whole life policy. Which of the following statements is CORRECT?
10-year renewable and convertible level term
Which of the following life insurance policies with the same face value would have the highest premium if issued to the same person?
Whole life and limited-pay life
Which of the following policies endows at age 100?
Option B
Which of the following provides for an enhanced death benefit on a universal life policy?
It renews with an increase in premium based on the insured's age.
Which of the following statements about a 1-year renewable term policy is CORRECT?
Premiums generally may be increased or decreased at the policyowner's option
Which of the following statements applies to universal life insurance?
A whole life policy
A life insurance policy in which the face amount remains level and the cash value grows to an amount equal to the face amount when the insured reaches age 100 is
Modified life
A prospect with a young family needs affordable whole life insurance. As a rising young executive, it is likely that the prospect's current limited resources will increase substantially over the next 15 years. What type of whole life insurance variation would you recommend?
the premiums may be increased or decreased from time to time by the policyowner
A significant feature of adjustable life insurance is that
Rajesh, who has a $100,000 20-pay life policy
Assume 4 individuals, all age 30, purchase the following life insurance policies. If all policies are still in force 10 years later, who will have the largest cash value in his policy?
less than for a $300,000, 5-year renewable term policy
David has a $300,000 nonrenewable 5-year term policy. The premium he pays for this policy would be
whole life policy
Diane would like to purchase a life insurance policy in which the face amount remains level and the cash value grows each year until she dies (or reaches age 100). Which type of policy should she purchase?
indirect links to a stock market index
Equity index life insurance policy values are determined by a specified participation rate and
To provide for annuities to be payable in fixed or variable amounts or for variable life insurance
For which of the following reasons would a domestic insurer set up separate accounts?
Graded Premium Whole Life
Gene, age 20, purchased a $50,000 life insurance policy. The premium at issue is lower than normal whole life rates, and it increases each year for the first 5 years of the policy period. After that, the premium levels off. What type of policy does Gene own?
5-year level term
Gerald, a 40-year-old building contractor, wants financial protection for his family while $150,000 of his assets are tied up in a building project for about 5 years. Which of the following types of life insurance policies would give him that protection at the lowest cost?
he can draw on the cash value to supplement his retirement income
If a policyowner purchases a $250,000 single premium whole life insurance policy and needs additional funds for retirement 6 months later,
The securities exchange commission
In addition to the Department of Insurance, who has the authority to regulate variable life insurance?
provides pure insurance protection only
In contrast to traditional whole life insurance policies, term life insurance
Contract cash values are not guaranteed
In contrast to traditional whole life insurance policies, with variable life insurance products
Cease paying premiums
Jane, age 35, has just purchased a 20-pay whole life policy. When she turns 55, she will
Graded Premium Whole Life
Jenna owns a policy in which the premium at the inception of the policy is lower than the continuous premium whole life rate and then increases each year for the first 5 years of the policy period. After 5 years, the premium levels off. What type of policy does Jenna own?
Decreasing Term
Joe buys his first home after obtaining a 30-year mortgage from his bank. He is considering the purchase of life insurance to ensure that the mortgage will be paid in the event of his death, in which case he will leave the house to his spouse and children. What would be the best life insurance protection for Joe?
A straight whole life insurance policy
Jorge would like to purchase a life insurance policy that offers level premiums from the time the policy is issued until his death. He also wants a policy that combines death protection with a savings element that can eventually be used for retirement purposes. Jorge should consider purchasing which of the following plans?
Juan's policy, but not Maria's, may have an option to convert.
Juan owns a 5-year $50,000 term life insurance policy, and Maria owns a $50,000 whole life insurance policy. Which of the following statements is CORRECT?
100,000
Ken, the insured, purchased a $40,000 5-year level term policy and a $100,000 whole life insurance policy when he was 49. When he died at age 56, his beneficiary received
The policy provides a straight, level $50,000 of coverage for 5 years.
Leo purchases a $50,000 5-year level term policy. Which of the following statements about Leo's coverage is CORRECT?
To guarantee that his son's college tuition will be covered
Roland is 45 years old and married. He has a 19-year-old son who is in his first year of studies at a local university. He also has an 8-year-old daughter. A decreasing term policy could be recommended for Roland for which of the following reasons?
Premiums for both policies are set at the time of policy issue and remain level throughout the term of the policies.
Mark purchased a 20-year $100,000 level term life insurance policy and a $250,000 straight whole life insurance policy. Which of the following statements is CORRECT?
A Variable life policy
Mitsuko is interested in buying a life insurance policy that must have these two features: a fixed premium and a separate account. What type of policy would best meet her needs?
level term life insurance
Nora, age 25, just started working and would like to purchase life insurance to ensure that her spouse and child are protected if she dies prematurely. She has very limited funds but would eventually like to have permanent protection. Nora should consider purchasing
Providing funds to pay off an outstanding loan at a reasonable premium
Of the following, which best describes a need that decreasing term insurance is often used to meet?
A 10-year renewable term is a policy with a fixed face amount and a premium that increases at each 10-year renewal period.
Of the following, which statement best describes a 10-year renewable term life insurance policy?
Upon showing evidence of insurability, Patrick can increase the face amount of his policy.
Patrick owns an adjustable life policy. Which of the following statements is CORRECT?
50,000 as an endowment
Tom has a $50,000 whole life policy. If he continues to pay the required premiums and lives to age 100, he will receive
partial withdrawals can be taken from the cash value account
Universal life is distinguished from whole life insurance in that
The SEC, FINRA, and the states
Variable life insurance policies are regulated by
the cash values are tied to the actual performance of investment funds
Variable life insurance policies are regulated by the Securities Exchange Commission and FINRA because
Nothing
When he was 45, Frank purchased a $40,000 5-year level term policy. When he died at age 52, his beneficiary received
20-pay life policy
Which of the following $50,000 limited-pay life policies will have the highest premium for an applicant who is age 30?
The fact that the product has a separate account which is distinct from the general account
Which of the following differentiates a variable life product from a conventional life product?
Harriet, who owns a $100,000 single premium whole life policy
Which of the following individuals can access the cash value of her life insurance policy to provide extra
