Types of Life Policies
During partial withdrawal from a universal life policy, which portion will be taxed?
Interest
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
Target premium
is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.
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
A Straight Life policy has what type of premium?
A level annual premium for the life of the insured
The LEAST expensive first-year premium is found in which of the following policies?
Annually renewable term
The term "fixed" in a fixed annuity refers to all of the following EXCEPT a. Equal annuity payments b. Amount of length of payments c. death benefit d. Guaranteed rate of interest
Death benefit
Which policy component decreases in decreasing term insurance?
Face amount
Which of the following best describes annually renewable term insurance?
It is level term insurance
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
Equity indexed annuities
Seek higher returns
Which type of life insurance policy generates immediate cash value?
Single premium
Which of the following is TRUE regarding the premium in term policies?
The premium is level
Decreasing Term's face amount...
decreases as the amount of debt is reduced
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
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?
Level term
Which of the following is called a "second-to-die" policy?
Survivorship life
Which of the following is TRUE regarding the premium in term policies?
The period of time during which accumulated money is converted into income payments
For variable products, underlying assets must be kept in
A separate account
The minimum interest rate on an equity-indexed annuity is often based on
An index like Standard & Poor's 500
Joint Life Policy
Cover the lives of two insureds; rates are blended. Upon the death of the first insured, the policy ends.
Which characteristic makes whole life permanent protection?
Coverage until death or age 100
What is another name for interest-sensitive whole life insurance?
Current assumption life
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
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
If an annuitant dies before annuitization occurs, what will the beneficiary receive?
Either the amount into the plan or the cash value of the plan, whichever is the greater amount
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
Annually renewable term policies provide a level death benefit for a premium that
Increases annually
A Return of Premium term life policy is written as what type of term coverage?
Increasing
Which statement is NOT true regarding a Straight Life Policy? a. The face value of the policy is paid to the insured at age 100 b. It usually depends cash value by the end of the third policy year c. It has the lowest annual premium of the three types of Whole Life policies d. Its premium steadily decreases over time, in response to its growing cash value
Its premium steadily decreases over time, in response to its growing cash value
The premium of a survivorship life policy compared with that of a join life policy would be. . .
Lower
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
Which of the following policies would be classified as a traditional level premium contract?
Straight Life
Which of the following policies would be classified as a traditional level premium contract?
Straight life
Which of the following would hep prevent a universal life policy from lapsing?
Target premium
The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE? a. The insurance company will retain the cash value and pay back the premiums to the owner's estate b. The money will continue to grow tax-deferred until the liquidation period, and then will be paid to the beneficiary c. The beneficiary will receive the greater of the money paid into the annuity or the cash value d. The owner's estate will receive the money paid into the annuity
The beneficiary will receive the greater of the money paid into the annuity or the cash value
Who bears all of the investment risk in a fixed annuity?
The insurance company
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 regarding a decreasing term policy EXCEPT a. The contract pays only in the event of death during the term and there is no cash value b. The face amount steadily declines throughout the duration of the contract c. The payable premium amount steadily declines throughout the duration of the contract d. The death benefit is $0 at the end of the policy term
The payable premium amount steadily declines throughout the duration of the contract
Which of the following determines the cash value of a variable life policy?
The performance of the policy portfolio
All of the following are true about variable products EXCEPT A. The minimum death benefit is guaranteed B. The cash value is not guaranteed C. Policyowners bear the investment risk D. The premiums are invested in the insurer's general account
The premiums are invested in the insurer's general account
Which of the following is NOT true regarding Equity Indexed Annuities? a. They have a guaranteed minimum interest rates b. They are less risky than variable annuities c. They earn lower interest rates than fixed annuities d. The insurance company keeps a percentage of the returns
They earn lower interest rates than fixed annuities
Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?
Universal life
Which type of policy will provide permanent protection?
Whole life
Level tern 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
In an annuity, the accumulated money is converted into a stream of income during which time period?
Annuitization period
Which of the following terms best describe the coverage provided by term policies, as compared to any other form of protection?
Greatest
What is the major difference between survivorship and join life policy's?
Survivorship life pays on the last death rather than upon the first death. Since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life
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
All of the following are true about variable products EXCEPT: a. Policyowners bear the investment risk b. The premiums are invested in the insurer's general account c. The minimum death benefit is guaranteed d. The cash value is not guaranteed
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
In a survivorship life policy, when does the insurer pay the death benefit?
Upon the last death
Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value?
Variable universal life
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
Which of the following is INCORRECT regarding a $100,000 20-year level term policy? A. The policy premium will remain level for 20 years B. If the insured dies before the policy expired, the beneficiary will receive $100,000 c. The policy will expire at the end of the 20-year period d. At the end of 20 years, the policy's cash value will equal $100,000
At the end of 20 years, the policy's cash value will equal $100,000
Which of the following is NOT true regarding the accumulation period of an annuity? A. It is also known as the pay-in period B. It would not occur in a deferred annuity C. It is the period during which the annuity payments earn interest D. It is the period over which the owner makes payments into an annuity
It would not occur in a deferred annuity
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
Variable Whole Life insurance is based on what type of premium?
Level fixed
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
Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?
Option B
Which of the following is NOT one of the three basic types of coverages that are available, based on how the face amount changes during the policy term? A. Level B. Increasing C. Renewable D. Decreasing
Renewable
To sell variable life insurance policies, an agent must receive all of the following EXCEPT a. FINRA registration b. A securities license c. A life insurance license d. SEC registration
SEC registration
If the annuitant dies during the accumulation period, who will receive the annuity benefits?
The beneficiary
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?
Universal life
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
Fixed annuities provide all of the following EXCEPT a. Hedge against inflation b. Equal monthly payments for life c. Minimum guaranteed rate of interest d. Future income payments
Hedge against inflation
The premium of a survivorship life policy compared with that of a join life policy would be
Lower
Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have financial resources?
Term
Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources?
Term
All of the folllowing statements about equity index annuities are correct EXCEPT a. The annuitant receives a fixed amount of return b. They have a guaranteed minimum interest rate c. The interest rate is tied to an index such as the Standard & Poor's 500 d. They invest on a more aggressive basis aiming for higher returns
The annuitant receives a fixed amount of return
What kind of policy allows withdrawals or partial surrenders?
Universal life
