Types of Life Policies
Which of the following features of the Indexed Whole Life policy is NOT fixed? A. Death benefit B. Policy period C. Cash value growth D. Premium
Cash value growth
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined, and the cash value fell to $10,000. If the insured dies, how much will be paid out? A. $10,000 B. $40,000 C. $50,000 D. $60,000
$50,000
An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it? A. Flexible premium B. Immediate C. Deferred D. Fixed
Deferred
Which policy component decreases in decreasing term insurance? A. Face amount B. Cash Value C. Dividend D. Premium
Face amount
A return of Premium term life policy is written as what type of term coverage? A. Increasing B. Decreasing C. Renewable D. Level
Increasing
Variable Whole Life insurance is based on what type of premium? A. Increasing B. Flexible C. Graded D. Level fixed
Level fixed
The death protection component of a universal life policy is expressed as what type of coverage? A. Whole life B. Adjustable Life C. Decreasing Term D. Annually Renewable Term
Annually Renewable Term
A Universal Life Insurance policy is best described as a/an A. Variable Life with a cash value account B. Whole life policy with two premiums: target and minimum C. Flexible Premium Variable Life policy D. Annually Renewable Term policy with a cash value account
Annually Renewable Term policy with a cash value account
What characteristic makes whole life permanent protection? A. Living benefits B. Coverage until death or age 100 C. Guaranteed death benefit D. Guaranteed level premium
Coverage until death or age 100
Which policy component decreases in decreasing term insurance? A. Dividend B. Premium C. Face amount D. Cash value
Face amount
Which of the following is another term for accumulation period of an annuity? A. Pay-in period B. Premium period C. Liquidation period D. Annuity period
Pay-in period
Which of the following is another term for the accumulation period of an annuity? A. Premium period B. Liquidation period C. Annuity period D. Pay-in period
Pay-in period
Which two terms are associated directly with the way an annuity is funded? A. Renewable or convertible B. Single payment or periodic payments C. Increasing or decreasing D. Immediate or deferred
Single payment or periodic payments
Which of the following determines the cash value of a variable life policy? A. The company's general account B. The policy's guarantees C. The premium mode D. The performance of the policy portfolio
The performance of the policy portfolio
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit A. Universal Life- Option B B. Equity Indexed Universal Life C. Universal Life- Option A D. Variable Universal Life
Universal Life- Option A
A Return of Premium term life policy is written as what type of term coverage? A. Decreasing B. Renewable C. Level D. Increasing
Increasing
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? A. Interest-sensitive whole life B. Life annuity with period certain C. Increasing term D. Limited pay whole life
Limited pay whole life
What kind of policy allows withdrawals or partial surrenders? A. 20-pay life B. Term policy C. Variable whole life D. Universal life
Universal life
Which of the following is a key distinction between variable whole life and variable universal life products A. Variable whole life has a guaranteed death benefit B. Variable universal life is regulated solely through FINRA C. Variable whole life allows policy loans from the cash value D. Variable universal life has a fixed premium
Variable whole life has a guaranteed death benefit
Why is an equity indexed annuity considered to be a fixed annuity? A. It is not tied to an index like the S&P 500 B. It has a guaranteed minimum interest rate C. It has a modest investment potential D. It has a fixed rate of return
It has a guaranteed minimum interest rate
Which of the following best describes annually renewable term insurance? A. It is level term insurance B. It requires proof of insurability at each renewal C. Neither the premium nor the death benefit is affected by the insured's age D. It provides an annually increasing death benefit
It is level term insurance
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? A. Term to specified age B. Ordinary life policy C. Limited pay whole life D. Level term
Level term
Which statement is NOT true regarding a Straight Life policy? A. The face value of the policy is paid to the insured at the age of 100 B. It usually develops 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
What are the two components of a universal policy? A. Separate account and policy loans B. Insurance and cash account C. Insurance and investments D. Mortality cost and interest
Insurance and cash account
The LEAST expensive first-year premium is found in which of the following policies? A. Annually Renewable Term B. Increasing Term C. Decreasing Term D. Level Term
Annually Renewable Term
In which of the following cases will the insured be able to receive the full face amount from a whole life policy? A. As soon as the cash value exceeds the face amount B. If there are no named beneficiaries when the policy is paid up C. At age 65 D. If the insured lives to age 100
If the insured lives to age 100
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? A. Deferred interest annuity B. Immediate Annuity C. Variable Annuity D. Flexible Payment Annuity
Immediate Annuity
During partial withdrawal from a universal life policy, which portion will be taxed? A. Cash Value B. Principal C. Loan D. Interest
Interest
Why is an equity indexed annuity considered to be a fixed annuity? A. It has a fixed rate of return B. It is not tied to an index like the S&P 500 C. It has a guaranteed minimum interest rate D. It has modest investment potential
It has a guaranteed minimum interest rate
Which of the following is TRUE regarding variable annuities? A. The funds are invested in the company's general account B. The company guarantees a minimum interest rate C. A person selling variable annuities is required to have only a life agent's license D. The annuitant assumes the risks on investment
The annuitant assumes the risks on investment
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? A. Variable Life B. Adjustable Life C. Universal Life D. Flexible Life
Universal Life
Which of the following features of the Indexed Whole Life policy is NOT fixed? A. Cash value growth B. Premium C. Death Benefit D. Policy Period
Cash value growth
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. What policy is that? A. Survivorship Life Policy B. Second-to-Die C. Family Income Policy D. Joint Life Policy
Joint Life Policy
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? A. Ordinary Life Policy B. Limited pay whole life C. Level Term D. Term to specified age
Level Term
Which of the following is NOT a type of whole life insurance? A. Single Premium B. Straight Life C. Limited payment D. Level Term
Level Term
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? A. A corporation can be an annuitant as long as the beneficiary is a natural person B. The contract can be issued without an annuitant C. The annuitant must be a natural person D. A corporation can be an annuitant as long as it is also the owner
The annuitant must be a natural person
Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? A. Universal Life- Option A B. Universal Life- Option B C. Equity Indeed Universal Life D. Variable Universal Life
Universal Life- Option A
What are the two components of a universal policy? A. Mortality cost and interest B. Separate account and policy loans C. Insurance and cash account D. Insurance an investments
Insurance and cash account
Which of the following best describes annually renewable term insurance? A. It requires proof of insurability at each renewal B. Neither the premium nor the death benefit is affected by the insured's age D. It is level term insurance
It is level term insurance
Which Universal Life option has a gradually increasing cash value and a level death benefit? A. Juvenile Life B. Term Insurance C. Option A D. Option B
Option A
Which of the following statements is correct regarding a whole life policy? A. Cash values are not guaranteed B. The policy premium is based on the attained age C. The death benefit may increase or decrease during the policy period D. The policyowner is entitled to policy loans
The policyowner is entitled to policy loans
Which of the following statements is correct regarding a whole life policy? A. The policyowner is entitled to policy loans B. Cash values are not guaranteed C. The policy premium is based on the attained age D. The death benefit may increase or decrease during the policy period
The policyowner is entitled to policy loans
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? A. Adjustable Life B. Term Life C. Limited Pay D. Universal Life
Universal Life
