Unit 5 Life insurance Policies.
Which is true concerning a VARIABLE LIFE insurance policy?
It provides a guaranteed minimum death benefit.
Which of the following statements pertaining to a MODIFIED LIFE policy is correct?
It provides for a low initial Premium for the first few years, and thereafter, requires a higher Premium which remains constant for the duration of the policy.
Which of the following terms best describes a life insurance policy that provides a straight $100,000 of coverage for a period of five years?
Level term.
All of the following statement regarding basic forms of whole life insurance are correct EXCEPT
Limited payment life provides protection only for the years during which premiums are paid.
All of the following statements about variable insurance policies are correct EXCEPT:
Materials used in selling variable policies must be approved only by the states Office of Insurance Regulation
When Jane becomes the owner of the policy at the age of 25, she will have to which of the following to maintain policy?
Pay the same premium that her father had paid for the coverage.
What was the main reason VARIABLE LIFE insurance was developed?
To provide a life policy that would help offset the effects of inflation.
If James Phillips dies prior to his daughter's twenty-five birthday, the insurance company will :
Waive the premium until Jane reaches the age of 25 and then charge premiums as if there had been no interruption in payments.
An ADJUSTABLE LIFE insurance policy has the following feature, EXCEPT :
Without its adjustable features, it resembles and Endowment policy.
A policy which affords coverage for two or more persons simultaneously with the face amount policy payable when any one of the insureds dies, at which time the policy terminates automatically (according to the provisions of the policies of most insurance companies), is known as:
A joint life policy.
Which of the following statements describing whole life insurance is CORRECT?
A whole life insurance is designed to mature at age 100.
In contrast to traditional whole life insurance policies, with variable life insurance products:
Contract cash values are not guaranteed.
Under which of the following circumstances would the policyowner be required to make a one time cash financial adjustment with the insurer?
Conversion of term insurance on an original issue age basis.
Features that may be included in most term policies include which of the following?
Convertibility and renewability
So-called "mortgage Insurance" is typically which of the following?
Decreasing term insurance.
Bob purchases a $50,000 5-year level term policy. All of the following statements about Bob's coverage are correct, EXCEPT:
If the insured dies beyond the specified 5 years,only the policy's cash value will be paid.
Which of the following term insurance contracts is not typically sold as an individual, separate contract?
Increasing term to 65
Insurance issued without a medical examination for a small amount on a weekly or monthly Premium paying basis,is known as:
Industrial insurance.
Which of the following statement about a renewable term policy is true?
It is renewable at the option of the insured.
The following statement about a UNIVERSAL LIFE policy are true, EXCEPT:
Its cash values generally are invested in a separate account.
Which of the following whole life insurance policies attempts to make insurance premiums more manageable by offering lower premiums during the first years following issue?
Modified Whole Life.
Which is correct statement concerning a GRADED PREMIUM LIFE policy?
Premiums start low and increase each year during the early years of the contract and then remain constant.
"When a level premium insurance is renewed,the premium amount rises to reflect the increased mortality risk of the insured's older age." What phrase best describes this approach to increasing premiums?
Step rate.
In a JOINT AND LAST SURVIVOR life contract which of the following is true?
The face value is paid when the last insured dies.
The cash values of life insurance policies belong to which of the following ?
The policyowner
Mrs.Williamson purchases a 5 year $50,000 level term policy with an option to renew. At the end of the 5- year term she renews the policy. Which of the following statement is CORRECT?
The premium for the renewal period will be higher than the initial period.
If an insured carried a $100,000 ten-payment life policy and a $100,000 twenty-payment life policy (both issued at the same age), which would have the greater reserve in 30 years?
They would both have the same reserve.
Which of the following statements regarding modified endowment contracts (MECs) is CORRECT?
To avoid being classified as an ME, a life insurance policy must satisfy the "7 - pay test"
Which of the following statements about a variable insurance policies is incorrect?
materials used in selling variable policies must be approved by the state Office of insurance regulations.
All of the following statement regarding term life insurance are correct EXCEPT:
A 3- year renewable policy allows a term policyowner to increase coverage for the next 3 years.
Jane Smith has ample life insurance to meet her personal needs. However, she is instituting and will be responsible for a sales program for her corporation that will extend over a period of eight or nine years. The corporation wishes to insure he life for the duration of the sales program. What form of insurance should the corporation purchase?
A Five- year renewable nonconvertible term policy.
Which of the following statement are true ?
A convertible term policy may be converted retroactively to the date the term policy was originally purchased. A convertible term policy may be converted on a current (attained age) basis. The premium fo an annual renewable term policy increases at each additional renewable period.
A policy covering 2 lives that only pays a death benefit when the second insured person dies is:
A joint and last survivor policy.
All of the following statements about term insurance are correct, EXCEPT:
Cash values build during the specified period.
What type of policy would be best used when the need for protection declines from year to year?
Decreasing term.
Why does the cash value in a LIMITED PAY LIFE policy grow faster during the premium-paying period and much slower thereafter?
During the premium-paying period, part of the premium goes into the cash value; after that, the cash value growth depends entirely on interest earning.
In a joint life contract which of the following is true?
the face value is paid when the first insured dies.
All of the following apply to a UNIVERSAL LIFE policy, EXCEPT:
there are no restrictions on it as far as receiving favorable tax treatment.
All of the following statement about variable insurance are correct, EXECEPT:
they are not considered securities contract.
