3 Exam Flash Cards

Question 1

What are the death benefit options in universal life policies

Answer 1

Option A - level death benefit

Option B - Increasing death benefit

Question 2

When the amount of insurance is increased in an adjustable life policy, what will the insurer require from the insured?

Answer 2

evidence of insurability

Question 3

What type of life insurance is best suited to cover a mortgage?

Answer 3

decreased term

Question 4

In annually renewable term policies what is the annual premium based upon?

Answer 4

the insured’s attainted age

Question 5

In variable universal life insurance, to what policy component does the term variable refer

Answer 5

• cash value: is not guaranteed at fluctuates at the performance of portfolio in premiums invested
• death benefit: Always mixed with minimum benefit but always fluctuates because of cash value

Question 6

The policy owner of a whole life insurance policy is also the insured. What age must the insured attain in order to receive the policy’s face amount

Answer 6

age 100

Question 7

What type of insurance policy offers pure death protection

Answer 7

Term

Question 8

A whole life policy that requires that the policy owner only pays premiums for a specific number of years is known as what kind of policy

Answer 8

limited-pay whole life

Question 9

What is the main advantage of converting from group life insurance to individual coverage?

Answer 9

evidence of insurability is not required

Question 10

What policy component must decrease in decreasing term insurance?

Answer 10

face amount

Question 11

What does level refer to in level term insurance?

Answer 11

face amount

Question 12

What happens to the cash value when a whole life insurance policy matures?

Answer 12

cash value is paid to the policy owner

Question 13

Why are policy loans not available on term insurance?

Answer 13

there is no cash value to borrow against

Question 14

When does an adjustablie life policy accumulate cash value?

Answer 14

when the premiums paid are more than the cost of the policy

Question 15

What type of policy issues certificates of insurance to the insureds?

Answer 15

group policy

Question 16

In what type of life insurance policies can the policy owner skip premium payments without the policy lapsing?

Answer 16

Universal life

Question 17

If an insured terminates membership in group life insurance, to what type of insurance can the insured convert the coverage?

Answer 17

whole life

Question 18

What universal life option has a gradually increasing cash value and a level death benefit?

Answer 18

Option A

Question 19

How is the premium determined in a joint life insurance policy?

Answer 19

the premium is based on the average age of the insureds.

Question 20

What’s the purpose of establishing a target premium for a universal life policy?

Answer 20

to prevent the policy from lapsing

Question 21

What are the living benefits of whole life insurance?

Answer 21

loan values

Question 22

If an employee wants to join goup life insurance coverage outside the open enrollment period, what would the employee have to provide?

Answer 22

evidence of insurability

Question 23

What type of life insurance policy provides permanent protection?

Answer 23

whole life

Question 24

What type of policy is typically issued without proof of insurability from the insured?

Answer 24

group policy

Question 25

An insured received a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was the last month. What type of policy does the insured have?

Answer 25

variable

Question 26

Who is the insured under a juvenile life policy?

Answer 26

a minor

Question 27

Group life insurance policies are written as what type of insurance?

Answer 27

annually renewable term

Question 28

What type of premium is charged on a straight life policy?

Answer 28

a level of premium for the life of the insured

Question 29

What type of whole life insurance policy generates immediate cash value?

Answer 29

single premium whole life

Question 30

Universal life policies have 2 types of interest rates. What are they?

Answer 30

guaranteed and current

Question 31

An individual has just borrowed $10k on a 5-years note from his bank. the note is due in installments. What type of life insurance policy would be best suited to this situation?

Answer 31

decreasing term

Question 32

What are the characteristics of the group that underwriters will consider before issuing a group life policy? (Not how based but qualifications)

Answer 32

• group’s purpose
• size
• financial strength and turnover

Question 33

What is the major difference between the most common types of whole life policies: Straight Life, Limited Payment, and Single Premium?

Answer 33

Premium Payment Mode

Question 34

Whole life insurance policies mature when the insured reaches the age of 100. If the owner of a whole life policy (the insured) dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?

Answer 34

the full death benefit

Question 35

Regarding taxation, how does the cash value of a universal life policy accumulate?

Answer 35

tax deferred

Question 36

In Term Policies, what happens to the premium throughout the term of the policy?

Answer 36

the premium remains level

Question 37

What elements of an adjustable life policy can be changed by the policy owners?

Answer 37

• the amount and period of the premium payment
• the face amount
• the period for protection

-these can all be changed on the discretion of the policy owner

Question 38

What type of whole insurance policies only requires a payment of premium at its inception, and in addition to providing insurance protection for the life of the insured, endows at the insured age 100?

Answer 38

single premium whole life

Question 39

The death protection component of a universal life policy is expressed as what type of coverage?

Answer 39

annually renewable term

Question 40

When would a 20-pay whole life policy endow?

Answer 40

when the insured reaches age 100

Question 41

In a joint life policy, when is the death benefit paid?

Answer 41

upon the first death

Question 42

What type of life insurance policy is Life Paid-Up at age 65 or LP-65?

Answer 42

limited-pay whole life

Question 43

Who owns a group life insurance contract?

Answer 43

the employer (also known as the sponsor of the group)

Question 44

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 what time period?

Answer 44

for 20 years or until the insured’s death, whichever occurs first

Question 45

What happens to the premium in an annually renewable term life policy.

Answer 45

the premium increases with each renewal

Question 46

Whole life policies provide protection until the insured reaches what age?

Answer 46

age 100

Question 47

Who is entitled to the cash value in a life insurance policy?

Answer 47

the policy owner

Question 48

Under Option B in a universal life policy, what happens to the death benefit?

Answer 48

The death benefit increases each year by the amount of cash value increases

Question 49

A policy that states it will pay a specific amount 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?

Answer 49

20-year level term

Question 50

Between adjustable life and universal life policies, which one provides more flexibility to the policy owner.

Answer 50

universal life