Basic Plans

Question 1

Temporary life insurance protection

Answer 1

Term insurance

Question 2

It is only offered for specified period such as one, five, ten, or twenty years. Depending on the contract, term plans usually provide coverage up to age 60, 65, or 70 years old only.

Answer 2

Term Plans

Question 3

Term plans only provide death benefits to the beneficiaries and does not provide ____

Answer 3

living benefits and
no build up in cash values

Question 4

two kinds of term plans

Answer 4

level term and decreasing term

Question 5

The policy owner is given protection that remains constant throughout a specified period.

Answer 5

Level Term

Question 6

The payable amount to the insured decreases constantly until the end of the term. By the end of the term period, the death benefit is reduced to zero

Answer 6

Decreasing Term

Question 7

Two important provisions/features of Term Policies

Answer 7

convertibility and renewability

Question 8

convertibility

Answer 8

the policy owner can convert the policy to permanent insurance at some point in time before the contract expires.

Question 9

convertible term insurance premium is slightly (higher or lower) than non-convertible insurance

Answer 9

higher

Question 10

renewability

Answer 10

Policy owners can renew they policies for an extended period so long as they do this before the term period expires

Question 11

Each time the policy is renewed, the premium becomes higher until _____

Answer 11

it becomes too costly for the policy owner.

Question 12

Advantages of Term Insurance

Answer 12

-affordable
-can be renewed
-can be converted into a permanent plan

Question 13

combines insurance protection and auxiliary benefits made possible by the build-up of cash value.

Answer 13

Permanent insurance

Question 14

he amount of insurance purchased. It is the amount the insurance company promises to pay as death benefit to the Beneficiaries when the insured dies while the policy is still active.

Answer 14

Face Amount

Question 15

The most basic form of permanent life insurance is the ________

Answer 15

whole life policy

Question 16

Whole life policy has three distinguishing characteristics:

Answer 16

• insurance protection until the age of 100
• premiums payable until the age of 100
  -endowment at the age of 100

Question 17

Advantages of Whole Life Policy

Answer 17

-good protection
-option to change plans
-flexible
-good cash value growth possibilities

Question 18

has premiums that are payable for a limited time only.

Answer 18

Limited Pay Life Policies

Question 19

The policy owner is being paid the face amount at a specified time or age. It endows before the age of 100

Answer 19

Endowment Policies

Question 20

This type of policy endows at the end of a specific period. The premium paying period ends before the end of the policy period

Answer 20

Limited Endowment

Question 21

the client does not have to wait for the maturity date of the endowment before receiving a portion of the face amount. For example, a client will receive 20% of the face amount 15 years before maturity date, another 20% 10 years before and another 20% five years before. At maturity, that person will receive 60% of the face amount.

Answer 21

anticipated endowment

Question 22

a form of permanent life insurance that has flexible premiums and face amounts and is unbundling of the pricing factors.

Answer 22

universal life insurance

Question 23

a universal life policy focuses on the following:

Answer 23

-mortality changes
-interest rate
-expense charges