Chapter 1 Exam Types Of Insurance Policies Flashcards
How does a typical Variable Life Policy investment account grow?
Through mutual funds, stocks bonds
Which type of life policy contains a monthly charges as well as self-directed investment choices?
Variable Universal Life
What kind of premium does a Whole Life policy have?
Level
Which of these would be considered a Limited-Pay Life policy?
10-year Renewable and Convertible Term
LIFE PAID-UP at Age 70
Straight whole Life
Renewable Term to Age 100
Limited-Pay Life is Life paid up at age 70
What type of life policy covers two people and pays upon the death of the last insured?
Survivorship
The amount of coverage on a group credit life policy is limited to:
The insured’s total loan value
A term life insurance policy matures:
Upon the insured’s death during the term of the policy
T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of teem coverage is this?
Renewable
What type of policy would offer a 40-year old the quickest accumulation of cash value?
Paid-up at 65
20-pay life
30-pay life
Straight whole life
20-pay life
Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n):
Third party with no insurable interest
Which is true concerning a Variable Universal Life policy?
Policyowner controls where the investment will go and selects the amount of the premium payment
Which of the following actions is NOT possible with a Universal Life policy?
Policy’s cash value may be used to pay premiums
Premium payments may be made at unscheduled times
PERMIUMS MAY BE APPLIED AS CREDIT AGAINST INCOME TAX
Face amount may be adjusted
P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $ 20,000 at the end of that 20 year period. What type of policy should P purchase?
Family Maintenance policy
Which of these statements describe a Modified Endowment contract (MEC)?
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as life insurance contract
Kay pays on a $20,000 20-year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?
$20,000 death benefit
Which of the following characteristics is CORRECT about Interest Sensitive WHOLE LIFE?
Premium payments can vary
S is covered by a whole life policy. Which insurance product can cover his children?
Child term rider
A 42 year old executive wants to purchase life insurance that will allow for increases or decreases to coverage as his/her needs change. Which of the following policies will best meet this need?
Universal Life
A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provisions
Payor provision
Which of these characteristics is consistent with a Straight Life policy?
Premiums are payable for as long as there is insurance coverage in force
Which of these life products is NOT considered interest-sensitive?
MODIFIED WHOLE LIFE
Variable Universal Life
Interest Sensitive Whole Life
Variable Life
MODIFIED WHOLE LIFE
Which of these is an element of a Variable Life policy?
A FIXED, LEVEL PREMIUM
Insurer assumes the investment risk
No investment risk to the policyowner
Rate of returns are guaranteed
When applied to Whole Life insurance, the word “straight” denotes:
The duration pf premium payments
Which of the following types of polices pays a benefit if the the insured goes blind?
AD&D
T would like to be assured $10,009 is available in 10 years to replace a roof on his house. What kind of $10,00 policy should T purchase?
Ten-year Endowment
Variable Whole Life Insurance can be described as:
Both insurance and securities product
What type of life insurance gives the greatest amount of coverage for a limited period of time?
Term life
Which statement is correct regarding the premium payment payment schedule for whole life policies?
Premiums are payable throughout the insured’s lifetime/coverage lasts until death of the insured
Which of the following types of policies BEST identifies one in which the cash value may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors?
Universal Life
K is looking to purchase Renewable Term insurance. Which of these types of term insurance may be renewable?
Level
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?
20-Pay Life accumulates cash value faster than Straight Life
When is the face amount of a Whole Life policy paid?
When the insured dies or at the policy’s maturity date, whichever happens first
All of these statements about Equity Indexed Life Insurance are correct, EXCEPT:
The premium can be lowered or raised, based on investment performance
Equity indexed Life Insurance is permanent life insurance that allows policyholders to tie accumulation values to a stock market index.
Which of the following policies is characterized by flexible premium and death benefit and allows the policyowner control of the investment aspect of the plan?
Variable Universal Life
A life insurance policy that provides a policyowner with a cash value along with a level along with a level face amount is called:
Whole life
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance Policy
Which statement about a whole life policy correct?
Cash value may be borrowed against
When is the face amount paid under a joint life and survivor policy?
Upon the death of the last insured
Which policy requires an agent to register with National Association of Securities Dealers (NASD) before selling?
Variable Life
What type of life insurance incorporates flexible premiums and an adjustable death benefit?
Universal Life
Which statement is TRUE regarding a Variable Whole Life policy?
Its premiums and benefits variable
L, aged 50, and L’s spouse, 48, have one natural child and one adopted child. They purchase a Family policy that covers L’s spouse to age 65. A death benefit will NOT be paid in which of the following circumstances?
L’s spouse dies at age 62.
L’s spouse dies at age 66.
Their natural child dies at age 18.
Their adopted child dies at age 18.
L’s spouse dies at age 66
A Renewable Term Policy is renewable at the option of the:
Insured
F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?
Decreasing term policy
A Variable insurance policy:
Does not guarantee a return on its investment accounts
All of these are characteristics of an Adjustable Life policy:
Adjustable premiums, Adjustable premium payment period and combination of term and whole life insurance
A policy that becomes a Modified Endowment Contract (MEC):
Will lose many of its tax advantages
When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
Conversion provision
Life insurance that covers an insured’s whole life with level premiums paid over a limited time is called:
Limited Pay Life
If X wants to buy $50,000 worth of permanent protection on his/her spouse and $25,000 worth of 10-years Term coverage on X under the same policy, the applicant should purchase:
A Whole Life Policy with Extended term
What does a Face Amount Plus Cash Value Policy supposed to pay at the insured’s death?
Face amount plus the policy’s cash value
K purchased a $10,000 life insurance policy that will pay the face amount to her if she lives to aged 65, or to her beneficiary if she dies before age 75. K purchased which of the following types of policies?
Endowment at Age 65
Which of the following statements is CORRECT about the period in which a Term Policy can be converted?
It varies according to the contracts
Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?
Conversion privileges
What type of insurance offers permanent life coverage with premythat are payable for life?
Whole Life
K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?
Modified Whole Life
Additional coverage can be added to a Whole Life Policy by adding a:
decreasing term rider
Which of the following policies is characterized by a flexible premium and death benefit and allows the poliyowner control of the investment aspect of the plan?
Variable Universal Life
N is 40-year old applicant who would like to retire at age 70. He is looking to but a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?
30 Pay Life
A Limited-Pay Life policy has:
Premium payments limited to a specified number of years
Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by guaranteed minimum death benefit?
Variable Life
The most important factor to consider when determining whether to convert term insurance at the insured’s attained age or the insured’s original age is:
The cost
Credit Life insurance is:
Issued in an amount not to exceed the amount of the loan
A Whole Life Insurance Policy endows when the:
Cash value equals the death benefit
What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?
Decreasing Term
Which of the following policies combines investment choices with a form of Term coverage?
Variable Universal Life
The investment gains from a Universal Life Policy usually go toward:
Cash Value
The Universal Life Policy is called an unbundled Life Policy because the policyholder can see the expense charges, the interest earned, and the:
Cost of insurance
M purchase a $70,000 life insurance policy with premium payments of $550 a year for the first 5 years. At the beginning of the sixth year, the premium will increase to $800 per year but will remain level thereafter. The face amount will remain at $70,000 throughout the life of the policy. The type of policy that M has purchased is:
Modified Premium Life
What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?
Whole life
When a life insurance policy exceeds certain IRS table value, the result would create which of the following?
Modified Endowment Contract (MEC)
G purchased a Family Income policy at age 40. The policy has a 20 year rider period. If G were to die at age 50, how long would G’s family receive an income?
10 years
Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?
Conversion
A Family income Policy is a combination of whole life and
Decreasing term insurance
How long does the coverage normally remain on a limited-pay life policy?
100
What kind of life insurance product covers children under their parents policy?
Term rider
Which of these types of policies may not have the automatic premium loan provision attached to it?
Modified Whole Life
20-pay Life
DECREASING Term
Endowment
Decreasing Term
Which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death?
Joint Life
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them
Variable Life
Universal Variable Life
Variable Annuity
Q would like to purchase $100,00 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase?
Whole life policy with other insured rider
Which of these types of insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?
Variable Life
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
Policyowner
J is 35 years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?
20-pay life
A 15-year mortgage is best protected by what kind of life policy?
15-year decreasing term
Term insurance has which following characteristics?
Expires at the end of the policy period
What type of life insurance are credit policies issued as
Term
Under a Renewable Term policy,
The renewable premium is calculated on the basis of the insured’s attained age
Whole life insurance policies are contractually guaranteed to provide each of the following
Cash value that will ultimately replace the death benefit, nonforfeiture benefit options and premiums that remain fixed for the life of the policy
Variable Life products require a producer to
Hold a life insurance license and securities license
What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?
Convertible Term
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Modified Endowment Contract
A ____ life policy offer the owner investment in products such as money-market funds, long-term bonds and equities
Variable
What kind of life insurance policy pays a specified monthly income to beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years
Family Maintenance policy
What type of policy covers 2 lives and pays the face amount after the first one dies?
Joint Life policy
Which of the following actions require a policyowner to provide proof of insurability in an adjustable life policy?
Increase face amount
S is close to retire and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?
Equity index insurance
Which of the following characteristics is correct about the interest Sensitive Whole life?
Premium payments can vary
G purchased a $50,00 single premium, Straight Life Annuity 2 years ago. G has been receiving monthly payments from the annuity. When G dies, the insurer:
Does not have to make any further payments
How are Roth IR distributions normally taxed?
Distributions are received tax-free
How are policyowner dividends treated in regards to income tax?
Interest on accumulation is taxed
Which of these provisions require proof of insurability after a policy has lapsed?
Reinstatement
A life insurance policyowner may sell their policy to a ____ in order to receive a percentage of the policy’s face calue
Viatical settlement provider
Which of the following unfair trade practices involved an agent who makes malicious statements about another person’s financial condition?
Defamation
What is the purpose of the Time of payment of Claims provision?
Prevents delayed claim payments made by the insurer
