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Insurance > Chapter 4 > Flashcards

Chapter 4 Flashcards

1
Q

What are the two UL death benefit options?

A

Options A and B

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2
Q

A jumping juvenile policy has a death benefit that increases to ____ times it’s stated value with no premium increase.

A

5

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3
Q

What is another name for a “First to Die” policy?

A

Joint life

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4
Q

What is the renewability feature?

A

The ability to renew a term policy without having to provide evidence of insurability

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5
Q

The death benefit of term policy is payable only if death occurs during the ___________ period.

A

Term coverage

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6
Q

T/F: Regardless of cash value performance, VL policies have a guaranteed minimum death benefit.

A

T

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7
Q

The premium on a universal life policy may be ____________.

A

Flexible

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8
Q

What age is used to determine level term policy renewals?

A

Premiums are based on a person’s actual age, and renewal premiums will increase

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9
Q

Whole life premium rates are based on a rate per $_______ of coverage.

A

$1,000

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10
Q

What is original age or retroactive conversion?

A

A type of conversion that uses the age of the original policy purchase.

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11
Q

Premiums on a VL policy are _________.

A

Fixed

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12
Q

What are loan option and cash surrender?

A

Methods available to the policy owner to obtain or access the policy’s cash value

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13
Q

Which life policy has cash value gains that mirror or are tied to a stock market index, such as the S&P 500?

A

An Indexed Life Insurance policy

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14
Q

Cash value increases with every ________ payment after the _______ year.

A

Premium; third

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15
Q

Does a term life policy have cash value?

A

No. Term life is pure insurance

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16
Q

T/F: Upon death, the cash value is payable in addition to the whole life death benefit.

A

F

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17
Q

What is attained or actual age conversion?

A

Conversion where new policy premiums are based on a persons current age

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18
Q

A VL contract has a guaranteed minimum ___________________.

A

Death benefit

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19
Q

A 5-year level term policy will renew every 5 years subject to ___________________.

A

Maximum age limitations

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20
Q

What whole life product has lower premium that increase each year for the first 3 to 5 years of the policy?

A

Graded premium whole life

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21
Q

The cash value of a single premium whole life policy will equal the death benefit at age ______.

A

100

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22
Q

For how long will the premium on a 20-year level term policy remain level?

A

For 20 years

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23
Q

Cash value generally begins to build within a whole life policy sometime in the _______ year.

A

Third

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24
Q

The cash value and potential death benefit of a VL policy vary _______.

A

Daily

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25
Q

What life insurance policy uses dividends to purchase one year term insurance to supplement a reducing death benefit?

A

Enhance ordinary or econometric life

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26
Q

What life insurance policy pays a benefit at the earlier of death or the end of a specified period?

A

An endowment

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27
Q

What happens at age 100?

A

Age 100 is the age at which many insurers calculate the policy’s cash value as equal to its death benefit

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28
Q

Decreasing term insurance has a ______ premium and a _______ death benefit.

A

Level; decreasing

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29
Q

Term insurance is described as _________ protection.

A

Pure

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30
Q

The cash value of a whole life policy grows at a minimum interest rate of ____% to _____%.

A

3-4%

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31
Q

A 10 year level term policy provides coverage for ______ years.

A

10

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32
Q

A VL policy has a ___________ minimum death benefit, but the cash value is ____________.

A

Guaranteed; not guaranteed

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33
Q

T/F: A universal life policy allows for partial withdrawals of the cash value.

A

T

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34
Q

What type of insurance policy is most often used as a mortgage redemption policy?

A

Decreasing term insurance

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35
Q

T/F: A whole life policy never requires renewal.

A

T

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36
Q

The death benefit and premium in a whole life contract are ________ throughout the owners lifetime.

A

Level

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37
Q

What is an unbundled premium?

A

When a UL life policy owner receives an annual statement breaking down all of the policy expenses and charges.

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38
Q

Which policy pays a death benefit, but only after the last remaining policy insured dies?

A

Survivorship life

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39
Q

____________ pay a living benefit at end of a set timeframe or a death benefit should death occur during that timeframe.

A

Endowments

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40
Q

What type of policy protects the bank in the event a borrower dies?

A

Credit life

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41
Q

Does a variable life policy have a guaranteed minimum death benefit?

A

Yes. Regardless of account performance, the minimum DB is paid (typically, the initial DB listed on the policy’s face).

42
Q

Can the death benefit of a variable life policy increase over time?

A

Yes, assuming the underlying investments outperform expectations and increase in value

43
Q

At what age is a whole life policy’s cash value assumed to equal its death benefit?

A

At age 100

44
Q

What is predetermined in a whole life contract?

A

The death benefit, cash values, premiums, nonforfeiture and surrender values

45
Q

What is another name for a Second or Last to Die policy?

A

Survivorship life

46
Q

Decreasing term insurance has a __________ death benefit.

A

Decreasing

47
Q

At what age does a whole life policy mature?

A

At age 100

48
Q

Which type of insurance provides temporary protection?

A

Term insurance

49
Q

What whole life product has lower premiums for the first 3 to 5 years of the contract, with a one time premium increase?

A

Modified premium whole life

50
Q

When converting policies, what must remain constant?

A

Generally, the death benefit must remain constant

51
Q

What non traditional life insurance policy has a flexible death benefit and a rate of return that is interest sensitive?

A

A universal life policy

52
Q

What are the advantages of term insurance?

A

It is initially less expensive than whole life, it may offset debts, and ensures insurability

53
Q

Who assumes the investment risk in a traditional insurance contract?

A

The insurance company

54
Q

What policy combines whole life insurance and a decreasing term rider providing coverage on the breadwinner?

A

A Family Income policy

55
Q

T/F: A 20 year family income policy will pay for 7 years if insured dies 13 years after policy issue.

A

T; the policy will pay the 7 years of remaining benefit as it uses decreasing term insurance

56
Q

Name the ability to change from a term policy to a whole life policy without providing evidence of insurability?

A

Convertibility

57
Q

T/F: term insurance builds cash value.

A

F

58
Q

What is straight life or continuous premium life?

A

Additional ways to describe ordinary whole life

59
Q

Describe a whole life policy.

A

A policy providing death benefit protection for life or to age 100, cash value, level death benefit, and level premium

60
Q

A level term policy has a ________ death benefit and premiums will increase at the
____________ period.

A

Level; next renewal

61
Q

Which life insurance policy has a cash value that is invested in securities and has the potential for greater growth?

A

A variable life policy

62
Q

A jumping juvenile policy may also be called ________________.

A

Juvenile life insurance

63
Q

What two licenses are required to sell variable products?

A

A life insurance and FINRA license

64
Q

A VL policy has a ________ premium and a cash value that is ______________.

A

Level; not guaranteed

65
Q

What WL product has a guaranteed minimum return and opportunity for CV growth based on the performance of a stock index?

A

Equity-Index Whole Life

66
Q

What is 10-pay whole life?

A

A whole life policy with premiums paid for 10 years and coverage provided until age 100 or death

67
Q

What is single pay whole life?

A

A whole life policy with a one time premium and coverage provided until age 100 or death

68
Q

_______ life insurance is purchased to protect a borrower if a lender does and cannot repay a loan.

A

Credit

69
Q

In a group credit policy, the bank is both the __________ and the _____________.

A

Policy owner; beneficiary

70
Q

What is the target premium?

A

The initial premium established to fund a UL policy

71
Q

Whole life is a combination of term protection and ___________.

A

Cash value

72
Q

T/F: A 20 year family maintenance income policy pays for 5 years if insured dies 15 years after policy issue.

A

F; regardless of the date of death, the policy will pay for 20 years since it uses level term insurance.

73
Q

Which whole life payment option would have the highest annual premium -10, 20, or 30 pay?

A

10 pay. The fewer the payments, the greater each payment must be for the policy to mature.

74
Q

What is policy equity?

A

The cash value in a whole life policy

75
Q

Most credit life policies utilize ___________ term insurance and coverage may not exceed the ______________.

A

Decreasing; amount of the loan

76
Q

Describe an Adjustable Life policy.

A

A policy that offers the ability to change the death benefit based on a persons needs

77
Q

Which WL payment option would have the lowest overall premium over the policy life - 10-pay, 20-pay, or single-pay?

A

Single-pay

78
Q

Name the policy that combines whole life insurance and a level term rider providing coverage on the breadwinner.

A

A Family Maintenance plan

79
Q

Generally, credit insurance uses __________ term.

A

Decreasing

80
Q

Who is the owner of a juvenile insurance policy?

A

The parent or legal guardian

81
Q

What does term insurance provide?

A

The maximum amount of protection with the lowest initial outlay of premiums

82
Q

A WL death benefit and premium both remain _________ for the life of the policy.

A

Level

83
Q

Describe an endowment.

A

Endowments have heavy cash savings, intended for future uses such as retirement or college funding

84
Q

Whole life premiums remain _______ for the life of the policy.

A

Level

85
Q

Identify the acronym: VL

A

Variable life

86
Q

What policy combines variable life with flexible premiums?

A

VUL

87
Q

The premium on an annually renewable level term policy increases __________.

A

Each year

88
Q

Describe an Equity Index Life Policy.

A

Usually a UL policy with cash value tied to an equity index account; offers a guaranteed minimum rate of return

89
Q

Straight life has a _________ and ________ premium.

A

Predetermined; level

90
Q

As a client ages, what happens to her premium payments in a variable life policy?

A

Payments in a variable life policy remain fixed (level)

91
Q

How long will coverage be provided under a 10-pay whole life product?

A

Will continue until death or age 100

92
Q

What is another name for interest sensitive whole life insurance?

A

Current assumption whole life

93
Q

What are the disadvantages of term insurance?

A

Temporary protection, no cash value, premiums increase with each renewal (level term)

94
Q

Why is whole life insurance more expensive than term insurance?

A

Because of the building up of cash value

95
Q

A 20 year endowment will mature at the end of ___ years.

A

20

96
Q

What is a lump sum premium?

A

Another name for single pay whole life

97
Q

Which policy pays a death benefit and concludes or ends on the death of any insured party listed on the contract?

A

A joint life policy

98
Q

T/F: Term insurance is temporary, but whole life is permanent.

A

T

99
Q

What is cash value?

A

The equity that grows inside a permanent policy

100
Q

Describe a Family Policy.

A

The policy provides whole life benefits on the breadwinner, with level term insurance on spouse and dependents.

Insurance (10 decks)

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