Economic basis – Lesson 3 Flashcards
It is common practice for policy loans to be made on which type of policy?
Ordinary life policies
What type of policy contains living benefits?
Permanent insurance
A single premium whole life policy endows prior to age 100 due to the sizable premium that is paid at the time of purchase. True or false?
False
A life insurance policy that continues to provide protection after the premium period has ended is called what?
Limited payment life policy
Term insurance is designed to meet the needs at the lowest cost?
A temporary protection to cover financial obligations that will be repaid in a defined time span.
Term insurance differs from permanent life insurance and that term:
Term builds no cash value but does pay a death benefit
A convertible term life insurance policy allow the insured to:
Change to a permanent plan of insurance without evidence of insurability at standard rates.
Which form of insurance could be the best suited to make sure a mortgage is paid off if the borrower dies?
Credits life policy
What type of policy provides a death benefit for all family members?
Family protection policy
What is a major difference between a family income policy and a family maintenance policy?
The major difference is the length of time the monthly benefit will be paid.
What type of policy might contain a payor benefit rider?
Juvenile policy
A joint life policy written as a first to die might be used for what situation?
Business partners who wish to be able to buy out a deceased partner.
Variable life insurance has a guaranteed minimum death benefit but no guaranteed cash values. True or false?
True
What type of life insurance policy will require an agent to hold a securities license in order to sell?
Variable life insurance
What type of life insurance policy will provide a 25-year-old woman with the most rapid growth of cash value?
20-pay life
Industrial life insurance:
Is an individual policy with a low face amount of insurance, usually $10,000 or less.
Characteristics of renewable term are:
Level face amounts; increasing premium.
A modified endowment contract:
Has negative tax consequences.
What is the characteristic of a family protection policy?
Covers all family members plus newborns and adopted children.
A joint life policy written as a second to die policy or last survivor policy:
- Insures husband-and-wife
- Mostly used as an estate planning tool.
- Usually written for $1 million or more.
Does a life agent need to have a life insurance license and a securities license in order to sell universal life?
No
What does life insurance create?
Any immediate estate.
Name the three categories of all life insurance:
- Ordinary insurance
- Group insurance
- Industrial insurance
Ordinary insurance can be classified as:
Temporary or permanent
What type of policy has a face amount that increases automatically as the consumer price index increases?
Indexed whole life policy
What type of policy have a lower premiums in the first years – usually 3 to 5 years – followed by a higher premium for the life of the contract?
Modified whole life policy
Money withdrawn from a Modified Endowment contract (MEC) is subject to unfavorable tax rules. True or false?
True
In a family protection policy, the coverage for the child normally starts when the child is a few days old and continues to what age? Spouse?
- Frequently 18
2. Until 65
