Economic basis – Lesson 3

Question 0

It is common practice for policy loans to be made on which type of policy?

Answer 0

Ordinary life policies

Question 1

What type of policy contains living benefits?

Answer 1

Permanent insurance

Question 2

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?

Answer 2

False

Question 3

A life insurance policy that continues to provide protection after the premium period has ended is called what?

Answer 3

Limited payment life policy

Question 4

Term insurance is designed to meet the needs at the lowest cost?

Answer 4

A temporary protection to cover financial obligations that will be repaid in a defined time span.

Question 5

Term insurance differs from permanent life insurance and that term:

Answer 5

Term builds no cash value but does pay a death benefit

Question 6

A convertible term life insurance policy allow the insured to:

Answer 6

Change to a permanent plan of insurance without evidence of insurability at standard rates.

Question 7

Which form of insurance could be the best suited to make sure a mortgage is paid off if the borrower dies?

Answer 7

Credits life policy

Question 8

What type of policy provides a death benefit for all family members?

Answer 8

Family protection policy

Question 9

What is a major difference between a family income policy and a family maintenance policy?

Answer 9

The major difference is the length of time the monthly benefit will be paid.

Question 10

What type of policy might contain a payor benefit rider?

Answer 10

Juvenile policy

Question 11

A joint life policy written as a first to die might be used for what situation?

Answer 11

Business partners who wish to be able to buy out a deceased partner.

Question 12

Variable life insurance has a guaranteed minimum death benefit but no guaranteed cash values. True or false?

Answer 12

True

Question 13

What type of life insurance policy will require an agent to hold a securities license in order to sell?

Answer 13

Variable life insurance

Question 14

What type of life insurance policy will provide a 25-year-old woman with the most rapid growth of cash value?

Answer 14

20-pay life

Question 15

Industrial life insurance:

Answer 15

Is an individual policy with a low face amount of insurance, usually $10,000 or less.

Question 16

Characteristics of renewable term are:

Answer 16

Level face amounts; increasing premium.

Question 17

A modified endowment contract:

Answer 17

Has negative tax consequences.

Question 18

What is the characteristic of a family protection policy?

Answer 18

Covers all family members plus newborns and adopted children.

Question 19

A joint life policy written as a second to die policy or last survivor policy:

Answer 19

1. Insures husband-and-wife
2. Mostly used as an estate planning tool.
3. Usually written for $1 million or more.

Question 20

Does a life agent need to have a life insurance license and a securities license in order to sell universal life?

Answer 20

No

Question 21

What does life insurance create?

Answer 21

Any immediate estate.

Question 22

Name the three categories of all life insurance:

Answer 22

1. Ordinary insurance
2. Group insurance
3. Industrial insurance

Question 23

Ordinary insurance can be classified as:

Answer 23

Temporary or permanent

Question 24

What type of policy has a face amount that increases automatically as the consumer price index increases?

Answer 24

Indexed whole life policy

Question 25

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?

Answer 25

Modified whole life policy

Question 26

Money withdrawn from a Modified Endowment contract (MEC) is subject to unfavorable tax rules. True or false?

Answer 26

True

Question 27

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?

Answer 27

1. Frequently 18

2. Until 65