Life 2

Question 1

Nonforfeiture values

Answer 1

– benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses

Question 2

Decreasing term

Answer 2

Decreasing term coverage is commonly purchased to insure the payment of a mortgage or other debts if the insured dies prematurely.

Question 3

Limited pay whole life

Answer 3

limited-pay whole life is designed so that the premiums for coverage will be completely paid-up well before age 100

Question 4

Single premium whole life (SPWL)

Answer 4

Single premium whole life (SPWL) is designed to provide a level death benefit to the insured’s age 100 for a one-time, lump-sum payment

Question 5

Cash value

Answer 5

d. The cash value, also called nonforfeiture value, does not usually accumulate until the third policy year and it grows tax deferred.

Question 6

Universal life

Answer 6

Universal life insurance is also known by the generic name of flexible premium adjustable life. That implies that the policyowner has the flexibility to increase the amount of premium paid into the policy and to later decrease it again

Question 7

2 components of universal life

Answer 7

universal life policy has two components: an insurance component and a cash account. The insurance component of a universal life policy is always annually renewable term insurances

Question 8

Withdrawals on universal life policies

Answer 8

Universal life policies allow the partial withdrawal (partial surrender) of the policy cash value….
During the withdrawal, the interest earned on the withdrawn cash value may be subject to taxation, depending upon the plan. The death benefit will be reduced by the amount of any partial surrender

Question 9

Variable life

Answer 9

is a level, fixed premium, investment-based product….
The cash value of the policy, however, is not guaranteed and fluctuates with the performance of the portfolio in which the premiums have been invested by the insurer.

Question 10

Variable Universal Life

Answer 10

insurance that combines many features of the whole life with the flexible premium of universal life and the investment component of variable life, making it a securities version of the universal life insurance.

Question 11

Agents selling variable life insurance products must:

Answer 11

Agents selling variable life insurance products must:

Be registered with FINRA;
Have a securities license; and
Be licensed by the state to sell life insurance.

Question 12

Indexed life

Answer 12

Indexed Life

The main feature of indexed whole life (or equity index whole life) insurance is that the cash value is dependent upon the performance of the equity index, such as S&P 500 although there is a guaranteed minimum interest rate. The policy’s face amount increases annually to keep pace with inflation

Question 13

Joint life

Answer 13

Joint life is a single policy that is designed to insure two or more lives. Joint life policies can be in the form of term insurance or permanent insurance…..

premium is based on a joint average age that is between the ages of the insureds.
The death benefit is paid upon the first death only.

Question 14

Survivorship Life

Answer 14

Survivorship Life

Survivorship life (also referred to as “second-to-die” or “last survivor” policy) insures two or more lives for a premium that is based on a joint age. The major difference is that survivorship life pays on the last death rather than upon the first death

Question 15

Annuity

Answer 15

annuity is a contract that provides income for a specified period of years, or for life. An annuity protects a person against outliving his or her money. Annuities are not life insurance, but rather a vehicle for the accumulation of money and the liquidation of an estate…..
payments stop upon the death of the annuitant

Question 16

Owner of annuity

Answer 16

The owner of an annuity may be a corporation, trust, or other legal entity.

Question 17

Annuitant

Answer 17

Annuitant – The person who receives benefits or payments from the annuity, whose life expectancy is taken into consideration, and for whom the annuity is written….must be a natural person

Question 18

Why are annuities purchased?

Answer 18

they are also purchased to fund or to help fund a college education.

provide or supplement retirement income

Question 19

Payment methods for annuities

Answer 19

An immediate annuity is one that is purchased with a single, lump-sum payment and provides income payments that start within one year from the date of purchase

Question 20

Can illustrations be altered

Answer 20

An illustration may not be altered by an agent and must clearly state that it is not part of the contract. It is legal to list nonguaranteed values in the contract, but they must be specifically labeled as projected, not guaranteed values.

Question 21

When is the earliest a policy may go into effect?

Answer 21

When the application is signed and a check is given to the agent…..

The policy can be effective as early as the date of the application, if the premium is submitted with the application and the policy is issued as applied for.

Question 22

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?

Answer 22

Universal life

Question 23

An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?

Answer 23

Limited pay life

Question 24

Which Universal Life option has a gradually increasing cash value and a level death benefit?

Answer 24

Option A
Under Option A, the death benefit remains level while the cash value gradually increases. The death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures.

Question 25

Which of the following best describes what the annuity period is?

Answer 25

The period of time during which accumulated money is converted into income payments

Question 26

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy

Answer 26

Lower….
Survivorship Life is much the same as joint life in that it insures two or more lives for a premium that is based on a joint age. The major difference is that survivorship life pays on the last death rather than upon the first death. Since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life.

Question 27

Which statement is NOT true regarding a Straight Life policy?

Answer 27

Its premium steadily decreases over time, in response to its growing cash value.

Straight Life policies charge a level annual premium throughout the insured’s lifetime and provide a level, guaranteed death benefit.

Question 28

If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?

Answer 28

Full death benefit
….

Whole life insurance policies guarantee the death benefit. If the insured lives to the age of 100, the insurance company pay the owner the face amount (equal the cash value). However, if the insured dies prior to the policy maturity date, the death benefit is paid to the beneficiary.

Question 29

All of the following are true regarding a decreasing term policy EXCEPT

Answer 29

Premiums remain level with a decreasing term policy; only the face amount decreases. The payable premium amount steadily declines throughout the duration of the contract…..

Question 30

In which of the following cases will the insured be able to receive the full face amount from a whole life policy?

Answer 30

If the insured lives to age 100

Question 31

What is the purpose of establishing the target premium for a universal life policy?

Answer 31

To keep the policy in force

Question 32

All of the following are true about variable products EXCEPT

Answer 32

The premiums are invested in the insurer’s general account.

Question 33

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured’s age 100 is called

Answer 33

Single premium whole life

Question 34

A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?

Answer 34

Level term

Question 35

A Return of Premium term life policy is written as what type of term coverage?

Answer 35

Increasing .

……

Return of premium (ROP) life insurance is an increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the amount of the premiums paid.

Question 36

Which of the following is another term for the accumulation period of an annuity?

Answer 36

Pay-in period

…..
The accumulation period is also known as the pay-in period. It is the period of time over which the annuitant makes payments (premiums) into an annuity.