Life Insurance Policies Flashcards
In term policies, what happens to the premium throughout the term of the policy?
The premium remains the same
Universal life policies have two types of interest rates. What are they?
Guaranteed and current
When the amount of insurance is increased in an adjustable life policy, what will the insurer require from the insured?
Evidence/Proof of insurability
What policy component must decrease in decreasing term insurance?
Face amount
What are the death benefit options in universal life policies?
Option - A level death benefit
Option - B increasing death benefit
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to the beneficiary, the premiums must be paid for what time period?
For 20 years or until the insured’s death, whichever occurs first.
Whole life policies provide protection until the insured reaches what age?
100
Who owns a group life insurance contract?
The employer
What type of life insurance policy provides permanent protection?
Permanent (whole) life
What are the characteristics of the group that underwriters will consider before issuing a group life policy?
Group’s purpose, size, financial strength and turnover
What type of premium is charged on a straight life policy?
Level premium on the life of the policy
A whole life policy that requires that the policy owner only pays premiums for a specified number of years is known as what kind of policy?
Limited-pay whole life
What does “level” refer to in Level term insurance?
Face amount
When would a 20-pay whole life policy endow?
When the insured reaches age 100
The death protection component of a universal life policy is expressed as what type of coverage?
Annually renewable term
If an insured terminates membership in group life insurance, to what type of insurance can the insured convert coverage?
Whole life
Regarding taxation, how does the cash value of a universal life policy accumulate?
Tax-deferred
A policy states that it will pay a specific face amount 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?
20 year level term
Group life insurance policies are written as what type of insurance?
Annually renewable term
What universal life option has a gradually increasing cash value and a level death benefit?
Option A has a level death benefit and an increasing cash value
What type of insurance policy can be changed from a policy with no cash value to one that generates cash value?
Convertible Term
In annually renewable term policies, what is the annual premium based upon?
The insured’s attained age
Whole life insurance policies mature when the insured reaches age 100. If the owner of a whole life policy (the insured) dies at age 80, and there are no outstanding loans, what portion of the death benefit will be paid to the beneficiary?
The full death benefit
Under option B in a universal life policy, what happens to the death benefit?
The death benefit increases each year by the amount of the cash value increases.
What type of whole life insurance policies only requires a payment of premium at its inception, and in addition to providing insurance protection for the life of the insured, endows at the insured’s age 100?
Single-premium whole life
In a joint life policy, when is death benefit paid?
Upon the first death
What is the major difference between the most common types of whole life policies: straight life, limited pay and single premium?
The length of time the premiums are paid
Premium payment mode
What type of life insurance is best suited to cover a mortgage?
Decreasing term
What type of whole life insurance policy generates immediate cash value?
Single premium whole life
What types of life insurance policy is life paid up at age 65?
Limited pay whole life
What elements of an adjustable life policy can be changed by the policy owners?
Premium amount and period, face amount, period of protection
What is the purpose of establishing the target premium for a universal life policy?
To prevent policy from lapsing
In variable universal life insurance, to what policy component does the term ‘variable’ refer?
Cash value and death benefit
The policy owner of a whole life insurance policy is also the insured. What age must the insured attain in order to receive the policy’s face amount?
100
What type of life insurance policy offers pure death protection?
Term
Who is entitled to the cash values in a life insurance policy?
The policy owner
If an employee wants to join group life insurance coverage outside of the open enrollment period, what would the employee have to provide?
Proof of insurability
How is the premium determined in a joint life insurance policy?
The average age between the insureds
An individual has just borrowed $10,000 on a 5-year note from his bank. The note is due in installments. What type of life insurance policy would be best suited to this situation?
decreasing term
What happens to the premium in an annually renewable term life policy?
Premium increases with each renewal
Who is insured under a juvenile life policy?
A minor
Why are policy loans not available on term insurance?
Because no cash value is accumulated to borrow against
What happens to the cash value when a whole life insurance policy matures?
Cash value is paid to the policy owner
What is the main advantage of converting from group life insurance to individual coverage?
Evidence of insurability is not required
What are the ‘living benefits’ of whole life insurance?
Loan values
A policy owner borrowed a portion of cash value from his whole life policy. If the loan is not repaid, how will that effect the death benefit to the beneficiary?
The amount of the loan will be deducted for the death benefit.
In what type of life insurance policies can the policy owner skip premium payments without the policy lapsing?
Universal life
When does an adjustable life policy accumulate cash value?
When the premiums paid are more than the cost of the policy
Between adjustable life and universal life policies, which one provides more flexibility to the policy owner?
Universal life
During partial withdrawal from a universal life policy, which portion, if any, will be taxed?
Interest earned on the withdrawn cash value
