Life Insurance Policies Flashcards
renewable without a physical examination, up to a certain age.
Term insurance
may be converted to whole life, but not the reverse. Conversion is based on the
insured’s current age.
Term insurance
convertible based upon the current or attained age of the insured.
Convertible term
the re-entry option is contingent upon the insured passing a physical
exam.
Term insurance
the premium and the amount of coverage are level throughout the term.
Level Term
the premium will increase every year, although the
face amount will remain the same.
Annual Renewable Term (ART)
The face amount of a mortgage protection life insurance policy will decrease at the same rate as
the mortgage balance declines.
Term insurance
T/F
It is the face amount that decreases on a decreasing term policy, not the premium.
True
type of life insurance provided in mortgage redemption insurance.
Decreasing term
must contain a table showing their guaranteed cash value at the end of each
year (anniversary date) for the first 20 years. It is shown per unit (per thousand).
Whole life
benefits are bundled (packaged).
Whole life
benefits are transparent (stand-alone).
universal life
reach maturity at the same time (age 100).
Whole life and limited pay
premiums are due until the insured dies or reaches age 100.
Whole life
premiums are paid for a shorter period of time.
limited pay
has a level premium and will provide coverage until the insured
dies or reaches age 100.
Straight or whole life
pay the face amount upon death or age 100, whichever comes first.
Whole life
though paid up earlier, do not mature until the insured reaches
age 100.
Limited pay whole life
T/F
Limited pay whole life insurance has limits that pertain either to the number of years payments
must be made, such as 20 pay-life, or the age by which all premiums must be paid, such as life
paid-up at 65.
True
the cash value will equal the face amount at maturity.
20-pay whole life
T/F
A single premium may buy a policy that is paid up for life.
True
T/F
A single premium policy has an immediate cash value.
True
This may be suitable for someone with fluctuating income
Adjustable whole life
T/F
Adjusting the premium paid on an adjustable whole life policy will affect the face amount, and
vice versa.
True
different from whole life because it has a premium that is flexible.
Universal life insurance
These policies permit their owners to take partial surrenders.
Universal life insurance
T/F
Taking a partial surrender on a universal life policy allows the policyowner to withdraw some of
the cash value without paying tax on the interest.
True
This type of insurance is also known as interest sensitive whole life.
Universal life insurance
a combination of 1-year renewable term and a cash value account.
Universal life insurance
offers flexible premiums and a minimum guaranteed rate of return.
Universal life insurance
Loans are allowed on these kinds of policies
Universal life
allows the insured to self-direct the cash value investment.
Variable life
have no guarantees and are not backed by the guaranty fund.
Variable policies
T/F
Investing in variable products isn’t considered a hedge against inflation.
False, it is considered a hedge against inflation.
A universal life policy that has an investment component is called…
variable universal life.
A life insurance policy that invests its cash values in equities is known as…
variable life.
A life insurance policy that has a flexible premium and allows the policyowner to self-direct their
cash values into equities is known as…
variable/universal life
T/F
An agent must be registered with FINRA in order to sell a variable product.
True
pays only when the first insured dies.
joint life policy
pays only
when the second insured dies.
joint and survivor life policy
commonly used in estate planning so the death benefit of the
policy can be used to pay estate taxes when due.
Survivorship life insurance
pays when the surviving insured dies.
Survivorship life insurance
a life insurance policy written on the life of a minor.
A juvenile life insurance policy
T/F
On credit life, the creditor is both the policyholder and the beneficiary.
True
The type of policy used to provide credit life insurance
decreasing term.
T/F
The policy limits on credit life cannot exceed the amount of the loan.
True
the employees receive a certificate of insurance that summarizes
coverage and lists the employee’s beneficiary.
Group life insurance
the policyowner, who is usually an employer, is issued the master policy.
Group insurance
75% eligible employees must enroll.
contributory group life insurance policy,
100% of all eligible
employees must participate.
noncontributory group life plan (employer pays total premium)
T/F
Individual policies are usually more expensive than group.
True
the employer may require an employee to pay the premium for dependent’s
coverage.
Group life
T/F
Group insurance participation requirements don’t help to avoid adverse selection.
False: they do help
T/F
A group cannot be formed just to buy insurance.
True
T/F
Experience rating is for large groups only. Rates are based on claims experience of the group.
True
