LIFE INSURANCE POLICIES

Question 1

issues very small face amounts, such as $1,000 or $2,000. Premiums are paid weekly and collected by debit agents. They were designed for burial coverage.

Answer 1

Industrial Life Insurance

Question 2

life insurance of commercial companies not issued on the weekly premiums basis. It is made up of several types of individual life insurance, such as temporary (term), and permanent (whole).

Answer 2

Ordinary Life Insurance

Question 3

insurance written for members of a group, such as a place of employment, association, or a union. Coverage is provided to the members of that group under one master contract. The group is underwritten as a whole, not on each individual member.

Answer 3

Group Life Insurance

Question 4

gives you the greatest amount of coverage for a limited period of time. An inexpensive type of insurance making it an attractive option for large policies. Provides a pure death protection since it only pays a death benefit if the insured dies during the policy term

Answer 4

Term Life Insurance

Question 5

has a level face amount and level premiums. Premiums tend to be higher than annual renewable term because they are level throughout the policy period. However, the premiums will increase at each renewal. Life insurance written to cover a need for a specified period of time at the lowest premium. Provides a fixed, low premium in exchange for coverage that lasts for a specified time period

Answer 5

Level Term

Question 6

Life insurance that provides an annually decreasing face amount over time with level premiums. These policies are usually for mortgage protection. Life policy which has a death benefit that adjusts periodically and is written for a specific period of time.

Answer 6

Decreasing Term

Question 7

typically purchased using a decreasing term life insurance policy with the term matched to the length of the loan period and the decreasing insurance amount is matched to the declining loan balance

Answer 7

Credit Policies

Question 8

life insurance that provides an increasing face amount over time based on specific amounts or a percentage of the original face amount

Answer 8

Increasing Term

Question 9

provision that allows policy owners to convert their term insurance in to permanent insurance without showing proof of insurability. When converting, your age is typically re-evaluated to your current age which would cause premiums to increase

Answer 9

Convertible term

Question 10

insurance that guarantees the insured the right to continue term coverage after expiration of the initial policy period without having to prove insurability.

Answer 10

Renewable term

Question 11

term coverage that provides a level face amount that renews annually, guaranteed renewable annually without proof of insurability

Answer 11

annual renewable term

Question 12

type of life insurance product which covers children under their parent’s policy. Family plan policies usually cover the head of the family with permanent insurance, and coverage on the spouse and children would be term. Always level term.

Answer 12

Term rider

Question 13

provides death benefits for the entire life of the insured. Also provides living benefits in the form of cash values. Matures at age 100 and normally has a level premium. has a fixed premium and level benefit cash value accumulation, regardless of how it is paid. often compared to BUYING

Answer 13

Whole Life Insurance

Question 14

premiums are payable throughout the insured’s lifetime, and coverage continues until insured’s death. Premiums are payable as long as coverage is in force. Pays out at death or age 100. allows you to maintain coverage throughout your whole life and spread cost throughout lifetime

Answer 14

whole life- straight insurance

Question 15

covers an insured’s whole life with level premiums paid over a limited amount of time

Answer 15

Whole Life- Limited Pay

Question 16

premium stays fixed for the first 5 years, increases in year 6 and stays level for the remainder of the policy

Answer 16

Whole Life- Modified

Question 17

policy that exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract. A MEC does not meet the 7-pay test and is considered over-funded by the IRS. For that reason, the policy will lose favorable tax treatment

Answer 17

Whole Life- Modified Endowment Contract (MEC)

Question 18

Covers the lives of two individuals and save of premium cost by averaging the ages of the two insureds. pays face amount after the first person on the policy dies

Answer 18

joint life policy

Question 19

covers lives of two individuals and saves on premium costs by averaging the ages of the two insureds. only pays death benefit when the last of the two dies

Answer 19

Joint or survivor life policy

Question 20

pays monthly income from the date of death of the insured to the end of the preselected period of time plus face amount of policy at the end of that time period

Answer 20

family maintenance policy

Question 21

pays an income at the beginning of the insured’s death and continues from a period specified from the date of policy issue

Answer 21

Family income policy

Question 22

offers flexible premiums. combines whole life and term life into a single plan

Answer 22

adjustable life policy

Question 23

flexible premiums and adjustable death benefit. investment gains go toward the cash value. policy owner can use the cash value to manipulate the flexible aspects of this type of policy. most options/most control

Answer 23

universal life insurance policy

Question 24

requires producer to have proper FINRA and National Association of Securities Dealers (NASD) securities registration prior to selling this type of policy contract, whether it be life insurance or an annuity, as they include regulated securities. AKA as interest-sensitive policies. Usually have a fixed level premium but. ash value/death benefits can fluctuate according to the performance of its underlying investment portfolio. This type of account grows through mutual funds, stocks, and bonds. This type of policy offsets inflation

Answer 24

variable life insurance policy

Question 25

policy owner controls investment of cash values, and selects the timing and amount of premium payments. can control how much and when premium is due

Answer 25

variable universal whole life

Question 26

combines most of the features, benefits, and security of traditional life insurance with the potential of earned interest based on the upward movement of an equity index. unlike a traditional whole life plan, this plan allows policy holders to link accumulation values to an outside e=equity index like S&P 500. 80% to 90% of the premium is invested in traditional fixed income securities and the remainder of the premium is invested in contracts tied to a stipulation stock index

Answer 26

Equity Index Universal Life Insurance

Question 27

when the insured dies, the policy owner (investor) benefits. An investor purchases a policy on the life of someone else to profit upon that person’s death. Usually, this is in exchange for a monetary living benefit for the insured. These policies are illegal as they are designed to circumvent the interest requirements of an insurance contract and position the policy owner to benefit upon the death of the insured

Answer 27

Investor (or stranger) originated life Insurance policy

Question 28

the equity amount or “savings” accumulation in a whole life policy

Answer 28

cash value

Question 29

contract for providing payment of the face amount at the end of a fixed period, at a specified age of the insured, or at the insured’s death before the end of the stated period

Answer 29

Endowment Policy

Question 30

contract that promises to pay at the insured’s death the face amount of the policy plus a sum equal to the policy’s cash value

Answer 30

face amount plus cash value policy

Question 31

written on the lives of children who are within specified age limits and under parental control

Answer 31

juvenile insurance

Question 32

typically doesn’t require a medical exam and tends to be more expensive than medically underwritten policies. insurer will average out everyone’s risk and charge accordingly

Answer 32

non-medical life insurance

Question 33

a suggested premium used in universal life policies. Doesn’t guarantee there will be adequate funds to maintain the policy to any time, especially to life. may give indication of what will be needed (under conservative estimate) to maintain the policy

Answer 33

target premium