LIFE INSURANCE POLICIES Flashcards
straight life has a ___ and ___ premium
predetermined and level premium
T or F: upon death, the cash value is payable in addition to the whole life death benefit
false
describe an adjustable life policy
a policy that offers the ability to change the death benefit based on a person’s needs
the cash value of a whole life policy grows at a minimum interest rate of ___ % to ___ %
3% to 4 %
decreasing term insurance has a ___ premium and a ___ death benefit
level premuim and a decreasing death benefit
the premium on a universal life policy may be ____
flexible
describe a family policy
a family policy provides whole life benefits on a breadwinner, with level term insurance on spouse and dependents.
what is predetermined in a whole life contract?
the death benefit, cash values, premiums, nonforfeiture and surrender values
what life insurance policy pays a benefit at the earlier of death or the end of a specified period?
an endowment
which policy pays a death benefit, but only after the last remaining policy insured dies?
survivorship life
a jumping juvenile policy has a death benefit that increases to ___ times its stated value with no premium increase
x 5
VL stands for:
variable life
what does term insurance provide?
the maximum amount of protection with the lowest initial outlay of premiums
at what age does a whole life policy mature?
100
as a client ages, what happens to her premium payments in a variable life policy?
payments in a variable life policy remain fixed (level)
what is straight life or continuous premium life?
additional ways to describe ordinary whole life
the death benefit and premium in a whole life contract are ___ throughout the owner’s lifetime
level (remain the same)
T or F: a universal life policy allows for partial withdrawals of the cash value
true
___ life insurance is purchased to protect a borrower if a lender dies and cannot repay a loan
credit life
what is original age or retroactive conversion?
a type of conversion that uses the age of the original policy purchase.
name the ability to change from a term policy to a whole life policy without providing evidence of insurability?
convertibility
what is attained or actual age conversion?
conversion where new policy premiums are based on a person’s current age
What is attained or actual age conversion?
conversion where new policy premiums are based on a person’s current age
what whole life product has lower premiums for the first 3 to 5 years of the contract, with a one-time premium increase?
modified premium whole life
when converting policies, what must remain constant?
generally, the death benefit must remain constant
what type of policy protects the bank in the event a borrower dies?
credit life
a 5 year level term policy will renew every 5 years subject to ___
maximum age limitations
which life insurance policy has a cash value that is invested in securities and has the potential for greater growth?
variable life policy
the cash value and potential death benefit of a VL policy vary ___
daily
which WL payment option would have the lowest overall premium over the policy life, 10-pay, 20-pay, or single-pay?
single-pay
a VL policy has a ____ premium and a cash value that is ___.
level premium and a not guaranteed
what are the two UL death benefit options?
A and B
decreasing term insurance has a ___ death benefit
decreasing
cash value generally begins to build within a whole life policy sometime in the ___ year
third
can the death benefit of a VL policy increase over time?
yes, assuming the underlying investments outperform expectations and increase in value.
What happens at age 100?
age 100 is the age at which many insurers calculate the policy’s cash value as equal to its death benefit.
does a variable life policy have a guaranteed minimum death benefit?
yes, regardless of account performance, the minimum DB is paid (typically, the initial DB listen on the policy’s face)
a 10 year level term policy provides coverage for ___ years
10
T or F: Term insurance builds cash value.
False
T or F: a 20 year family maintenance income policy pays for 5 years if insured dies 15 years after policy issue.
False; regardless of the date of death, the policy will pay for 20 years since it uses level term insurance.
at what age is a whole life policy’s cash value assumed to equal its death benefit?
100
Most credit life policies utilize ___ term insurance and coverage may not exceed the ___
decreasing term ; the amount of the loan
What WL product has a guaranteed minimum return and opportunity for CV growth based on the performance of a stock index?
equity-index whole life
Which policy pays a death benefit and concludes or ends on the death of any insured party listed on the contract?
a joint life policy
what age is used to determine level term policy renewals?
premiums are based on a persons actual age, and renewal premiums will increase.
what life insurance policy uses dividends to purchase one-year term insurance to supplement a reducing death benefit?
enhance ordinary or economatic life
premiums on a VL policy are ___
fixed
what is single-pay whole life?
a whole life policy with a one-time premium and coverage provided until age 100 or death
what two licenses are required to sell variable products?
a life insurance and FINRA license
who is the owner of a juvenile insurance policy?
the parent or legal guardian
does a term life policy have cash value?
no, term life is pure insurance
the premium on an annually renewable level term policy increases ___
each year
what is another name for interest-sensitive whole life insurance
current assumption whole life
what are the advantages of term insurance?
it is initially less expensive then WL, it may offset debts, and ensures insurability
a jumping juvenile policy may also be called ___
juvenile life insurance
what policy combines whole life insurance and a decreasing term rider providing coverage on the breadwinner?
a family income policy
what is another name for a “first to die” policy
joint life
what are the disadvantages of term insurance?
temporary protection, no cash value, premiums increase with each renewal (level term)
describe an equity index life policy
usually a UL policy with cash value tied to an equity index account; offers a guaranteed minimum rate of return
which whole life payment option would have the highest annual premium - 10, 20 or 30 pay?
10 pay - the fewer the payments, the greater each payment must be for the policy to mature.
a level term policy has a ___ death benefit and premiums will increase at the ___ period.
level death benefit, next renewal period
what nontraditional life insurance policy has a flexible death benefit and a rate of return that is interest-sensitive?
a universal life policy
a WL death benefit and premium both remain ___ for the life of the policy
level
describe an endowment
heavy cash savings, intended for future uses such as retirement or college funding
in a group credit policy, the bank is both the ___ and the ___
policyowner and the beneficiary
what is another name for a second or last to die policy?
suvivorship life
what is policy equity
the cash value in a whole life policy
a VL policy has a ___ minimum death benefit, but the cash value is ___
guaranteed minimum death benefit, cash value is not guaranteed
what type of insurance policy is most often used as a mortgage redemption policy?
decreasing term insurance
whole life premiums remain ___ for the life of the policy
level
what whole life product has lower premiums that increase each year for the first 3 to 5 years of the policy?
graded premium whole life
who assumes the investment risk in a traditional insurance contract?
the insurance company
whole life is a combination of term protection and ___
cash value
how long will coverage be provided under a 10-pay whole life product?
until death or age 100
why is whole life insurance more expensive than term insurance?
because of the building of cash value
what is the renewability feature?
the ability to renew a term policy without having to provide evidence of insurability
whole life premium rates are based on a rate per $ ___ of coverage.
$1,000
describe a whole life policy
a policy providing death benefit protection for life or to age 100, cash value, level death benefit, and level premium
what is an unbundled premium?
when a UL life policyowner receives an annual statement breaking down all of the policy expenses and charges
T or F: regardless of cash value performance, VL policies have a guaranteed minimum death benefit
true
a 20-year endowment will mature at the end of ___ years
20
term insurance is described as ___ protection
pure protection
what is a lump-sum premium
another name for a single-pay whole life
what is cash value
the equity that grows inside a permanent policy
name the policy that combines whole life insurance and a level term rider providing coverage on the breadwinner
family maintenance plan
the death benefit of a term policy is payable only if death occurs during the ___ policy
term coverage period
the cash value of a single premium whole life policy will equal the death benefit at age ___
100
for how long will the premium on a 20-year level term policy remain level?
20 years
T or F: term insurance is temporary, but whole life is permanent.
true
what is the target premium?
the initial premium established to fund a UL policy
what are loan option and cash surrender?
methods available to the policyowner to obtain or access the policy;s cash value
T or F: a 20-year family income policy will pay for 7 years if insured dies 13 years after the policy issue.
true. the policy will pay the 7 years of remaining benefit as it uses decreasing term insurance.
generally, credit insurance uses ___ term
decreasing term
what is 10-pay whole life?
a whole life policy with premiums paid for 10 years and coverage provided until age 100 or death
which life policy has cash value gains that mirror or are tied to a stock market index, such as the S&P 500?
an indexed life insurance policy
a VL contract has a guaranteed minimum ___
death benefit
what policy combines variable life with flexible premiums?
variable universal life
what type of insurance provides temporary protection?
term insurance
___ pay a living benefit at end of a set timeframe or a death benefit should death occur during that timeframe.
endowments
T or F: a whole life policy never requires renewal
true
cash value increases with every ___ payment after the ___ year
premium payment after the 3rd year
