Life provision, Life Policies & Riders Flashcards
If the policy is canceled or expires prior to the insured’s death nothing is payable.
Term life
What type of life insurance incorporates flexible premium and adjustable death rate benefit? A. Endowment policy B. Modified whole life C. Decreasing term D. Universal life
Universal Life
A term life insurance policy matures:
A. Upon endowment of the contract
B. Upon death of the insured
C. When the cash value equals the death benefit
D. Upon the insured‘s death during the term policy
Upon the insured‘s death during the term policy
Term life policy can only mature (pay out the face amount) if death occurs during the term policy
Which of these statements describes a Modified Endowment contract (MEC) ?
A. Five below the minimum amount of premium that can be paid into a policy & still have it recognized as life insurance contract.
B. Exceeds the maximum amount of premium that can be paid into a policy & still have it recognized as a life insurance contract
C. The 7-pay test is used to determine the minimum death benefit of the policy
D. The 7-pay test is used to determine the maximum death benefit of the policy
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance policy.
A life insurance arrangement with circumvents insurable interest status is called? A. Contract of adhesion B. Indemnity contract C. Key person contract D. Investor-originated Life Insurance
Investor-originated life insurance
Which of these policies may NOT have automatic premium loan provision attached? A. Modified B. 20 pay life C. Decreasing term D. Endowment
Decreasing term
Type of policy that has death benefits that adjust periodically and written for a specific period of time? A. Level term B. Decreasing term C. Convertible term D. Renewable term
Decreasing term
It provides an annual decreasing face amount overtime with level premiums
A life insurance policy that allows the policy owner to convert their term insurance into a permanent policy without showing proof of insurability? A. Level term B. Renewable term C. Convertible term D. Credit life
Convertible term
Can change to permanent , but your premiums will go up to your current/attained age
The insurer has the right to continue term coverage after expiration of initial policy. Without having to show insurability? A. Convertible term B. Renewable term C. Level term D. Decreasing term
Renewable term
Insured doesn’t have to prove insurability, however the premiums can rise due to your current age
Insurance contracts are known as\_\_\_ because certain future conditions or acts must occur before any claims can be paid? A. Consideration B. Unilateral C. Aleatory D. Conditional
Conditional
Because certain future conditions or acts must occur before any claims can be paid by the insurance co.
Who owns a group life insurance contract?
A. Employee
B. Employer
C. insurance commissioner
Employer
Which of the following characteristics is Correct about Interest sensitive whole life?
A. Premium payments can vary
B. there are no guaranteed minimum interest rates
C. Mortality charges do not impact the investment amount
D. Interest rates never determine cash values
Premium payments can vary
Premiums vary to reflect the insurer’s changing assumptions with death, investment and expense factors
Which of these is an element of a variable life policy?
A. a fixed, level premium
B. Insurer assumes the investment risk
C. No investment risk to the policy owner
D. Rate of returns are guaranteed
A fixed , level premium
Additional coverage can be added to a whole life policy by adding: A. Payor rider B. Accelerated benefit rider C. Decreasing term rider D. Automatic premium loan rider
Decreasing term rider
Which type of policy is considered to be overfunded, stated by IRS guidelines?
A. Modified whole life
B. Variable universal life
C. Modified endowment contract
Modified endowment contract
Which of these would be considered a limited-pay life policy ?
A. 10 year renewable and convertible term
B. Life paid-up at age 70
C. Straight whole life
D. Renewable term to age 100
Life paid-up at age 70
Universal life policy is called an unbundled life policy Because the policy owner can see the expense charges, the interest earned, and?
A. Premium tax
B. Dividend rate
C. Values based on mutual funds or stocks
D. Cost of insurance
Cost of insurance
What type of policy would offer a 40-year-old the quickest accumulation of cash value? A. Paid up at 65 B. 20-pay life C. 30-pay life D. Straight whole life
20-pay life
P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies & a lump sum of $20,000 at end of 20 year period.. What policy should he purchase?
A. Family benefit policy
B. Family maintenance policy
C. Family income policy
Family maintenance policy
It pays a monthly income from the Date of death of the insured to a preselected period/years.
All are characteristics of a adjustable life policy, except?
A. adjustable premiums
B. Adjustable premium payment period
C. Combination of term and whole life insurance
D. Face amount can be adjusted using policy dividends
Face amount can be adjusted using policy dividends
What type of life policy covers 2 lives and pays the face amount after the first one dies?
A. Last survivor policy
B. Family income policy
C. Joint life policy
Joint life policy
The investment gains from a universal life policy usually go towards? A. Death benefit B. Dividends C. The cash value D. Paying off a policy loan
The cash value
Which of the following actions requires a policy owner to provide proof of insurability in an Adjustable Life policy? A. Increase face amount B. Decrease face amount C. Increase premium paying period D. Decrease premium payment
Increase face amount
A \_\_\_\_ Life policy offers the owner investment in products such as money market funds, long-term bonds in equities? A. Adjustable B. Term C. Universal D. Variable
Variable
What does a face amount plus cash value policy supposed to pay at an insured’s death?
A. Face amount plus the policy cash value
B. Face amount plus the policy dividends
C. Greater amount of the policy’s death benefit or the cash value
D. Face amount plus total premium paid throughout the life of the policy
Face amount plus the policy cash value
Promises to pay at the insured’s death, The face amount of the policy plus the sum equal to the policy cash value
Term Insurance has which characteristics?
A. Expires at the end of the policy period.
B. Builds cash value
C. Endows at the end of the policy.
D. Nonforfeiture options
Expires at the end of the policy period
When applied to a whole life insurance the word “straight “denotes:
A. Absence of dividends
B. Mode premium payments
C. The duration of premium payments
The duration of premium payments
Duration means rest of owners life
Whole life insurance policies are contractually guaranteed to provide which of the following,Except:
A. Cash value that will ultimately replace the death benefit
B. Nonforfeiture benefit options
C. Premiums that remain fixed for the life of the policy
D. Partial withdrawal features beyond a surrender charge.
Partial withdrawals features beyond a surrender charge period
Type of life insurance that covers 2 lives and pays the face amount after the first one dies?
A. Group life
B. Joint Life
C. Last survivor policy
Joint life
A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is:
A. Adjustable life
B. Modified whole life
C. Variable life
Variable life
K buys a policy where premium stays fixed for the first 5 years. Premium then increases in year 6 and size level thereafter, while death benefit remains the same.
A. Adjustable life
B. Graded premium whole life
C. Modified whole life
Modified whole life
Under renewable term policy:
A. Evidence of insurability must be provided at each renewal
B. Face amount is automatically adjusted at renewal
C. The renewal premium is calculated on the basis of the insured’s attained age
The renewal premium is calculated on the basis of the insurer’s attained age
X wants to buy $50,000 worth of permanent protection on his spouse and $25,000 worth of 10 year term coverage on X under the same policy, applicant should buy;
A. Whole life policy with extended term
B. Whole life policy with payor benefit
C. Whole life with an Other Insured rider
Whole life policy with the other insured rider
How long does coverage normally retain on a limited-pay life policy?
A. Age 65
B. Age 100
Age 100
Amount of coverage on a group credit life policy is:
A. Half of insured’s total loan value
B. The insured’s total loan value
The insurer’s total loan value
Type of insurance which offers permanent life coverage with premiums that are payable for life?
A. Renewable term life
B. Whole life
Whole Life
Family income policy is a combination of whole life and?
A. Decreasing term insurance
B. Level term insurance
Decreasing term insurance
Variable insurance policy:
A. Guarantees a minimum rate of return
B. Does not guarantee a return of investment accounts
C.
Does not guarantee a return on his investment accounts
Policyowners assumes the investment risk
Which policy combines investment choices with a form of Term coverage?
A. adjustable life
B. Universal life
C. Variable universal life
Variable universal life
Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of term coverage on himself under the same policy. What kind of policy should Q purchase?
A. Joint policy
B. Joint survivor policy
C. Whole life policy with other insured rider
D. Whole life policy with a guaranteed insurability option
C. Whole life policy with other insured rider
A 42-year-old executive wants to purchase life insurance that will allow increases or decreases to his coverage as his needs change. Which policy?
A. Universal life
B. Graded whole life
C. Modified whole life
Universal life
Flexible premiums & adjustable death rate
Which characteristics is consistent with straight life policy?
A. Owner can adjust both premium and death rate
B. Owner has an option to convert to Term insurance
C. Premiums are payable as long as there is insurance coverage inforce
Premiums are payable for as long as there is insurance
K pays on $20,000 for 20 years and down that policy for 10 years & dies in accident. How much will insurance company pay beneficiary?
A. Return of premiums paid
B. Cash value plus interest
C. $20,000 death benefit
$20,000 death benefit
Endowment pays policy face value also known as “death benefit” to beneficiaries
K looking to purchase renewable term insurance. Which type of term insurance may be renewable?
A. Decreasing
B. Increasing
C. Level
Level
Level pays the same benefit if death occurs at any point during the term.
K purchase $10,000 life policy that will pay face amount to her if she lives to age 65, or to her beneficiary if she dies before age 65. K purchase what type of policy?
A. Term to age 65
B. Whole life up at age 65
C. Endowment at age 65
Endowment at age 65
Endowment is characterized by cash values that grow at a rapid pace/policy matures at specific date (before age 100)
Which policy is characterized by flexible premium and death benefit and allows the policy owner control the investments aspect?
A. Variable life
B. Universal life
C. Variable universal life
Variable universal life
Rider for additional coverage to Whole Life?
A. Payor rider
B. Decreasing term rider
Decreasing term rider
D needs life insurance coverage for only a limited amount of time while also paying the lowest possible premium. What policy?
A. Limited-pay life
B. Level term
Level term
S has a whole life policy with a premium payment due soon. Which provision would keep the policy in force if S did not make the required payment and the policy had adequate cash value from the premium payment?
A. Automatic policy loan
B. Grace period
Automatic policy loan
S Buys a $50,000 whole life policy with a $50,000 accidental death and dismemberment rider. S dies one year later of natural causes. How much will the insurer Pay the beneficiary?
A. $100,000
B. $50,000
$50,000
Which statement is correct about accelerated death benefits?
A. Full face amount is available as accelerated benefit
B. Those on Social Security disability qualify for this benefit
C. This provision is usually provided with an increase in premium
D. Must have a terminal illness to qualify
Must have a terminal illness to qualify
In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of financial benefits?
A. Entire contract
B. Insuring clause
C. Owner’s rights
Owner’s rights
Incontestable clause allows an insured to:
A. Disallow a change of ownership throughout the contestable period
B. Contest claim at any time if cause of death was accidental
C. Contest a claim during the contestable period
Contest a claim during the contestable period
A policy loan is made possible by this insurance policy feature?
A. Consideration clause
B. Owners rights provision
C. Cash value provision
Cash value provision
Suicide provision is designed to?
A. safeguard the insurer from an applicant who is contemplating suicide
B. Protect the insurer from ever paying a claim that results from suicide
Safeguard the insured from an applicant who is contemplating suicide
All of these statements concerning settlements Options are true, except:
A. Increase proceeds can be provided through accumulation of interest
B. Rapid depletion of proceeds can be avoided
C. Proceeds can be administered by the insurance company
D. Only the beneficiary may select
Only the beneficiary may select = isn’t true
Which provision requires Proof of Insurability after a policy has lapsed?
A. Conversion
B. Consideration
C. Reinstatement
Reinstatement
Accelerated death benefit provision in a life insurance policy is known as?
A. Nonforfeiture option
B. Living benefit
Living benefit
T check out $50,000 life insurance policy with a accidental death and dismemberment rider. Five years later, T commits suicide. How much insurer pay?
A. Nothing
B. 50,000
50,000
Suicide occurred outside the suicide clause which is two years, so face amount will be paid
I Life Insurance Academy Podcast paid if the insured becomes disabled, what kind of rider attached?
A. Wavier of premium
B. Accelerated Benefits
C. Return of premium
Waiver of premium
A provision in life insurance policy that pays the policy owner an amount that does not surpass the guaranteed cash value is?
A. Policy loan provision
B. Automatic premium loan provision
Policy loan provision
P died five years after purchasing a life policy. While investigating the claim, the insured discovered material misrepresentations made by pee during the application process. Which of these actions will insurer take:
A. Beneficiary will be denied the claim and refund it all paid premiums
B. Beneficiary will be paid the death benefit
Beneficiary willpay the death benefit.
Because incontestable clause prevents insured from canceling the contract even with misrepresentation
Return of premium life insurance policy is:
A. Whole life and increasing term
B. Interest sensitive
C. Variable life
Whole life and increasing term.
Made a return is whole life with a death benefit rider of increasing term equals the amount of premiums paid. If it sure dies within the period of term, the beneficiary receive face amount plus paid premiums
Which statement regarding Misstatement of age provision is true:
A. Coverage will be adjusted to reflect insurer’s true age if the misstatement of age is Discovered
B. Insurer may void the policy if Misstatement of age is discovered
Coverage will be adjusted to reflect ensures true age if Misstatement of age is discovered
How are policyowner dividends treated in regards to income tax?
A. Dividends are not taxable
B. Taxed as ordinary income
C. Interest on accumulations is taxed
Interest on accumulations is taxed
Excess dividends are considered taxable income
What action can a policy owner take if an application for a bank loan requires collateral?
A. Borrow against policy value and use as down payment
B. Assign policy ownership to the bank
Assign policy ownership to the bank
The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon insurer’s death is:
A. Entire contract provision
B. Insuring agreement (clause)
Insuring clause
Insurance companies promise to pay benefits at insured’s death
When does guaranteed insurability rider allow insured to buy additional coverage?
A. At future dates specified in contract with proof of insurability required
B. Future date specified in the contract with No evidence of insurability required
At future dates specified in the contract with no evidence of insurability required
S buys $10,000 whole life coverage and 2003 and pays annual premium of $100. Yes that is five years later in 2008 and then sure pays a beneficiary $10,500. What kind of writer did S include?
A. Return of premium rider
B. Term rider
Return of premium rider
