Nontraditional Life Ins Policies

Question 1

In the 1980s, insurance companies introduced a number of new life products designed to
keep up with ___________ and are _________-sensitive,

Answer 1

inflation;

interest-sensitive

Question 2

The most notable of the life insurance policies introduced in the 80’s to keep up with inflation are:

Answer 2

interest- sensitive whole life, 
adjustable life, 
universal life, 
variable life, and 
variable universal life.

Question 3

type of whole life insurance where the cash value can increase beyond the stated guarantee if economic conditions warrant.

Answer 3

Interest-Sensitive Whole Life

Question 4

Interest-Sensitive Whole Life gives the insured the opportunity to either increase the face amount or use the extra cash value to lower future premiums.
T/F

Answer 4

True. Premiums can vary to reflect the insurer’s changing assumptions with regard to its death, investment, and expense factors.

Question 5

________ life policies: are distinguished by their FLEXIBILITY that comes from combining term and whole life insurance into a single plan.

Answer 5

Adjustable life policies

Question 6

Adjustable life insurance allows you to vary your coverage as your _______ change without requiring evidence of insurability

Answer 6

Needs

Question 7

Variation of whole life characterized by considerable flexibility
Investment Gains go towards cash value

Answer 7

Universal life

Question 8

universal life allows its policyowners to determine the ______ and _______ of premium payments which will adjust the policy face amount

Answer 8

Amount; frequency

Question 9

universal policy cash value accumulations are subject to a __________ interest guarantee.
Any surrender charges of a universal policy must be disclosed

Answer 9

Minimum

Question 10

Equity Index Universal Life insurance (EIUL): A permanent life insurance policy that allows policyholders to tie accumulation values to a stock market index, like the

Answer 10

S&P 500.

Question 11

Equity Index Universal Life insurance (EIUL) typically contain a minimum guaranteed ______ interest rate component along with the indexed account option.

Answer 11

Fixed

Question 12

_________ policies give policyholders the security of fixed universal life insurance with the growth potential of a variable policy linked to indexed returns.

Answer 12

Indexed

Question 13

A policy that is overfunded, according to IRS tables, is classified as a

Answer 13

Modified Endowment Contract.

Question 14

Funds withdrawn from Modified Endowment Contracts (MEC) are subject to ____-__ _____-____ (LIFO) tax treatment, which assumes that the investment or earnings portion of the contract’s values is withdrawn first (making these funds fully taxable as ordinary income).

Answer 14

Last- in first-out (LIFO)

Question 15

Because of the transfer of investment risk from the insurer to the policyowner, variable insurance products are considered securities contracts as well as insurance contracts.
T/F

Answer 15

True. A producer is required to register with the National Association of Securities Dealers to sell variable products.

Question 16

With variable life insurance policies, the Policy values are invested into insurers _________ accounts, housing common stock, bond, money market, and other securities investment options.

Answer 16

Separate

Question 17

The basic characteristics of a _____ life policy are:
Fixed premiums,
a guaranteed minimum death benefit which fluctuates over the minimum,
and cash values which fluctuate and are NOT guaranteed.

Answer 17

Variable life ins.
(was created to help offset the effects of inflation on death
benefits. )

Question 18

_______ _________ ____ is a type of life insurance that builds cash value, that can be invested in a wide variety of separate accounts, similar to mutual funds, and the choice of which of the available separate accounts to use is entirely up to the contract owner.

Answer 18

Variable universal life (VUL):

Question 19

Variable Universal Life: The ‘variable’ component in the name refers to the ability to invest in _________ accounts whose values vary-
The ‘universal’ component in the name refers to the ________ the owner has in making premium payments.

Answer 19

Separate; flexibility

Question 20

Evidence of insurability can be required for an individual covered by a variable universal life policy when the death benefit is

Answer 20

Increased