Policies

Question 1

Three basic types of term insurance ?

Answer 1

• Level
• Increasing
• Decreasing

Question 2

Face amount of the policy is ?

Answer 2

The Death Benefit

Question 3

Death benefit is ?

Answer 3

The Face Amount

Question 4

Why is Term insursance known as pure death protection ?

Answer 4

If the insured dies during this term the policy pays the death benefit to the beneficiary

Question 5

What has no cash value nor other living benefits?

Answer 5

Term Insurance

Question 6

What term insurance is the most common and has a death benefit that does not change throughout the life of the policy ?

Answer 6

Level Term

Question 7

Its the purest form of term insurance. death benefit remains level and the policy may be guaranteed to be renewable each year with out proof of insurability but the premium increases annually according to the attained age?

Answer 7

Annually Renewable Term

Question 8

Level premium Term

Answer 8

Provides level death benefit and a level premium during the policy term.

Question 9

Term-to-65 Contract

Answer 9

Term insurance with level premium and level death benefits that is provided till the insured’s 65th birthday.

Question 10

Decreasing Term

Answer 10

has a lower premium than level term, no cash value, and the face amount steadily declines through out the duration of the contract.

Question 11

Indeterminate Premium

Answer 11

contains a provision that provides a current premium scale (non guaranteed) and a maximum premium scale ( guaranteed), beyond which premiums cannot be raised.

Question 12

Key Characteristics of Whole Life Insurance?

Answer 12

• Level premium
• Death benefit
• Cash Value
• Living benefits

Question 13

Three basic Forms of whole life Insurance?

Answer 13

• Straight whole life
• Limited-pay whole life
• Single premium whole life

Question 14

Straight life (continuous premium)

Answer 14

• cash value increases
• premium stays level
• it is payed from the begining to the end

Question 15

Limited Payment

Answer 15

• cash value builds up faster
• premiums are paid for a limited time
• insurance is payed up in a shorter period so the annual premium will be higher

Question 16

Single Premium

Answer 16

provides a level death benefit to the insured’s age 100 for a one-time, lump-sum payment. Which is completely paid-up after one premium and generated immediate cash.

Question 17

Graded Premium whole life

Answer 17

starts with a premium that is approximately 50% or lower than the premium of a straight life policy. The premium then gradually increases esach year for a period of usually 5 or 10 years and then remains level thereafter.

Question 18

A policy that provides a guaranteed minimum interest rate along with a current and maximum guaranteed mortality charges, the performance of the policy is based upon the current interest rate being credited and mortality costs?

Answer 18

Current Assumption

Question 19

Flexible Premium Policies

Answer 19

• adjustable life
• universal life

Question 20

Adjustable life

Answer 20

• can be either term or permanent coverage
• insured determines how much voverage and amount of premium, the insurer then determines the appropriate type of insurance to offer
• as needs change the policyowner can make adjustments

Question 21

Typically, the policyowner can make adjustments in his or her policy. Typically, the policyowner has the following options: (adjustable life)

Answer 21

• Increase or decrease the premium or the premium-paying period
• Increase or decrease the face amount
• Change the period of protection
• convert from term to whole life
• increases in the death benefit or changing to a lower premium will require proof of insurability
• can pay additional premiums above what is required to shorten paying-period and accumulate greater cash value

Question 22

How does cash value develop on an adjustable life policy?

Answer 22

will only developo when the premiums paid are more than the cost of the policy

Question 23

Universal Life

Answer 23

• able to increase amount of premium and later decrease it
• premium payments may be skipped if sufficient cash value has been attained
• if cash value is too small to pay premium the policy will expire

Question 24

Premiums may be adjusted in a Universal Life so the policyowner is usually given what two choices to pay premium ?

Answer 24

• minimum premium
• target premium

Question 25

What is the minimum premium and the

target premium?

Answer 25

• min: amount needed to keep the policy in force fot the current year . Policy will perform as an annually renewable term.
• Target: recommended amount that should be paid on a policy in order to cover the cost of insurance to keep the policy in force throughtout its lifetime.