Section Four Exam 1 Flashcards
The least expensive option to pay off a 30 year mortgage balance would be?
A. Convertible term life
B. Decreasing term life
C. Adjustable, term life
D. Increasing term life
Decreasing term life
A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate that is higher than the guaranteed rate is called?
A. Whole life
B. Group life
C. Credit life
D. Universal life
Universal life
Donald is the primary insured of a life insurance policy and adds a Children’s term rider. What is the advantage of adding this rider?
A. Can be converted to permanent coverage without evidence of insurability.
B. Coverage can be different for each child.
C. Premiums on this rider are not required until the limiting age is reached.
D. Increases the policies overall cash value.
Can be converted to permanent coverage without evidence of insurability
Which of the following are the premium payments for a universal life policy NOT used for?
A. Death benefits
B. Cash value
C. Loading costs
D. Separate account investments.
Separate account investments
Which type of life insurance policy pays the face amount at the end of the specified if the insured is still alive?
A. Adjustable life policy
B. Modified life policy
C. Endowment policy
D. Universal life policy.
Endowment policy
Under a modified endowment contract, what are the likely tax consequences?
A. Interest on policy loans is tax deductible.
B. Premium payments are tax deductible.
C. Pre-death distributions will become taxable.
D. Cash value cannot be surrendered early.
Pre-death distributions will become taxable
Sean, Mike, and Dave are brothers who have a $100,000 “first to die” joint life policy covering all three of their lives. If Mike dies first the policy proceeds.
A. Will no longer provide insurance protection
B. Will go to Mike’s estate
C. Will be divided by probate
D. Will not be paid until the last brother dies.
Will no longer provide insurance protection
Which type of life insurance offers flexible premium’s, a flexible, death benefit, and the choice of how the cash value will be invested?
A. Adjustable life policy
B. Variable Universal Life policy
C. Universal policy
D. Modified whole life policy.
Variable universal life policy
“A modified endowment contract” the “MEC” is best described as
A. A Life insurance contract which accumulates cash values higher than the IRS will allow.
B. An annuity contract which was converted from a life insurance contract.
C. A modified life contract which enjoys all the tax advantages of whole life insurance.
D. A life insurance contract were all withdrawals prior to age 65 are subject to a 10% penalty.
A life insurance contract, which accumulate cash value is higher than the IRS will allow
All of these are valid options for an adjustable life policy EXCEPT.
A. The policies premium can be increased or decreased
B. The policy’s death benefit can be increased or decreased
C. The nonforfeiture option can be used to increase the death benefit
D. The policies protection period Can be modified.
A nonforfeiture option can be used to increase the death benefit
Variable life insurance and universal life insurance are very similar. Which of these features are held exclusively by variable universal life insurance?
A. Policy owner may increase or decrease the premium payments.
B. Policy owner may increase or decrease the face amount.
C. Policy owner can contribute large sums of money.
D. Policy owner has the right to select the investment which will provide the greatest return.
Policy owner has the right to select the investment which will provide the greatest return
Which of these would be the best example of a limited pay life insurance policy?
A. Whole life policy that pays out its cash value over a 20 year.
B. Whole life policy with premium is paid up after 20 years.
C. Term life policy that returns cash value after 20 years.
D. Term life policy with premiums paid up after 20 years.
Whole life policy with premium is paid up after 20 years
An interest sensitive whole life insurance policy owner may be able to withdraw the policies cash value interest free. The provision that allows this is called.
A. Partial surrender
B. Subrogation
C. Automatic Premium Loan
D. Accelerated Death Benefit.
Partial surrender
All of these are characteristics of a universal life insurance policy EXCEPT
A. Flexible death benefit
B. Fixed surrender value
C. Flexible premium’s
D. Builds cash value
Fixed surrender value
Decreasing term life insurance is often used to
A. Provide retirement funds
B. Provide coverage for a home mortgage
C. Accumulate cash value
D. Provide coverage for estate taxes.
Provide coverage for a home mortgage
Which of these RIDERS will pay a death benefit if the insured’s spouse dies?
A. Guaranteed insurability rider
B. Family term insurance rider
C. Family whole insurance rider
D. Payer benefit rider
Family term insurance rider
The statement which best describes the relationship between the premiums of a whole life policy and the premium payment is
A. The shorter the payment the lower the premium
B. The longer the payment the higher the premium
C. The shorter the payment the higher the premium
D. The payment has no effect on the premium payment
The shorter the payment The higher the premium.
Which type of multiple protection policy pays on the death of the last person?
A. Joint life policy
B. Survivorship life policy
C. Dual life policy
D. Multiple life policy
Survivorship life policy
How are survivorship life insurance policies helpful in estate planning?
A. Provide funds to help find retirement.
B. Provide funds to help pay taxes.
C. Provide funds for funeral expenses.
D. Provide tax deductions for premium payments.
Provide funds to help pay taxes
The premium for a modified whole life policy is
A. Higher than the typical whole life policy during the first few years and then lower than typical for the reminder,
B. Lower than the typical whole life policy during the first few years and then higher than typical for the remainder.
C. Normally graded over a period of 20 years
D. Level for the first five years then decreases for the remainder of the policy.
Lower than the typical whole life policy during the first few years, and then higher than typical for the remainder
What kind of life insurance policy covers two or more people with the death benefit payable upon the last person’s death?
A. Dual life insurance
B. Joint life insurance
C. Last survivor life insurance
D. Shared life insurance.
Last survivor life insurance
A life insurance policy written on one contract for two people in which it is payable upon the first death is called
A. Split
B. Shared
C. Joint
D. Survivorship
Joint
Krissa purchases a 10 year level term life insurance policy that has a death benefit of $200,000. Which of these statements is true?
A. The policy automatically converts to whole life after the ten-year period.
B. The face amount will remain constant, and the premium will increase over the 10 year.
C. The premium will remain constant in the face amount will increase over the 10 year.
D. The face amount and premium will remain constant over the 10 year.
The face amount will remain constant, and the premium will increase over the 10 year period
A life insurance policy that has premiums fully paid up with an a stated time period is called
A. Stated payment insurance
B. Limited universal insurance
C. Stated modified insurance
D. Limited payment insurance
Limited payment insurance
A single premium cash value policy can be described as
A. A policy that is paid up after only one payment
B. A policy that only requires an annual payment
C. A policy that is guaranteed issue
D. A policy that covers two or more lives
A policy that is paid up after only one payment
