Types of Insurance Policies

Question 1

________ _____ __________ issues very small face amounts, such as $1,000 or $2,000. Premiums are paid weekly and collected by debit agents. They were designed for burial coverage.

Answer 1

Industrial life insurance

Question 2

_________________ is life insurance of commercial companies not issued on the weekly premium basis. It is made up of several types of individual life insurance, such as temporary (term), permanent (whole).

Answer 2

Ordinary Life Insurance

Question 3

___________________ is insurance written for members of a group, such as a place of employment, association, or a union. Coverage is provided to the members of that group under one master contract. The group is underwritten as a whole, not on each individual member.

Answer 3

Group Life Insurance

Question 4

___________________ gives you the greatest amount of coverage for a limited period of time. Term insurance is only good for a limited period of time because it has a TERMination date.

Answer 4

Term life insurance

Question 5

_____ term is also called level premium level term, has a level face amount and level premiums. Premiums tend to be higher than annual renewable term because they are level throughout the policy period. However, the premiums will increase at each renewal.

Answer 5

Level

Question 6

____________ term is term life insurance that provides an annually decreasing face amount over time with level premiums. These policies are usually used for mortgage protection.

Answer 6

Decreasing

Question 7

_______ policies are typically purchased using a decreasing term life insurance policy, with the term matched to the length of the loan period and the decreasing insurance amount matched to the declining loan balance.

Answer 7

Credit

Question 8

_____________ is term life insurance that provides an increasing face amount over time based on specific amounts or a percentage of the original face amount.

Answer 8

Increasing term

Question 9

_________________ is a provision that allows policyowners to convert their term insurance into permanent policies without showing proof of insurability.

Answer 9

Convertible term

Question 10

__________________ is term insurance that guarantees the insured the right to continue term coverage after expiration of the initial policy period without having to prove insurability.

Answer 10

Renewable term

Question 11

______________________ is term coverage that provides a level face amount that renews annually. This type of coverage is guaranteed renewable annually without proof of insurability.

Answer 11

Annual renewable term

Question 12

A ______________ is a type of life insurance product which covers children under their parent’s policy. Family plan policies usually cover the family head with permanent insurance, and the coverage on the spouse and children is term insurance in the form of a rider.

Answer 12

Term Rider

Question 13

_____________ insurance provides death benefits for the entire life of the insured. It also provides living benefits in the form of cash values. It matures at age 100 and normally has a level premium.

Answer 13

Whole life

Question 14

With Whole Life - ___________ insurance, premiums are payable throughout the insured’s lifetime, and coverage continues until the insured’s death. Said differently, premiums are payable as long as coverage is in force.

Answer 14

Straight Life

Question 15

With Whole Life - ___________ the coverage remains on a limited-pay life policy until age 100 or death, whichever happens first. Even though the premium payments are limited to a certain period, the insurance protection extends until the insured’s death, or to age 100.

Answer 15

Limited Pay

Question 16

Whole Life - ___________ is a policy where the premium stays fixed for the first 5 years, and then increases in year 6 and stays level for the remainder of the policy.

Answer 16

Modified

Question 17

Whole Life - ________________________ is best described as a policy that exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract.

Answer 17

Modified Endowment Contract (MEC)

Question 18

A ___________ policy covers the lives of 2 individuals and save on premium cost by averaging the ages of the two insureds.

Answer 18

Joint Life

Question 19

A _____________ or Last Survivor Life Policies cover the lives of two individuals and saves on premium costs by averaging the ages of the two insureds.

Answer 19

Joint Survivor

Question 20

A ______________ policy pays a monthly income from the date of death of the insured to the end of the preselected period. The payment of the face amount of the policy is payable at the end of such preselected period.

Answer 20

Family Maintenance

Question 21

A ______________ policies pay an income beginning at the insured’s death and continues for a period specified from the date of policy issue.

Answer 21

Family Income

Question 22

An ______________ policy owner is usually looking for a policy offering flexible premiums. As financial needs and objectives change, the policyowner can make adjustments to the premium and/or face amount of an ____________ insurance policy.

Answer 22

Adjustable Life

Question 23

________________ insurance policy incorporates flexible premiums and an adjustable death benefit.

Answer 23

Universal life

Question 24

________________ insurance policies require a producer to have proper FINRA and National Association of Securities Dealers (NASD) securities registration prior to selling any variable policy contract, whether it be life insurance or an annuity, as they include regulated securities. These policies are also known as interest sensitive policies.

Answer 24

Variable life

Question 25

With ____________________, (VUL) the policyowner controls the investment of cash values and selects the timing and amount of premium payments.

Answer 25

Variable Universal Whole Life

Question 26

________________________ or Equity Indexed Life combines most of the features, benefits and security of traditional life insurance with the potential of earned interest based on the upward movement of an equity index. Unlike, a traditional whole life plan, this plan allows policyholders to link accumulation values to an outside equity index like S&P 500. 80% to 90% of the premium is invested in traditional fixed income securities and the remainder of the premium is invested in contracts tied to a stipulated stock index.

Answer 26

Equity Index Universal Life Insurance

Question 27

With an _____________________ insurance policy S(I)OLI, when the insured dies, the policyowner (investor) benefits. In normal circumstances, it is a beneficiary with insurable interest who benefits from the death of an insured.

Answer 27

investor (or stranger) originated life

Question 28

_____________ is the equity amount or “savings” accumulation in a whole life policy.

Answer 28

Cash Value

Question 29

The _________________ is a contract providing for payment of the face amount at the end of a fixed period, at a specified age of the insured, or at the insured’s death before the end of the stated period.

Answer 29

Endowment Policy

Question 30

A ______________________ policy is a contract that promises to pay at the insured’s death the face amount of the policy plus a sum equal to the policy’s cash value.

Answer 30

face amount plus cash value

Question 31

___________________ is written on the lives of children who are within specified age limits and generally under parental control.

Answer 31

Juvenile Insurance

Question 32

_____________ Life Insurance typically does not require a medical exam and tends to be more expensive than medically underwritten policies. The insurer will average out everyone’s risk and charge accordingly. Although insurers typically will not require a medical exam, they will still inquire about the applicant’s medical history and lifestyle.

Answer 32

Non-Medical

Question 33

_________________ is a suggested premium used in Universal Life policies. It does not guarantee there will be adequate funds to maintain the policy to any time, especially to life. It may give an indication of what will be needed (under conservative estimates), to maintain the policy.

Answer 33

Target premium

Question 34

_____________ insurance is the principal type of life insurance purchased in the United States and includes both temporary (term) life life insurance, permanent (whole, universal, and variable) life insurance coverage, as well as endowment policies.

Answer 34

Ordinary life

Question 35

_________________, also often referred to as Ordinary Whole Life or Continuous Premium Whole Life is whole life insurance providing permanent level protection with level premiums from the time the policy is issued until the insured’s death (or age 100).

Answer 35

Straight whole life

Question 36

_______________________ policies have level premiums that are limited to a specified number of years. This period is predetermined, but can be of any duration.

Answer 36

Limited pay whole life

Question 37

A _______________________ policy involves a large one-time only premium payment at the beginning of the policy period.

Answer 37

single-premium whole life

Question 38

_________________ policies are distinguished by premiums that are lower than typical whole life premiums during the first few years (usually five) and then higher than typical thereafter.

Answer 38

Modified whole life

Question 39

Premiums are lower than typical whole life rates during the preliminary period after the policy is issued (usually lasting five to ten years). The premiums will initially increase yearly during the preliminary period then remain level afterwards.

Answer 39

Graded Premium Whole Life

Question 40

________________ life insurance contracts pay a death benefit to a named beneficiary upon the death of an insured during a specified “endowment” period; or it pays the policyowner/insured a cash value equal to the face amount of the policy at the end of the endowment period (when the contract matures or “endows”) if the insured is still living.

Answer 40

Endowment

Question 41

The ___________ Act of 1984 states, any policy issued after 1/1/1985 that endows before age 95 no longer qualifies as life insurance.

Answer 41

Tax Reform

Question 42

A ____________________ contract is considered to be a policy that is overfunded, according to IRS tables and as such, is not truly a life insurance policy.

Answer 42

modified endowment

Question 43

Once a contract is declared a ____, it can never revert back to ordinary insurance. However, if there is a material change in the contract, the seven pay test applies again.

Answer 43

MEC

Question 44

The __________ is a limitation on the total amount you can pay into your policy in the first seven years of existence.

Answer 44

7-pay test

Question 45

The _________ policy is designed to insure all family members under one policy. The coverage on the spouse and children is level term insurance in the form of a rider.

Answer 45

family plan

Question 46

A ______________ policy consists of both whole life and decreasing term insurance. This policy will provide monthly income to a beneficiary if death occurs during a specified period beginning after date of purchase.

Answer 46

family income

Question 47

A ____________________ policy consists of both whole life and level term insurance, which provides income for a specific period beginning on the date of death of the insured.

Answer 47

family maintenance

Question 48

A _____________ policy covers two or more people. Using some type of permanent insurance (as opposed to term), it pays the death benefit at the first insured’s death.

Answer 48

joint life

Question 49

A variation of the joint life policy is the _______________ policy, also known as a second to die policy. This plan also covers two lives, but the benefit is paid upon the death of the last surviving insured.

Answer 49

last survivor

Question 50

__________________________, also known as interest-sensitive whole life and excess interest whole life, is characterized by premiums that vary to reflect the insurer’s changing assumptions with regard to its death, investment, and expense factors.

Answer 50

Current assumption whole life

Question 51

An interest-sensitive life insurance policyowner may be able to withdraw the policy’s cash value interest- free. The provision that allows this is called the __________________ provision.

Answer 51

Partial Surrender

Question 52

_____ policies are either of the low premium or high premium variety. Both possess several characteristics including but not limited to:
The use of an accumulation account which is made up of the premium, less expense and mortality charges, and credited with interest based on current rates.
Minimum guaranteed cash value and rate of return.
Maximum annual premium.
Use of a surrender charge, fixed at issue, which is deducted from the accumulation account to derive the policy’s surrender value.
Use of a fixed death benefit and maximum premium level at time of issue.

Answer 52

CAWL

Question 53

A ___________________________________ policy is a contract that promises to pay the policies face amount plus the policy’s cash value upon death of the insured.

Answer 53

face amount plus cash value

Question 54

______________________ policies, also known as blended or combination policies, are distinguished by their flexibility that comes from combining term and permanent insurance into a single plan.

Answer 54

Adjustable life

Question 55

(increasing the face amount normally requires providing proof of ___________)

Answer 55

insurability

Question 56

____________ life insurance is essentially a term policy with cash value, characterized by flexible premiums and an adjustable death benefit.

Answer 56

Universal

Question 57

___________ life allows its policyowners to determine the amount and frequency of premium payments and adjust the death benefit up or down to reflect changes in needs. Consequently, changes may be made with relative ease by the policyowner and no new policies will need to be issued when changes are desired.

Answer 57

Universal

Question 58

A _______________ is assessed a policyholder when the policy is initially issued. A ___________________ (i.e., rear-end load) is one assessed when a policy is surrendered.

Answer 58

front-end load, back-end load

Question 59

As Universal life premiums are paid and as cash values accumulate, _________ is credited to the policy’s cash value. This interest may be either the current _________ rate declared by the company (and dependent on current market conditions) or the guaranteed minimum rate, specified in the contract.

Answer 59

interest

Question 60

Another factor that distinguishes universal life from whole life is the fact that partial __________________ can be made from the policy’s cash value account.

Answer 60

withdrawals

Question 61

_______________ Life Insurance or Equity Indexed Life combines most of the features, benefits and security of traditional life insurance with the potential of earned interest based on the upward movement of an equity index. 80% to 90% of the premium is invested in traditional fixed income.

Answer 61

Equity Index Universal

Question 62

With a ________________ policy, premium payments are fixed. Part of the premium is placed into a separate account, which is invested in a stock, bond, or money market fund. The death benefit is guaranteed, but the cash value of the benefit can vary considerably according to the ups and downs of the stock market. ___________ insurance products do not guarantee contract cash values, and it is the policyowner who assumes the investment risk.

Answer 62

variable life, Variable

Question 63

Variable insurance products are considered securities contracts as well as insurance contracts. Therefore, they fall under the regulatory arm of both state offices of insurance regulation and the Securities and Exchange Commission (SEC). To sell variable insurance products, an individual must hold a life insurance license and a __________________________________________________ (FINRA) registered representative’s license (FINRA was formerly known as the National Association of Securities Dealers, or NASD).

Answer 63

Financial Industry Regulatory Authority