Types of Life Policies

Question 1

How soon can income payments begin in an immediate annuity?

Answer 1

No later than 1 year from the time of annuity purchase

Question 2

What type of insurance policy is Life Paid-up at Age 65?

Answer 2

Limited-Pay Whole Life

Question 3

What type of life insurance policy offers pure death protection?

Answer 3

Term

Question 4

What are two phases of annuity?

Answer 4

Accumulation and annuitization (or pay-in and pay-out)

Question 5

What type of life insurance offers an applicant a cash value element?

Answer 5

Permanent Insurance (usually, whole life)

Question 6

What are the two classifications of annuities according to the time when annuity payments begin?

Answer 6

Immediate and Deferred

Question 7

In flexible premium payment annuities, the term flexible refers to what?

Answer 7

Amount of Premium

Question 8

An individual has a contract that will provide him with a certain amount of income for the rest of his life. However, this is not a life insurance policy. What type of contract does this person have?

Answer 8

Annuity

Question 9

In variable universal life insurance, to what policy component does the term “variable” refer?

Answer 9

Cash Value and Death Benefit

Question 10

What happens to the cash value when a whole life insurance policy matures?

Answer 10

Cash value is paid to the policy owner

Question 11

What type of license(s) is/are required to sell variable annuities?

Answer 11

A life insurance license and a securities license

Question 12

If the annuitant dies before the annuitization period starts, what will the beneficiary receive?

Answer 12

Either the amount paid into the annuity of the cash value, whichever is greater

Question 13

What happens to the premium in an annually renewable term life policy?

Answer 13

The premium increases with each renewal

Question 14

What does the term “level” refer to in level term insurance?

Answer 14

Face Amount

Question 15

When would a 20-pay whole life policy endow?

Answer 15

When the insured reaches age 100

Question 16

A policy states that it will pay a specified face amount if the insured dies during the 20-year premium-paying period and nothing if death occurs after the 20-year period. What type of policy is this?

Answer 16

20-year level term

Question 17

When does an adjustable life policy accumulate cash value?

Answer 17

When the premiums paid are more than the cost of the policy

Question 18

If an annuity provides a set amount of income for two or more persons with the income ceasing upon the first death, what type of annuity is that?

Answer 18

Joint Life Annuity

Question 19

What type of life insurance is best suited to cover a mortgage?

Answer 19

Decreasing Term

Question 20

What are the death benefit options in universal life policies?

Answer 20

Option A- level death benefit, and Option B-increasing death benefit

Question 21

Whole life insurance policies mature when the insured reaches the age of 100. If the owner of a whole life policy (the insured) dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?

Answer 21

The full death benefit

Question 22

A whole life policy that requires that the policy owner only pays premiums for a specified number of years is known as what kind of policy?

Answer 22

Limited-pay whole life

Question 23

Regarding annuity payments, what is the difference between the annuitant and the beneficiary of an annuity?

Answer 23

The annuitant receives payments from the annuity during the annuitization period; the beneficiary receives benefits after the annuitant’s death.

Question 24

Whole life policies provide protection until the insured reaches what age?

Answer 24

Age 100

Question 25

In a joint life policy, when is the death benefit paid?

Answer 25

Upon the first death

Question 26

With a single premium deferred annuity, when will the annuity payments become available?

Answer 26

No sooner than 1 year after the annuity purchase

Question 27

What type of premium is charged on a straight life policy?

Answer 27

A level premium for the life of the insured

Question 28

An individual has just borrowed $10,000 on a 5-year note from his bank. The note is due in installments. What type of life insurance policy would be best suited to this situation?

Answer 28

Decreasing Term

Question 29

The death protection component of a universal life policy is expressed as what type of coverage?

Answer 29

Annually Renewable Term

Question 30

Can a business or a corporation be an annuitant?

Answer 30

No, an annuitant must always be a natural person.

Question 31

How long will a life annuity with a 15-year period certain pay?

Answer 31

For the life of the annuitant unless he/she dies within the first 15 years of the annuitization period; then the payments will last for 15 years.

Question 32

What policy component must decrease in decreasing term insurance?

Answer 32

Face Amount

Question 33

What is the purpose of establishing the target premium for a universal life policy?

Answer 33

To prevent the policy from lapsing

Question 34

If the annuitant dies during the accumulation period, who will receive the annuity benefits?

Answer 34

Beneficiary

Question 35

Whose life expectancy is taken into consideration in an annuity contract?

Answer 35

Annuitant

Question 36

In what type of life insurance policies can the policy owner skip premium payments without the policy lapsing?

Answer 36

Universal Life

Question 37

Who receives income payments from an annuity?

Answer 37

Annuitant

Question 38

What universal life option has a gradually increasing cash value and a level death benefit?

Answer 38

Option A

Question 39

What type of annuity is suitable for someone who wants to select the benefit option that will pay the largest amount only for as long as the annuitant lives?

Answer 39

Straight Life

Question 40

Who bears the investment risk in a fixed annuity?

Answer 40

The insurer

Question 41

Mortality tables are used by insurance companies to predict what?

Answer 41

Life expectancy and the death rates for specific groups of individuals.

Question 42

In annually renewable term policies, what is the annual premium based upon?

Answer 42

The insured's attained age

Question 43

In an annuity, the accumulated money is converted into a stream of income during which phase?

Answer 43

Annuitization period

Question 44

An annuity purchased with multiple payments that begin income payments after one year from the moment of purchase is known as what type of annuity?

Answer 44

Flexible premium deferred annuity

Question 45

How is the premium determined in a joint life insurance policy?

Answer 45

The premium is based on the average age of the insureds.

Question 46

What type of whole life insurance policies only requires a payment of premium at its inception, and in addition to providing insurance protection for the life of the insured, endows at the insured's age 100?

Answer 46

Single Premium Whole Life

Question 47

If there is no named beneficiary for the annuity benefits, to which entity will the benefits be paid?

Answer 47

Annuitant's estate