Types Of Life Policies

Question 1

What policy component must decrease in decreasing term insurance?

Answer 1

Face amount

Question 2

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

Answer 2

Annuitant’s estate

Question 3

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

Answer 3

Age 100

Question 4

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

Answer 4

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

Question 5

Why are policy loans not available on term insurance?

Answer 5

There is no cash value to borrow against

Question 6

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid for what time period?

Answer 6

For 20 years or until the insured’s death, whichever occurs first

Question 7

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

Answer 7

Face amount

Question 8

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

Answer 8

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

Question 9

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

Answer 9

Limited-pay whole life

Question 10

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 10

Decreasing term

Question 11

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

Answer 11

No sooner than 1 year after the annuity purchase

Question 12

What type of life insurance policy provides permanent protection?

Answer 12

Whole life

Question 13

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

Answer 13

Decreasing term

Question 14

Who receives income payments from an annuity?

Answer 14

Annuitant

Question 15

What type of whole life insurance policy generates immediate cash value?

Answer 15

Single premium whole life

Question 16

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

Answer 16

The premium is based on the average age of the insureds

Question 17

Who is entitled to the cash values in a life insurance policy?

Answer 17

The policyowner

Question 18

Under Option B in a universal life policy, what happens to the death benefit?

Answer 18

Under Option B, the death benefit increases each year by the amount of the cash value increases

Question 19

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

Answer 19

The insured’s attained age

Question 20

What are the death benefit options in universal life policies?

Answer 20

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

Question 21

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 21

Annuity

Question 22

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

Answer 22

Permanent insurance (usually, whole life)

Question 23

When would a 20-pay whole life policy endow?

Answer 23

When the insured reaches age 100

Question 24

What is the difference between a single premium and a flexible premium payment options in a deferred annuity?

Answer 24

The number of payments that purchase the annuity

Question 25

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 25

20-year level term

Question 26

What are the two phases of an annuity?

Answer 26

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

Question 27

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

Answer 27

immediate and deferred

Question 28

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

Answer 28

Option A

Question 29

Whole life insurance policies mature when the insured reaches the age of 100. If the owner of a whole life policy (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 29

The full death benefit

Question 30

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

Answer 30

A level premium for the life of the insured

Question 31

What is the main reason for purchasing an annuity?

Answer 31

To provide income that the annuitant cannot outlive

Question 32

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 32

Single premium whole life

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

During partial withdrawal from a universal life policy, what portion, if any, will be taxed?

Answer 34

Interest earned on the withdrawn cash value

Question 35

Can a business or a corporation be an annuitant?

Answer 35

No, an annuitant must always be a natural person

Question 36

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

Answer 36

Annuitization period

Question 37

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

Answer 37

Upon the first death

Question 38

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

Answer 38

Universal life

Question 39

What type of life insurance policy offers pure death protection?

Answer 39

Term

Question 40

Who bears the investment risk in a fixed annuity?

Answer 40

The insurer

Question 41

What type of insurance would perform the function of cash accumulation?

Answer 41

Whole life insurance

Question 42

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

Answer 42

Limited-pay Whole Life

Question 43

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

Answer 43

The premium increases with each renewal

Question 44

How soon can income payments begin in an immediate annuity?

Answer 44

No later than 1 year from the time of annuity purchase

Question 45

Mortality tables are used by insurance companies to predict what?

Answer 45

Life expectancy and the death rates for specific groups of individuals

Question 46

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

Answer 46

Beneficiary

Question 47

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

Answer 47

Annuitant

Question 48

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

Answer 48

Amount of premium

Question 49

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

Answer 49

Cash value is paid to the policyowner

Question 50

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 50

Straight life

Question 51

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

Answer 51

Cash value and death benefit

Question 52

When does an adjustable life policy accumulate cash value?

Answer 52

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

Question 53

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

Answer 53

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 54

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

Answer 54

A life insurance license and a securities license

Question 55

What type of annuity can be purchased with a single premium?

Answer 55

Immediate annuity

Question 56

What annuity settlement option provides income payments to the annuitant for the duration of his or her life, and also guarantees payment for a specified number of years?

Answer 56

Life income with period certain

Question 57

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

Answer 57

Annually renewable term

Question 58

What type of annuity credits its interest based upon an index such as S&P 500?

Answer 58

Equity indexed annuity

Question 59

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 59

Flexible premium deferred annuity

Question 60

What elements of an adjustable life policy can be changed by the policyowners?

Answer 60

The amount and payment period of the premium, the face amount, and the period for protection

Question 61

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 61

Joint life annuity

Question 62

What type of annuity requires an agent to have a securities license?

Answer 62

Variable annuity