Types Of Life Policies

Question 1

Variable whole life insurance is based on what type of premium?

Answer 1

Level fixed

Variable whole life insurance is a level fixed premium investment-based product

Question 2

Who bears all of the investment risk in a fixed annuity?

Answer 2

The insurance company

Question 3

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT

Upon conversion, the death benefit of the permanent policy will be reduced by 50%
Evidence of insurability is not required
Most term policies contain a convertibility option
Upon conversion, the premium for the permanent policy will be based upon attained age

Answer 3

Upon conversion, the death benefit of the permanent policy will be reduced by 50%

Question 4

To sell life insurance policies, an agent must receive all of the following EXCEPT

A life insurance license
SEC registration
FINRA registration
A Securities license

Answer 4

SEC registration

Question 5

The term “fixed” in a fixed annuity refers to all of the following EXCEPT

Amount and length of payments
Death benefit
Guaranteed rate of interest
Equal annuity payments

Answer 5

Death benefit

Question 6

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured’s age 100 is called

Answer 6

Single premium whole life

Question 7

The LEAST expensive first-year premium is found in which of the following policies?

Increasing Term
Decreasing Term
Level Term
Annually Renewable Term

Answer 7

Annually Renewable Term

Question 8

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Life annuity with period certain
Increasing term
Limited pay whole life
Interest-sensitive whole life

Answer 8

Limited pay whole life

Question 9

Equity indexed annuities

Answer 9

Seek higher returns

Question 10

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

Answer 10

The beneficiary

Question 11

What are the two components of a universal policy?

Answer 11

Insurance and cash account

Question 12

The death benefit in a variable universal life policy

Answer 12

Depends on the performance of a separate account

Question 13

Which statement is NOT true regarding a Straight Life policy?

It has the lowest annual premium of the three types of Whole Life policies
It’s premium steadily decreases over time, in response to its growing cash value
The face value of the policy is paid to the insured at age 100
It usually develops cash value by the end of he third policy year

Answer 13

It’s premium steadily decreases over time, in response to its growing cash value

Question 14

Which of the following policies would be classified as a traditional level premium contract?

Adjustable Life
Universal Life
Variable Universal Life
Straight Life

Answer 14

Straight Lifef

Question 15

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?

Annuitization period
Pay-out period
Liquidation period
Depreciation period

Answer 15

Depreciation period

Question 16

A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy

Answer 16

Required a premium increase each renewal

Question 17

All of the following are true of an annuity owner EXCEPT

The owner has the right to name the beneficiary
The owner is the party who may surrender the annuity
The owner must be the party to receive benefits
The owner ay the premiums on the annuity

Answer 17

The owner must be the party to receive benefits

Question 18

Which of the following is called a “second-to-die” policy?

Survivorship life
Family income
Juvenile Life
Joint life

Answer 18

Survivorship Life

Question 19

The type of policy that can be changed from one that does not accumulate cash value to the that does is a

Answer 19

convertible term policy

Question 20

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?

Variable life
Adjustable life
Universal life
Flexible life

Answer 20

Universal life

Question 21

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

Answer 21

For 20 years or until death, whichever occurs first

Question 22

A married couple owns a permanent policy which covers both of their live and pays the death benefit only upon the death of the first insured. Which policy is that?

Answer 22

Joint Life Policy

Question 23

Which policy component decreases in decreasing term insurance?

Answer 23

Face amount