Life Insurance Policies

Which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death?

- Survivorship Life
- Family Plan
- Joint Life
- Whole Life and Level Term Rider
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Terms in this set (96)
What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death?
- Face amount plus the policy's cash value
- Face amount plus the policy's dividends
- The greater amount of the policy's death benefit or the cash value
- Face amount plus total premium paid throughout the life of the policy
All of these statements about Equity Indexed Life Insurance are correct EXCEPT
- Cash value has a minimum rate of accumulation
-If the gain on the index goes beyond the policy's minimum rate of return, the cash value will mirror that of the index
-The premiums can be lowered or raised, based on investment performance
-Tied to an equity index such as the S&P 500
What type of life policy covers two people and pays upon the death of the last insured? Shared Survivorship Adjustable JointsurvivorshipWhich of the following types of policies BEST identifies one in which the cash value may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors? Universal Life Endowment Life Modified Whole Life Graded Premium Whole Lifeuniversal lifeWhat kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100? Term Life Whole Life Credit Life Universal Lifewhole lifeA life insurance policy that provides a policyowner with cash value along with a level face amount is called Whole life Level term Credit life Ordinary lifewhole lifeA 15-year mortgage is best protected by what kind of life policy? Modified whole life 15-year level term 15-year decreasing term Adjustable life15-year decreasing termVariable Whole Life Insurance can be described as - both an insurance and securities product - an insurance product only - a securities product only - the insurance company assumes the investment riskboth an insurance and securities productWhich is true concerning a Variable Universal Life policy? -Policyowner controls where the investment will go and selects the amount of the premium payment - Policyowner has no say where the investment will go but can choose the premium mode -The investment vehicle for this type of policy is held in the insurer's general portfolio - The death benefit can vary but the policyowner has no say in the premium amount paidpolicyowner controls where the investment will go and selects the amount of the premium paymentWhen is the face amount paid under a Joint Life and Survivor policy? - when policy reaches maturation - upon death of the first insured - upon death of the last insured - when one of the insureds becomes disabled and no longer able to make premium paymentsupon death of the last insuredP is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase? Family Benefit policy Family Maintenance policy Family Income policy Family Survivor policyFamily maintenance policyAll of these are characteristics of an Adjustable Life policy EXCEPT -adjustable premiums - adjustable premium payment period -combination of term and whole life insurance -face amount can be adjusted using policy dividendsface amount can be adjusted using policy dividendsWhich type of policy is considered to be overfunded, as stated by IRS guidelines? Modified Whole Life Modified Endowment Contract Variable Universal Life Interest-Sensitive Whole Lifemodified endowment contractK buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this? Variable Life Adjustable Life Graded Premium Whole Life Modified Whole Lifemodified whole life (premiums just increases once)Additional coverage can be added to a Whole Life policy by adding a(n) payor rider accelerated benefit rider decreasing term rider automatic premium loan riderdecreasing term riderQ would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase? Joint policy Joint survivor policy Whole life policy with other insured rider Whole life policy with a Guaranteed Insurability optionwhole life policy with other insured riderWhich of the following policies combines investment choices with a form of Term coverage? Limited-Pay Life Variable Universal Life Universal Life Adjustable Lifevariable universal lifeWhich of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability? Owner's Rights clause Incontestable Period Insuring Agreement Conversion privilegeconversion privilegeA(n) ______ Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities. Adjustable Term Universal VariablevariableWhich statement is TRUE regarding a Variable Whole Life policy? -A minimum guaranteed Death benefit is provided -It is a combination of an Endowment and a Increasing Term policy -Its premiums and benefits are variable -It has guaranteed dividendsa mimimum guaranteed death benefit is providedWhat type of insurance offers permanent life coverage with premiums that are payable for life? Credit Life Renewable Term Life Whole Life Endowmentwhole lifeA Limited-Pay Life policy has -graded death benefits -no cash value -premium payments limited to a specified number of years -premium payments that are paid to age 100premium payments limited to a specified number of yearsWhich provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health? Modification Conversion Exchange AdjustableconversionA potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? - Straight life accumulates faster than Limited-pay Life - 20-Pay Life accumulates cash value faster than Straight Life - Cash value accumulation of both 20-Pay Life and Straight Life depend on the insurer's financial rating - 20-Pay Life and Straight Life accumulate cash value at the same rate20-pay life accumulates cash value faster than straight lifeWhich of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy? increase face amount decrease face amount increase premium-paying period decrease premium paymentincrease face amountWhich statement about a whole life policy is correct? Beneficiary may be changed only with the consent of the premium payor Death benefit can usually be adjusted Cash value may be borrowed against Premiums are flexiblecash value may be borrowed againstA life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as Adjustable Life Graded-Premium Life Variable Life Modified Whole Lifevariable lifeM purchases a $70,000 Life Insurance Policy with premium payments of $550 a year for the first 5 years. At the beginning of the sixth year, the premium will increase to $800 per year but will remain level thereafter. The face amount will remain at $70,000 throughout the life of the policy. The type of policy that M has purchased is Adjustable Life Indeterminate Premium Life Grader Premium Life Modified Premium Lifemodified premium lifeThe Universal Life Policy is called an unbundled Life Policy because the policyholder can see the expense charges, the interest earned, and the Premium tax Dividend rate Values based on mutual funds or stocks Cost of insurancecost of insuranceK is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?. Increasing Decreasing Adjustable LevellevelWhich of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options? Modified Whole Life Variable Life Universal Life Adjustable Lifevariable lifeWhat kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies? Family Maintenance Policy Family Income Policy Survivor Policy Family Survivor Policyfamily maintenance policyK purchased a $10,000 Life Policy that will pay the face amount to her if she lives to age 65, or to her beneficiary if she dies before age 65. K purchased which of the following types of policies? Limited-Pay Life Term to Age 65 Whole Life Paid-Up at Age 65 Endowment at Age 65endowment at age 65Which of these characteristics is consistent with a Straight Life policy? Owner can adjust both premium and death benefit Premiums are lower for the first five years, increase the sixth year, then levels off for the remaining length of the contract Owner has the option of converting to term insurance Premiums are payable for as long as there is insurance coverage in forcepremiums are payable for as long as there is insurance coverage in forceT has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this? Renewable Increasing Level DecreasingrenewableK pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary? Return of premiums paid Cash value plus interest $20,000 death benefit Face amount plus interest$20,000 death benefitAll of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for Variable Life Modified Whole Life Universal Variable life Variable Annuitymodified whole lifeariable Life products require a producer to guarantee not more than a 12% return per annum hold a Life and Health Insurance license hold a Life Insurance license and a Securities license be regulated solely by State Lawhold a life insurance license and a securities licenseL, aged 50, and L's spouse, 48, have one natural child and one adopted child. They purchase a Family Policy that covers L's spouse to age 65. A death benefit will NOT be paid in which of the following circumstances? L's spouse dies at age 62. L's spouse dies at age 66. Their natural child dies at age 18. Their adopted child dies at age 18.L's spouse dies at age 66Life insurance that covers an insured's whole life with level premiums paid over a limited time is called Adjustable Life Renewable Term Limited Pay Life Joint Lifelimited pay lifeS is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase? Equity index insurance Endowment Graded whole life policy Return of premium policyequity index insuranceHow does a typical Variable Life Policy investment account grow? Tied to price of gold Through mutual funds, stocks, bonds Based on returns from insurer's general account Tied to Treasury Billsthrough mutual funds, stocks, and bondsA 42-year-old executive wants to purchase life insurance that will allow for increases or decreases to coverage as his/her needs change. Which of the following policies will best meet this need? Endowment at Age 75 Universal Life Graded Benefit Whole Life Modified Whole Lifeuniversal lifeWhat kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years? Family Lump Sum Policy Family Maintenance Policy Family Survivor Policy Family Income Policyfamily maintenance policyThe most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is the cost the health of the insured the amount of coverage being converted who will be beneficiarythe costWhich policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling? Variable Life Credit Life Universal Life Interest-Sensitive Whole Lifevariable lifeA Whole Life Insurance Policy endows when the Premium paid equals the death benefit Death proceeds are paid Cash value equals the death benefit Cash value plus dividends equal the death benefitcash value equals the death benefitWhich of these statements describe a Modified Endowment Contract (MEC)? Falls below the minimum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract The 7-pay test is used to determine the minimum death benefit of the policy The 7-pay test is used to determine the maximum death benefit of the policyexceeds the maximum amoung of premium that can be paid into a policy and still have it recognized as a life insurance contractG purchased a Family Income policy at age 40. The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income? 5 years 10 years 15 years 20 years10 yearsWhat type of policy would offer a 40-year old the quickest accumulation of cash value? Paid-up at 65 20-pay life 30-pay life Straight whole life20-pay lifeWhat kind of premium does a Whole Life policy have? decreasing adjustable level deferredlevelWhole Life insurance policies are contractually guaranteed to provide each of the following EXCEPT cash value that will ultimately replace the death benefit nonforfeiture benefit options premiums that remain fixed for the life of the policy partial withdrawal features beyond a surrender charge periodpartial withdrawal features beyond a surrender charge periodWhen a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply? Extended term option Conversion provision 1035 Exchange Incontestable periodconversion provisionWhen a life insurance policy exceeds certain IRS table values, the result would create which of the following? 1035 Exchange An investment Modified Endowment Contract (MEC) Endowmentmodified endowment contractWhich statement is correct regarding the premium payment schedule for whole life policies? Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured Premiums are payable for a set period/ coverage expires at that point Premiums are payable until age 65/ coverage lasts a lifetime A single premium is paid at time of application/ coverage lasts until retirementpremiums are payable throughout the insured's lifetime/ coverage lasts until death of the insuredWhat kind of special need would a policyowner require with an Adjustable Life insurance policy? level premiums flexible premiums flexible nonforfeiture options level death benefitsflexible premiumsA father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision? Payor provision Accelerated Benefits provision Assignment provision Waiver of Premium provisionpayor provisionHow long does the coverage normally remain on a limited-pay life policy? age 65 age 100 when premium payments stop at the discretion of the insurerage 100Which of these is an element of a Variable Life policy? A fixed, level premium Insurer assumes the investment risk No investment risk to the policyowner Rate of returns are guaranteeda fixed, level premiumA policy that becomes a Modified Endowment Contract (MEC) will no longer allow for policy loans must be placed in an irrevocable trust can never be reinstated after a lapse will lose many of its tax advantageswill lose many of its tax advantagesWhat type of life insurance gives the greatest amount of coverage for a limited period of time? Term life Graded Premium Whole life Whole life Endowment policyterm lifeThe amount of coverage on a group credit life policy is limited to half of the insured's total loan value the insured's total loan value 75% of the insured's total loan value $25,000the insured's total loan valueS is covered by a whole life policy. Which insurance product can cover his children? Assignment provision Payor benefit Accelerated benefit rider Child term riderchild term ridervariable insurance policy guarantees a minimum rate of return does not allow the policyowner to assume the investment risk does not guarantee a return on its investment accounts does not guarantee an assignment provisionit does not guarantee a return on its investment accountsWhat kind of life insurance product covers children under their parent's policy? Family Maintenance rider Term rider Family Income rider Payor benefitterm riderWhich of the following actions is NOT possible with a Universal Life policy? Policy's cash value may be used to pay premiums Premium payments may be made at unscheduled times Premiums may be applied as a credit against income tax Face amount may be adjustedpremiums may be applied as a credit against income taxCredit life insurance is typically issued with which of the following types of coverage? Annual Renewable Term Decreasing Term Individual Whole Life Group Termdecreasing termThe investment gains from a Universal Life Policy usually go toward the death benefit the dividends the cash value paying off a policy loanthe cash valueTerm insurance has which of the following characteristics? Expires at the end of the policy period Builds cash value Has nonforfeiture options Endows at the end of the policy periodexpires at the end of the policy periodA term life insurance policy matures upon endowment of the contract upon death of the insured when the cash value equals the death benefit upon the insured's death during the term of the policyupon the insured's death during the term of the policyT would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase? Interest-Sensitive Whole Life Ten-Year Endowment Variable Universal Life Ten-Year Renewable Termten-year endowmentCredit Life insurance is issued in any amount at the discretion of the applicant used in the event of loss of income issued in an amount not to exceed the amount of the loan coverage that waives the premiums on a loan payment in the event of total disabilityissued in an amount not to exceed the amount of the loanWhat type of life policy covers 2 lives and pays the face amount after the first one dies? Group Life Joint Life Policy Family Income Policy Last Survivor Policyjoint life policyWhich of the following types of policies pays a benefit if the insured goes blind? Universal life AD&D Endowment Adjustable lifeAD&DIf X wants to buy $50,000 worth of permanent protection on his/her spouse and $25,000 worth of 10-year Term coverage on X under the same policy, the applicant should purchase An Estate Builder Policy A Whole Life Policy with Extended Term A Whole Life Policy with an Other Insured Rider A Whole Life Policy with a Payor benefita whole life policy with an other insured riderWhat type of life policy has a death benefit that adjusts periodically and is written for a specific period of time? Modified whole life 20-year paid up policy Endowment Decreasing termdecreasing termD needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed? Limited-pay life Graded Premium Level term Endowmentlevel termJ is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value? Life Paid-up at Age 70 20-pay Life Increasing Term to age 65 Straight Life20-pay lifeWhich of the following statements is CORRECT about the period in which a Term Policy can be converted? It is the same in all contracts It is set by state regulation It can be changed by the insured It varies according to the contractsit varies according to the contractsWhat kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability? Endowment policy Limited-Pay Whole life Convertible Term Decreasing Termconvertible termF needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed? Level term policy Whole life policy Limited-pay policy Decreasing term policydecreasing term policyN is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase? 30 Pay Life Term to Age 70 Universal Life Adjustable Life30 pay lifeWhich of these types of policies may NOT have the Automatic Premium Loan provision attached to it? Modified Whole Life 20-Pay Life Decreasing Term Endowmentdecreasing termWho benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? beneficiary insured policyowner insurerpolicyownerWhat type of life insurance incorporates flexible premiums and an adjustable death benefit? Endowment Policy Modified Whole Life Decreasing Term Universal Lifeuniversal lifeWhich of these life products is NOT considered interest-sensitive? Modified Whole Life Variable Universal Life Interest Sensitive Whole Life Variable Lifemodified whole lifeWhich of these would be considered a Limited-Pay Life policy? 10-year Renewable and Convertible Term Life Paid-Up at Age 70 Straight Whole Life Renewable Term to Age 100life paid-up at age 70Which type of life policy contains a monthly mortality charge as well as self-directed investment choices? Joint Life Adjustable Life Variable Universal Life Universal Lifevariable universal life