3 - Life Insurance Policies - Provisions, Options And Riders (Exam 1)

A variable 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 provision

Which 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 flexible

Which 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 retirement

A 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 Life

What 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 term

How 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 Bills

S is covered by a whole life policy. Which insurance product can cover his children? -Assignment provision -Payor benefit -Accelerated benefit rider -Child term rider

When 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 payments

What type of life policy covers two people and pays upon the death of the last insured? -Shared -Survivorship -Adjustable -Joint

Which 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 force

Which 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 paid

Which type of life policy contains a monthly mortality charge as well as self-directed investment choices? -Joint Life -Adjustable Life -Variable Universal Life -Universal Life

A 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 rate

Which 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 Life

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 rider