Ch 3 Life Insurance Policies (Part 1)

27 February 2023
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question
Which statement about a whole life policy is correct?
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Cash value may be borrowed against
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All of these are characteristics of an Adjustable Life policy EXCEPT
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face amount can be adjusted using policy dividends
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What type of life insurance incorporates flexible premiums and an adjustable death benefit?
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universal life
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Which of the following actions is NOT possible with a Universal Life policy?
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Premiums may be applied as a credit against income tax
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What type of life policy covers 2 lives and pays the face amount after the first one dies?
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Joint life policy
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A Renewable Term Policy is renewable at the option of the
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insured
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J 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?
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20 pay life
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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?
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20-Pay Life accumulates cash value faster than Straight Life
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T 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?
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Ten-Year Endowment
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S 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?
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Equity index insurance
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Under a Renewable Term policy,
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the renewal premium is calculated on the basis of the insured's attained age
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Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
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Decreasing Term
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Which of the following types of policies pays a benefit if the insured goes blind?
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AD&D
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A life insurance policy that provides a policyowner with cash value along with a level face amount is called
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whole life
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Which type of policy is considered to be overfunded, as stated by IRS guidelines?
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Modified Endowment Contract
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N 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?
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30 pay life
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What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
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Family Maintenance Policy
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A 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?
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payor provision
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What type of life insurance gives the greatest amount of coverage for a limited period of time?
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term life
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A 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?
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universal life
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D 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?
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level term
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How does a typical Variable Life Policy investment account grow?
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Through mutual funds, stocks, bonds
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A policy that becomes a Modified Endowment Contract (MEC)
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will lose many of its tax advantages
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Life insurance that covers an insured's whole life with level premiums paid over a limited time is called
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limited pay life
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Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
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policyowner
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Which of the following statements is CORRECT about the period in which a Term Policy can be converted?
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it varies according to contract
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A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as
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variable life
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What 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 life
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20 pay life
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A Limited-Pay Life policy has
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premium payments limited to a specified number of years
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Which of these is an element of a Variable Life policy?
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a fixed, level premium
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A Whole Life Insurance Policy endows when the
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Cash value equals the death benefit
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Credit life insurance is typically issued with which of the following types of coverage?
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decreasing term
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A variable insurance policy
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does not guarantee a return on its investment accounts
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Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy?
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increase face amount
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L, 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?
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L's spouse dies at age 66.
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What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?
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whole life
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A term life insurance policy matures
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upon the insured's death during the term of the policy
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When a life insurance policy exceeds certain IRS table values, the result would create which of the following?
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Modified Endowment Contract (MEC)
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How long does the coverage normally remain on a limited-pay life policy?
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age 100
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K 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?
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$20,000 death benefit
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The 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
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the cost
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What 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?
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family maintenance policy
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If 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
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A Whole Life Policy with an Other Insured Rider
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Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
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Variable Universal Life
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What type of life policy covers two people and pays upon the death of the last insured?
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Survivorship
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S is covered by a whole life policy. Which insurance product can cover his children?
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child term rider
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K 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?
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Modified Whole Life
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Which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death?
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Joint Life
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Which is true concerning a Variable Universal Life policy?
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Policyowner controls where the investment will go and selects the amount of the premium payment
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Which of these life products is NOT considered interest-sensitive?
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modified whole life
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All of these statements about Equity Indexed Life Insurance are correct EXCEPT
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The premiums can be lowered or raised, based on investment performance
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The investment gains from a Universal Life Policy usually go toward
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cash value
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The amount of coverage on a group credit life policy is limited to
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the insureds total loan value
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When applied to Whole Life insurance, the word "straight" denotes
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The duration of premium payments
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All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for
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modified whole life
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Which statement is correct regarding the premium payment schedule for whole life policies?
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Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured
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K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?.
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level
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Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?
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conversion
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Term insurance has which of the following characteristics?
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expires at the end of the policy period
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Which 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 100
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Life Paid-Up at Age 70
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What kind of premium does a Whole Life policy have?
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level
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Which 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?
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universal life
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Additional coverage can be added to a Whole Life policy by adding a(n)
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decreasing term rider
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G 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?
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10 years
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What type of life insurance are credit policies issued as?
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term
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What kind of life insurance product covers children under their parent's policy?
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term rider
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P 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?
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family maintenance policy
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F 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?
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decreasing term policy
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Which of these characteristics is consistent with a Straight Life policy?
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Premiums are payable for as long as there is insurance coverage in force
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Q 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?
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Whole life policy with other insured rider
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Variable Whole Life Insurance can be described as
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both an insurance and securities product
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Which of the following policies combines investment choices with a form of Term coverage?
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variable universal life
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Which 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?
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Conversion privilege
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M 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
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modified premium life
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The Universal Life Policy is called an unbundled Life Policy because the policyholder can see the expense charges, the interest earned, and the
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Cost of insurance
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What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?
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Decreasing term
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Which of these statements describe a Modified Endowment Contract (MEC)?
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Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
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A 15-year mortgage is best protected by what kind of life policy?
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Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
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When is the face amount paid under a Joint Life and Survivor policy?
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upon death of the last insured
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When is the face amount of a Whole Life policy paid?
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When the insured dies or at the policy's maturity date, whichever happens first
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Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?
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variable life
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Which statement is TRUE regarding a Variable Whole Life policy?
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A minimum guaranteed Death benefit is provided
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Variable Life products require a producer to
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hold a Life Insurance license and a Securities license
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A Family Income Policy is a combination of Whole Life and
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decreasing term
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Which of the following characteristics is CORRECT about Interest Sensitive Whole Life?
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There is a flexible premium payment
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T 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?
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Renewable
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K 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?
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Endowment at Age 65
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What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?
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convertible term
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Whole Life insurance policies are contractually guaranteed to provide each of the following EXCEPT
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partial withdrawal features beyond a surrender charge period
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A(n) ______ Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities.
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variable
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What kind of special need would a policyowner require with an Adjustable Life insurance policy?
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flexible premiums
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Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?
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variable life
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What type of insurance offers permanent life coverage with premiums that are payable for life?
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whole life
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Credit Life insurance is
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issued in an amount not to exceed the amount of the loan