Chapter 3 (Part 1)

18 October 2022
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question
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?
answer
30 Pay Life
question
What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?
answer
Whole Life
question
Which of these is an element of a Variable Life policy?
answer
A fixed, level premium
question
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
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Policyowner
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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 statement about a whole life policy is correct?
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Cash value may be borrowed against
question
What type of life insurance gives the greatest amount of coverage for a limited period of time?
answer
Term life
question
What type of insurance offers permanent life coverage with premiums that are payable for life?
answer
Whole Life
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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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How does a typical Variable Life Policy investment account grow?
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Through mutual funds, stocks, bonds
question
Which of these life products is NOT considered interest-sensitive?
answer
Modified Whole Life
question
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?
answer
10 years
question
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?
answer
Whole life policy with other insured rider
question
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 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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Which type of policy is considered to be overfunded, as stated by IRS guidelines?
answer
Modified Endowment Contract
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Which of these statements describe a Modified Endowment Contract (MEC)?
answer
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
question
Which of these would be considered a Limited-Pay Life policy?
answer
Life Paid-Up at Age 70
question
Which statement is correct regarding the premium payment schedule for whole life policies?
answer
Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured
question
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
answer
Family Maintenance Policy
question
All of these insurance products require a producer to have proper FINRA securities registration in order to sell them EXCEPT for
answer
Modified Whole Life
question
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?
answer
Modified Whole Life
question
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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When is the face amount paid under a Joint Life and Survivor policy?
answer
upon death of the last insured
question
Which of these characteristics is consistent with a Straight Life policy?
answer
Premiums are payable for as long as there is insurance coverage in force
question
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?
answer
Decreasing term policy