Chapter 3 quiz Answer Key

Variable Life insurance is based on what kind of premium? A)Graded B)Level fixed C)Increasing D)Decreasing

All of the following are the types of term insurance depending on how the face amount changes during the policy term EXCEPT A)Increasing. B)Renewable. C)Decreasing. D)Level.

Which of the following policies would be classified as a traditional level premium contract? A)Adjustable Life B)Universal Life C)Variable Universal Life D)Straight Life

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? A)Limited pay whole life B)Interest-sensitive whole life C)Life annuity with period certain D)Increasing term

Which of the following is TRUE about credit life insurance? A)Debtor is the annuitant. B)Creditor is the insured. C)Debtor is the policy beneficiary. D)Creditor is the policyowner.

Which of the following is called a "second-to-die" policy? A)Juvenile life B)Joint life C)Survivorship life D)Family income

All of the following are true about variable products EXCEPT A)Policyowners bear the investment risk. B)The premiums are invested in the insurer's general account. C)The minimum death benefit is guaranteed. D)The cash value is not guaranteed.

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? A)Variable life B)Adjustable life C)Universal life D)Flexible life

An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his A)Experience Rating. B)Group rate. C)Insurer's scheduled rate. D)Attained age.

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? A)Variable life B)Decreasing term C)Straight whole life D)Universal life

All of the following are characteristics of a group life insurance plan EXCEPT A)The participants receive a Certificate of Insurance as their proof of insurance. B)A minimum number of participants is required in order to underwrite the plan. C)The cost of the plan is determined by the average age of the group. D)There is a requirement to prove insurability on the part of the participants.

The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called A)Multiple Protection insurance. B)Credit life. C)Credit health. D)Decreasing whole life.

In a group life insurance policy, the employer may select all of the following EXCEPT A)The premium payor. B)The beneficiary. C)The type of insurance. D)The amount of insurance.

Which type of life insurance policy generates immediate cash value? A)Single Premium B)Level Term C)Decreasing Term D)Continuous Premium

Which of the following is NOT allowed in credit life insurance? A)Creditor becoming a policy beneficiary B)Creditor requiring that a debtor buys insurance from a certain insurer C)Creditor having a collateral assignment on the policy D)Creditor requiring that a debtor has a life insurance

Which Universal Life option has a gradually increasing cash value and a level death benefit? A)Term insurance B)Option B C)Option A D)Juvenile life

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 A)Single premium whole life. B)Modified Endowment Contract (MEC). C)Level term life. D)Graded premium whole life.

In a survivorship life policy, when does the insurer pay the death benefit? A)If the insured survives to age 100 B)Upon the last death C)Upon the first death D)Half at the first death, and half at the second death

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit? A)Universal Life - Option A B)Universal Life - Option B C)Equity Indexed Universal Life D)Variable Universal Life

All of the following entities regulate variable life policies EXCEPT A)The Insurance Department. B)The Guaranty Association. C)Federal government. D)The SEC.

Which of the following Life Insurance policies would be considered interest sensitive? A)Adjustable life B)Whole life C)Increasing term D)Universal life

When an employee terminates coverage under a group insurance policy, coverage continues in force A)Until the employee can obtain coverage under a new group plan. B)Until the employee notifies the group insurance provider that coverage conversion policy is issued. C)For 31 days. D)For 60 days.

When would a 20-pay whole life policy endow? A)When the insured reaches age 100 B)At the insured's age 65 C)After 20 payments D)In 20 years

The initial amount of credit life insurance may NOT exceed A)The borrower's annual income. B)The amount to be repaid under the contract. C)An amount set by statute and adjusted regularly for inflation. D)The borrower's monthly income.

Which of the following best describes annually renewable term insurance? A)It requires proof of insurability at each renewal. B)Neither the premium nor the death benefit is affected by the insured's age. C)It provides an annually increasing death benefit. D)It is level term insurance.

A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that? A)Survivorship Life Policy B)Second-to-Die C)Family Income Policy D)Joint Life Policy

Which of the following features of the Indexed Whole Life policy is NOT fixed? A)Policy period B)Cash value growth C)Premium D)Death benefit

Which of the following would help prevent a universal life policy from lapsing? A)Face amount B)Adjustable premium C)Corridor of insurance D)Target premium

All of the following statements are correct regarding Credit Life Insurance EXCEPT A)Benefits are paid to the borrower's beneficiary. B)The amount of insurance permissible is limited per borrower. C)Premiums are usually paid by the borrower. D)Benefits are paid to the creditor.

A domestic insurer issuing variable contracts must establish one or more A)Liability accounts. B)Annuity accounts. C)General accounts. D)Separate accounts.

A Straight Life policy has what type of premium? A)An increasing annual premium for the life of the insured B)A decreasing annual premium for the life of the insured C)A variable annual premium for the life of the insured D)A level annual premium for the life of the insured

What does "level" refer to in level term insurance? A)Cash value B)Interest rate C)Face amount D)Premium

An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy? A)She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan. B)She will still be covered under the group plan, but will have to pay an individual policy premium. C)She can only convert her coverage without proof of insurability if she has the master policy. D)She must apply for a new policy, which requires her to provide proof of insurability.

The type of policy that can be changed from one that does not accumulate cash value to the one that does, is a A)Whole Life Policy. B)Convertible Term Policy. C)Renewable Term Policy. D)Decreasing Term Policy.

Annually renewable term policies provide a level death benefit for a premium that A)Remains level. B)Fluctuates. C)Increases annually. D)Decreases annually.

If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary? A)The face amount minus the premiums that would have been collected until the insured reached the age of 100 B)A full death benefit C)A death benefit equal to the cash value of the policy D)50% of the death benefit

Credit Life insurance A)Insures the life of a creditor. B)Has a maximum term for insurance of 20 years. C)Insures the life of a debtor. D)Is purchased on an installment basis.

Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated? A)Those who have no history of claims B)Those who have been insured under the plan for at least 5 years C)Those who have worked in the company for at least 3 years D)Those who have dependents

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen? A)The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one. B)The insurer will pay the full death benefit from the group policy to the beneficiary. C)The insurer will pay a reduced death benefit to the beneficiary. D)The insurer will pay the death benefit minus one month's premium.

Which of the following is an example of a limited-pay life policy? A)Life Paid-up at Age 65 B)Renewable Term to Age 70 C)Level Term Life D)Straight Life

Which of the following types of insurance policies is most commonly used in credit life insurance? A)Increasing term B)Whole life C)Equity indexed life D)Decreasing term

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 ASingle premium whole life. BModified Endowment Contract (MEC). CLevel term life. DGraded premium whole life.