Chapter Exam 1 Life Policies

coverage from their date of issue until the insured reaches the specified age

characterized by comparatively small issue amounts, i.e. $,1000

"Pre-death distributions are typically taxable". Failing to meet the seven-pay test results in pre-death distributions likely to likely to.become taxable.

A single premium cash value policy is best described as a policy that is paid up after only one payment.

limited pay policy

Term insurance is appropriate for individuals seeking temporary protection and lower premiums.

Universal life has a guaranteed interest rate with the possibility to earn an interest rate that is higher than the guaranteed rate.

"Universal Life policy". This is an example of a Universal Life policy.

"lower than the typical whole life policy during the first few years and then higher than typical for the remainder". Modified whole life policies are distinguished by premiums that are lower than typical whole life premiums during the first few years and then higher than typical thereafter.

Death benefits, cash value, loading costs

A survivorship life policy pays on the death of the last person

"will no longer provide insurance protection". In this situation, if Mike dies first, the policy proceeds will no longer provide further insurance protection.

"A flexible premium schedule". The policy feature that makes universal life different from whole life insurance policies is its flexible premium schedule.

The type of policy where 80% to 90% of the premium is invested in traditional fixed income securities and the remainder of the premium is invested in contracts tied to a stipulated stock index is equity index whole life.

modified endowment contract (MEC) receives different tax treatment on pre-death distributions than other life insurance policies because it tends to be an investment vehicle.

life insurance producer needs to possess a securities license to sell variable annuities.

The policy's premium can be increased or decreased. The policy's death benefit can be increased or decreased. The policy's protection period can be modified

insurance is individual life insurance that includes many types of temporary (term), permanent (whole life), and variable universal life insurance protection plans written on individuals.

are normally paid monthly, quarterly, semi-annually or annually

(1) term, (2) whole life, (3) universal, and variable life coverage as well as endowment policies.

by comparatively small issue amount, i.e. $1,000.00

a weekly or monthly basis by the agent at the policy owner's home

employer, employee groups, associations, unions, and creditors

coverage for a number of individuals under one contract

the group, not the individuals who are insured

grown tremendously over the past few decades

the simplest type of life insurance plan

only if the insured dies during that period.

do not build cash value

the initial premium is lower than for an equivalent amount of whole life insurance

the greatest amount of death benefit per dollar of initial cash outlay

temporary life insurance since it provides protection for a temporary period of time.

years and by certain age