Which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death?
- Survivorship Life
- Family Plan
- Joint Life
- Whole Life and Level Term Rider
answer
Joint Life
question
A Family Income Policy is a combination of Whole Life and
Decreasing Term insurance
Level Term insurance
Deposit Term insurance
Increasing Term insurance
answer
Decreasing Term Insurance
question
Under a Renewable Term policy,
-the face amount is automatically adjusted at the time of renewal
-evidence of insurability must be provided at each renewal
-the renewal premium is calculated on the basis of the insured's attained age
-a new application must be completed at each renewal
answer
The renewal premium is calculated on the basis of the insured's attained age
question
What does a Face Amount Plus Cash Value Policy supposed to pay at the insured's death?
- Face amount plus the policy's cash value
- Face amount plus the policy's dividends
- The greater amount of the policy's death benefit or the cash value
- Face amount plus total premium paid throughout the life of the policy
answer
Face amount plus the policy's cash value
question
Which of the following characteristics is CORRECT about Interest Sensitive Whole Life?
- There is a flexible premium payment
- There are no guaranteed minimum interest rates
- Mortality charges do not impact the investment amount
- Interest rates determine cash values
answer
There is a flexible premium payment
question
What type of life insurance are credit policies issued as?
Whole
Variable
Term
Universal
answer
Term
question
When is the face amount of a Whole Life policy paid?
-At the policy's maturity date only
-When the insured dies or at the policy's maturity date, whichever happens first
-Only when the insured dies
-When the policy is surrendered
answer
when the insured dies or at the policy's maturity date, whichever happens first
question
When applied to Whole Life insurance, the word "straight" denotes
-The absence of dividends
-Options to reduce or withhold premium payments
-The mode premium payments
-The duration of premium payments
answer
The duration of premium payments
question
All of these statements about Equity Indexed Life Insurance are correct EXCEPT
- Cash value has a minimum rate of accumulation
-If the gain on the index goes beyond the policy's minimum rate of return, the cash value will mirror that of the index
-The premiums can be lowered or raised, based on investment performance
-Tied to an equity index such as the S&P 500
answer
premiums can be lowered or raised, based on investment performance
question
A Renewable Term Policy is renewable at the option of the
Owner
Company
Insured
Assignee
answer
Insured
question
What type of life policy covers two people and pays upon the death of the last insured?
Shared
Survivorship
Adjustable
Joint
answer
survivorship
question
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?
Universal Life
Endowment Life
Modified Whole Life
Graded Premium Whole Life
answer
universal 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?
Term Life
Whole Life
Credit Life
Universal Life
answer
whole life
question
A life insurance policy that provides a policyowner with cash value along with a level face amount is called
Whole life
Level term
Credit life
Ordinary life
answer
whole life
question
A 15-year mortgage is best protected by what kind of life policy?
Modified whole life
15-year level term
15-year decreasing term
Adjustable life
answer
15-year decreasing term
question
Variable Whole Life Insurance can be described as
- both an insurance and securities product
- an insurance product only
- a securities product only
- the insurance company assumes the investment risk
answer
both an insurance and securities product
question
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
answer
policyowner controls where the investment will go and selects the amount of the premium payment
question
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
answer
upon death of the last insured
question
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?
Family Benefit policy
Family Maintenance policy
Family Income policy
Family Survivor policy
answer
Family maintenance policy
question
All of these are characteristics of an Adjustable Life policy EXCEPT
-adjustable premiums
- adjustable premium payment period
-combination of term and whole life insurance
-face amount can be adjusted using policy dividends
answer
face amount can be adjusted using policy dividends
question
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Modified Whole Life
Modified Endowment Contract
Variable Universal Life
Interest-Sensitive Whole Life
answer
modified endowment contract
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?
Variable Life
Adjustable Life
Graded Premium Whole Life
Modified Whole Life
answer
modified whole life (premiums just increases once)
question
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
answer
decreasing term rider
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?
Joint policy
Joint survivor policy
Whole life policy with other insured rider
Whole life policy with a Guaranteed Insurability option
answer
whole life policy with other insured rider
question
Which of the following policies combines investment choices with a form of Term coverage?
Limited-Pay Life
Variable Universal Life
Universal Life
Adjustable Life
answer
variable universal life
question
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?
Owner's Rights clause
Incontestable Period
Insuring Agreement
Conversion privilege
answer
conversion privilege
question
A(n) ______ Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities.
Adjustable
Term
Universal
Variable
answer
variable
question
Which statement is TRUE regarding a Variable Whole Life policy?
-A minimum guaranteed Death benefit is provided
-It is a combination of an Endowment and a Increasing Term policy
-Its premiums and benefits are variable
-It has guaranteed dividends
answer
a mimimum guaranteed death benefit is provided
question
What type of insurance offers permanent life coverage with premiums that are payable for life?
Credit Life
Renewable Term Life
Whole Life
Endowment
answer
whole life
question
A Limited-Pay Life policy has
-graded death benefits
-no cash value
-premium payments limited to a specified number of years
-premium payments that are paid to age 100
answer
premium payments limited to a specified number of years
question
Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?
Modification
Conversion
Exchange
Adjustable
answer
conversion
question
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
answer
20-pay life accumulates cash value faster than straight life
question
Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy?
increase face amount
decrease face amount
increase premium-paying period
decrease premium payment
answer
increase face amount
question
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
answer
cash value may be borrowed against
question
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
answer
variable life
question
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
Adjustable Life
Indeterminate Premium Life
Grader Premium Life
Modified Premium Life
answer
modified premium life
question
The Universal Life Policy is called an unbundled Life Policy because the policyholder can see the expense charges, the interest earned, and the
Premium tax
Dividend rate
Values based on mutual funds or stocks
Cost of insurance
answer
cost of insurance
question
K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?.
Increasing
Decreasing
Adjustable
Level
answer
level
question
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
answer
variable life
question
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance Policy
Family Income Policy
Survivor Policy
Family Survivor Policy
answer
family maintenance policy
question
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?
Limited-Pay Life
Term to Age 65
Whole Life Paid-Up at Age 65
Endowment at Age 65
answer
endowment at age 65
question
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
answer
premiums are payable for as long as there is insurance coverage in force
question
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?
Renewable
Increasing
Level
Decreasing
answer
renewable
question
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?
Return of premiums paid
Cash value plus interest
$20,000 death benefit
Face amount plus interest
answer
$20,000 death benefit
question
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for
Variable Life
Modified Whole Life
Universal Variable life
Variable Annuity
answer
modified whole life
question
ariable Life products require a producer to
guarantee not more than a 12% return per annum
hold a Life and Health Insurance license
hold a Life Insurance license and a Securities license
be regulated solely by State Law
answer
hold a life insurance license and a securities license
question
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?
L's spouse dies at age 62.
L's spouse dies at age 66.
Their natural child dies at age 18.
Their adopted child dies at age 18.
answer
L's spouse dies at age 66
question
Life insurance that covers an insured's whole life with level premiums paid over a limited time is called
Adjustable Life
Renewable Term
Limited Pay Life
Joint Life
answer
limited pay life
question
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?
Equity index insurance
Endowment
Graded whole life policy
Return of premium policy
answer
equity index insurance
question
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
answer
through mutual funds, stocks, and bonds
question
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?
Endowment at Age 75
Universal Life
Graded Benefit Whole Life
Modified Whole Life
answer
universal life
question
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?
Family Lump Sum Policy
Family Maintenance Policy
Family Survivor Policy
Family Income Policy
answer
family maintenance policy
question
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
the cost
the health of the insured
the amount of coverage being converted
who will be beneficiary
answer
the cost
question
Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?
Variable Life
Credit Life
Universal Life
Interest-Sensitive Whole Life
answer
variable life
question
A Whole Life Insurance Policy endows when the
Premium paid equals the death benefit
Death proceeds are paid
Cash value equals the death benefit
Cash value plus dividends equal the death benefit
answer
cash value equals the death benefit
question
Which of these statements describe a Modified Endowment Contract (MEC)?
Falls below the minimum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
The 7-pay test is used to determine the minimum death benefit of the policy
The 7-pay test is used to determine the maximum death benefit of the policy
answer
exceeds the maximum amoung of premium that can be paid into a policy and still have it recognized as a life insurance contract
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?
5 years
10 years
15 years
20 years
answer
10 years
question
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
answer
20-pay life
question
What kind of premium does a Whole Life policy have?
decreasing
adjustable
level
deferred
answer
level
question
Whole Life insurance policies are contractually guaranteed to provide each of the following EXCEPT
cash value that will ultimately replace the death benefit
nonforfeiture benefit options
premiums that remain fixed for the life of the policy
partial withdrawal features beyond a surrender charge period
answer
partial withdrawal features beyond a surrender charge period
question
When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
Extended term option
Conversion provision
1035 Exchange
Incontestable period
answer
conversion provision
question
When a life insurance policy exceeds certain IRS table values, the result would create which of the following?
1035 Exchange
An investment
Modified Endowment Contract (MEC)
Endowment
answer
modified endowment contract
question
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
answer
premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured
question
What kind of special need would a policyowner require with an Adjustable Life insurance policy?
level premiums
flexible premiums
flexible nonforfeiture options
level death benefits
answer
flexible premiums
question
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?
Payor provision
Accelerated Benefits provision
Assignment provision
Waiver of Premium provision
answer
payor provision
question
How long does the coverage normally remain on a limited-pay life policy?
age 65
age 100
when premium payments stop
at the discretion of the insurer
answer
age 100
question
Which of these is an element of a Variable Life policy?
A fixed, level premium
Insurer assumes the investment risk
No investment risk to the policyowner
Rate of returns are guaranteed
answer
a fixed, level premium
question
A policy that becomes a Modified Endowment Contract (MEC)
will no longer allow for policy loans
must be placed in an irrevocable trust
can never be reinstated after a lapse
will lose many of its tax advantages
answer
will lose many of its tax advantages
question
What type of life insurance gives the greatest amount of coverage for a limited period of time?
Term life
Graded Premium Whole life
Whole life
Endowment policy
answer
term life
question
The amount of coverage on a group credit life policy is limited to
half of the insured's total loan value
the insured's total loan value
75% of the insured's total loan value
$25,000
answer
the insured's total loan value
question
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
answer
child term rider
question
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
answer
it does not guarantee a return on its investment accounts
question
What kind of life insurance product covers children under their parent's policy?
Family Maintenance rider
Term rider
Family Income rider
Payor benefit
answer
term rider
question
Which of the following actions is NOT possible with a Universal Life policy?
Policy's cash value may be used to pay premiums
Premium payments may be made at unscheduled times
Premiums may be applied as a credit against income tax
Face amount may be adjusted
answer
premiums may be applied as a credit against income tax
question
Credit life insurance is typically issued with which of the following types of coverage?
Annual Renewable Term
Decreasing Term
Individual Whole Life
Group Term
answer
decreasing term
question
The investment gains from a Universal Life Policy usually go toward
the death benefit
the dividends
the cash value
paying off a policy loan
answer
the cash value
question
Term insurance has which of the following characteristics?
Expires at the end of the policy period
Builds cash value
Has nonforfeiture options
Endows at the end of the policy period
answer
expires at the end of the policy period
question
A term life insurance policy matures
upon endowment of the contract
upon death of the insured
when the cash value equals the death benefit
upon the insured's death during the term of the policy
answer
upon the insured's death during the term of the policy
question
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?
Interest-Sensitive Whole Life
Ten-Year Endowment
Variable Universal Life
Ten-Year Renewable Term
answer
ten-year endowment
question
Credit Life insurance is
issued in any amount at the discretion of the applicant
used in the event of loss of income
issued in an amount not to exceed the amount of the loan
coverage that waives the premiums on a loan payment in the event of total disability
answer
issued in an amount not to exceed the amount of the loan
question
What type of life policy covers 2 lives and pays the face amount after the first one dies?
Group Life
Joint Life Policy
Family Income Policy
Last Survivor Policy
answer
joint life policy
question
Which of the following types of policies pays a benefit if the insured goes blind?
Universal life
AD&D
Endowment
Adjustable life
answer
AD&D
question
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
An Estate Builder Policy
A Whole Life Policy with Extended Term
A Whole Life Policy with an Other Insured Rider
A Whole Life Policy with a Payor benefit
answer
a whole life policy with an other insured rider
question
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
answer
decreasing term
question
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?
Limited-pay life
Graded Premium
Level term
Endowment
answer
level term
question
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?
Life Paid-up at Age 70
20-pay Life
Increasing Term to age 65
Straight Life
answer
20-pay life
question
Which of the following statements is CORRECT about the period in which a Term Policy can be converted?
It is the same in all contracts
It is set by state regulation
It can be changed by the insured
It varies according to the contracts
answer
it varies according to the contracts
question
What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?
Endowment policy
Limited-Pay Whole life
Convertible Term
Decreasing Term
answer
convertible term
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?
Level term policy
Whole life policy
Limited-pay policy
Decreasing term policy
answer
decreasing term policy
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?
30 Pay Life
Term to Age 70
Universal Life
Adjustable Life
answer
30 pay life
question
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
Modified Whole Life
20-Pay Life
Decreasing Term
Endowment
answer
decreasing term
question
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
beneficiary
insured
policyowner
insurer
answer
policyowner
question
What type of life insurance incorporates flexible premiums and an adjustable death benefit?
Endowment Policy
Modified Whole Life
Decreasing Term
Universal Life
answer
universal life
question
Which of these life products is NOT considered interest-sensitive?
Modified Whole Life
Variable Universal Life
Interest Sensitive Whole Life
Variable Life
answer
modified whole life
question
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
answer
life paid-up at age 70
question
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
answer
variable universal life
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