Adjustable Life Policy Quiz & Flashcards

Questions and Answers

Which of the following life insurance policies combine term insurance with an investment element?

Universal Life (correct)

Variable Life

Term Life

Whole Life

Variable Life products require a producer to?

Hold a Life Insurance License and a Securities License

What type of life policy covers two lives and pays the face amount after the first one dies?

Joint Life Policy

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?

$20,000 Death Benefit Signup and view all the answers

Which of the following policies is characterized by a flexible premium and death benefit and allows the policy owner control of the investment aspect of the plan?

Variable Universal Life Signup and view all the answers

Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary time period. Which of these policies should Q purchase?

Term Life Signup and view all the answers

What does a Face Amount Plus Cash Value Policy pay upon the insurer's death?

Face Amount Plus the Policy's Cash Value Signup and view all the answers

Y purchased $100,000 worth of permanent protection on himself and $50,000 worth of 10-year Term coverage for his wife on the same policy. Which of these policies did Y purchase?

Whole Life Policy with an Other Insured Rider Signup and view all the answers

When a life insurance policy exceeds certain IRS table values, the result would create which of the following?

Modified Endowment Contract (MEC) Signup and view all the answers

Whole Life Insurance policies are contractually guaranteed to provide each of the following EXCEPT Partial Withdrawal Features Beyond A Surrender Charge Period.

True Signup and view all the answers

Term insurance has which of the following characteristics?

True Signup and view all the answers

Term Life Policies that have the ability to be converted to permanent coverage may do so during a specific time period. This conversion period?

Varies According to the Contract Signup and view all the answers

What type of life policy covers two people and pays upon the death of the last insured?

Survivorship Signup and view all the answers

The investment gains from a Universal Life Policy usually go toward?

The Cash Value Signup and view all the answers

The cash value in a(n) ___________ life policy may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors.

Universal Signup and view all the answers

Under a Graded Premium Whole Life policy?

The Premium Increases each year during the early years of the contract and remains the same after that Signup and view all the answers

Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?

Policyowner Signup and view all the answers

A policy that becomes a Modified Endowment Contract (MEC)

Will Lose many of its tax advantages Signup and view all the answers

At what point does a Whole Life Insurance policy endow?

When the cash value equals the death benefit Signup and view all the answers

Who has the option to renew a Renewable Term policy?

Insured Signup and view all the answers

Which of the following features of a group Term Life policy enables an individual to leave the group and continue his/her insurance without providing evidence of insurability?

Conversion Privilege Signup and view all the answers

All of these are characteristics of an Adjustable Life policy EXCEPT Face amount can be adjusted using policy dividends.

True Signup and view all the answers

Which of the following types of policies pays a benefit if the insured goes blind?

AD&D Signup and view all the answers

When is the face amount paid under a Joint Life and Survivor policy?

Upon death of the last insured Signup and view all the answers

Under a Renewable Term policy,?

The renewal premium is calculated on the basis of the insured's attained age Signup and view all the answers

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?

Ten-Year Endowment Signup and view all the answers

All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for Modified Whole Life.

True Signup and view all the answers

Whole Life Insurance is sometimes referred to as 'Straight Life'. What does the word 'Straight' indicate when using this phrase?

The Duration of Premium Payments Signup and view all the answers

S is covered by a whole life policy. Which insurance product can cover his children?

Child Term Rider Signup and view all the answers

A life policy that contains a monthly charge as well as self-directed investment choices is called a(n)

Variable Universal Life Policy Signup and view all the answers

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 Signup and view all the answers

Which of the following actions is NOT possible with a Universal Life Policy?

True Signup and view all the answers

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 Signup and view all the answers

K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?

Level Signup and view all the answers

Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life Policy?

Increase Face Amount Signup and view all the answers

A Universal Life Policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, expense charges, and the?

Cost of Insurance Signup and view all the answers

Which of these statements describe a Modified Endowment Contract (MEC)?

Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract Signup and view all the answers

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?

Level Term Signup and view all the answers

Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?

Decreasing Term Signup and view all the answers

S, age 40, is looking to buy a Life Insurance policy that will allow for increases or decreases in coverage as his needs change. The policy best suited for S would be?

Universal Life Signup and view all the answers

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?

Decreasing Term Policy Signup and view all the answers

Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit?

Variable Life Signup and view all the answers

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?

10 Years Signup and view all the answers

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

Universal Life Signup and view all the answers

Which is true concerning a Variable Universal Life policy?

Policyowner controls where the investment will go and selects the amount of the premium payment Signup and view all the answers

What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?

Family Maintenance Policy Signup and view all the answers

How does a typical Variable Life Policy investment account grow?

Through mutual funds, stocks, and bonds Signup and view all the answers

What type of life insurance are credit policies issued as?

Term Signup and view all the answers

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 to be paid up at retirement. Which of these should N purchase?

30 Pay Life Signup and view all the answers

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

Conversion Provision Signup and view all the answers

Which of these characteristics is consistent with a Straight Life Policy?

Premiums are payable for as long as there is insurance coverage in force Signup and view all the answers

All of these statements about Equity Indexed Life Insurance are correct EXCEPT the premiums can be lowered or raised, based on investment performance.

True Signup and view all the answers

What kind of premium does a Whole Life policy have?

Level Signup and view all the answers

Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?

Variable Life Signup and view all the answers

Additional coverage can be added to a Whole Life policy by adding a(n)

Decreasing Term Rider Signup and view all the answers

P owns a $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own?

Endowment at Age 70 Signup and view all the answers

Which statement is TRUE regarding a Variable Whole Life Policy?

A minimum guaranteed death benefit is provided Signup and view all the answers

Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n):

Third Party with no Insurable Interest Signup and view all the answers

Which of the following types of Term Life policies most likely contains a Renewable feature?

10 year convertible term Signup and view all the answers

Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?

Conversion Signup and view all the answers

What advantage does the renewable feature give to a term policy?

The insured may extend the coverage period Signup and view all the answers

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?

20 pay life accumulates cash faster than straight life Signup and view all the answers

A variable insurance policy

Does not guarantee a return on its investment accounts Signup and view all the answers

Which of these needs is satisfied by Adjustable Life insurance?

Insured's needs for flexible premiums Signup and view all the answers

Which of the following is considered an element of a Variable Life Policy?

Underlying Equity Investment Signup and view all the answers

A(n) ________ term life policy is normally used when covering an insured's mortgage balance.

decreasing Signup and view all the answers

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?

Modified Whole Life Signup and view all the answers

Study Notes

Life Insurance Policies Overview

Universal Life combines term insurance with an investment component, providing flexibility in premiums and death benefits.
Variable Life products require both a life Insurance License and a Securities License for producers to sell.
Joint Life Policy insures two lives and pays out upon the death of the first insured individual.

Policy Benefits and Features

A 20-Year Endowment policy pays out $20,000 upon the insured's death within the coverage period, regardless of cause.
Variable Universal Life offers a flexible premium and investment control, allowing policyholders to adjust their death benefit.
Term Life Insurance is best for individuals seeking temporary protection at the lowest premium cost.

Cash Value and Benefit Payments

A Face Amount Plus Cash Value Policy pays both the face amount and accumulated cash value upon the insured's death.
Whole Life Policy with an Other Insured Rider provides $100,000 permanent coverage with an additional $50,000 term coverage for a spouse.
An insurance policy becomes a Modified Endowment Contract (MEC) if it exceeds certain IRS premium limits, losing tax advantages.

Policy Characteristics and Conversions

Whole Life Insurance provides guaranteed benefits but does not allow partial withdrawals beyond a surrender charge period.
Term Insurance expires at the end of its defined period, with conversion options for some policies varying by contract.
Survivorship Policies cover two people and pay out upon the death of the last insured.

Premium Structures and Adjustments

Graded Premium Whole Life features yearly increasing premiums in early years that stabilize later on.
Universal Life Policies have fluctuating cash values based on changing mortality, interest, and expense factors.
Adjustable Life Policies allow for face amounts to be adjusted but not through policy dividends.

Insurance Types and Conversions

AD&D Insurance pays out benefits for specific events like blindness, while twists like Joint Life and Survivor policies pay out on the last insured's death.
Renewable Term Policies allow insured individuals the option to renew based on attained age, impacting premium calculations.
Conversion Provisions enable policyholders to switch from term policies to whole life without proof of good health.

Special Insurance Considerations

Non-Qualified Policies include features like the Automatic Premium Loan, which is typically absent in decreasing term policies.
Family Income Policies provide income benefits for a specified period following the insured's death.
Stranger-Owned Life Insurance (STOLI) involves purchasing life insurance solely for profit motives, involving third parties without insurable interest.

Policy Recommendations

For guaranteed cash accumulation, consider a 20 Pay Life, which generates cash value faster than other standard whole life products.
Decreasing Term Policies are ideal for covering mortgages as they align with decreasing liabilities.
A Modified Whole Life policy maintains fixed premiums for a set period before adjusting, providing a structured premium payment plan combined with level death benefits.

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Test your knowledge on various life insurance policies with this flashcard quiz. From Universal Life to Joint Life Policies, cover the essential definitions and requirements. Perfect for those preparing for exams in life insurance.

Chapter Exam 1 - Life Policies

Questions and Answers

Which of the following life insurance policies combine term insurance with an investment element?

Variable Life products require a producer to?

What type of life policy covers two lives and pays the face amount after the first one dies?

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?

Which of the following policies is characterized by a flexible premium and death benefit and allows the policy owner control of the investment aspect of the plan?

Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary time period. Which of these policies should Q purchase?

What does a Face Amount Plus Cash Value Policy pay upon the insurer's death?

Y purchased $100,000 worth of permanent protection on himself and $50,000 worth of 10-year Term coverage for his wife on the same policy. Which of these policies did Y purchase?

When a life insurance policy exceeds certain IRS table values, the result would create which of the following?

Whole Life Insurance policies are contractually guaranteed to provide each of the following EXCEPT Partial Withdrawal Features Beyond A Surrender Charge Period.

Term insurance has which of the following characteristics?

Term Life Policies that have the ability to be converted to permanent coverage may do so during a specific time period. This conversion period?

What type of life policy covers two people and pays upon the death of the last insured?

The investment gains from a Universal Life Policy usually go toward?

The cash value in a(n) ___________ life policy may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors.

Under a Graded Premium Whole Life policy?

Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?

A policy that becomes a Modified Endowment Contract (MEC)

At what point does a Whole Life Insurance policy endow?

Who has the option to renew a Renewable Term policy?

Which of the following features of a group Term Life policy enables an individual to leave the group and continue his/her insurance without providing evidence of insurability?

All of these are characteristics of an Adjustable Life policy EXCEPT Face amount can be adjusted using policy dividends.

Which of the following types of policies pays a benefit if the insured goes blind?

When is the face amount paid under a Joint Life and Survivor policy?

Under a Renewable Term policy,?

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?

All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for Modified Whole Life.

Whole Life Insurance is sometimes referred to as 'Straight Life'. What does the word 'Straight' indicate when using this phrase?

S is covered by a whole life policy. Which insurance product can cover his children?

A life policy that contains a monthly charge as well as self-directed investment choices is called a(n)

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?

Which of the following actions is NOT possible with a Universal Life Policy?

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?

K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?

Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life Policy?

A Universal Life Policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, expense charges, and the?

Which of these statements describe a Modified Endowment Contract (MEC)?

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?

Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?

S, age 40, is looking to buy a Life Insurance policy that will allow for increases or decreases in coverage as his needs change. The policy best suited for S would be?

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?

Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit?

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?

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

Which is true concerning a Variable Universal Life policy?

What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?

How does a typical Variable Life Policy investment account grow?

What type of life insurance are credit policies issued as?

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 to be paid up at retirement. Which of these should N purchase?

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

Which of these characteristics is consistent with a Straight Life Policy?

All of these statements about Equity Indexed Life Insurance are correct EXCEPT the premiums can be lowered or raised, based on investment performance.

What kind of premium does a Whole Life policy have?

Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?

Additional coverage can be added to a Whole Life policy by adding a(n)

P owns a $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own?

Which statement is TRUE regarding a Variable Whole Life Policy?

Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n):

Which of the following types of Term Life policies most likely contains a Renewable feature?

Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?

What advantage does the renewable feature give to a term policy?

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?

A variable insurance policy

Which of these needs is satisfied by Adjustable Life insurance?

Which of the following is considered an element of a Variable Life Policy?

A(n) ________ term life policy is normally used when covering an insured's mortgage balance.

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?

Study Notes

Life Insurance Policies Overview

Policy Benefits and Features

Cash Value and Benefit Payments

Policy Characteristics and Conversions

Premium Structures and Adjustments

Insurance Types and Conversions

Special Insurance Considerations

Policy Recommendations

Studying That Suits You

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