Insurance Chapter 3 Quiz
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Questions and Answers

What is an example of a limited-pay life policy?

  • Life Paid-up at age 75
  • Life Paid-up at age 60
  • Life Paid-up at age 65 (correct)
  • Life Paid-up at age 70

    • What statement about group life is correct?

  • The cost of coverage is based on the size of the group.
  • The cost of coverage varies only by age.
  • The cost of coverage is based on the ratio of men and women in the group. (correct)
  • The cost of coverage is the same for all individuals.

    • All of the following entities regulate variable life policies except:

  • Guaranty Association (correct)
  • SEC
  • Federal Government
  • Insurance Department

    • All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?

    <p>Lower</p> Signup and view all the answers

    Which Universal Life option has a gradually increasing cash value and a level death benefit?

    <p>Option A</p> Signup and view all the answers

    All other factors being equal, the least expensive first-year premium payment is found in:

    <p>Annually Renewable Term</p> Signup and view all the answers

    What part of an indexed whole life policy is NOT fixed?

    <p>Cash value growth</p> Signup and view all the answers

    Which is classified as a traditional level premium contract?

    <p>Straight Life</p> Signup and view all the answers

    Concerning juvenile life insurance, what is true?

    <p>JL is written on the life of a minor, limited premium payment policy, parent is the applicant for the insurance.</p> Signup and view all the answers

    15 sky divers wanted cheaper life insurance so they got together. They applied and were rejected for group life. Why?

    <p>The purpose of the group was to purchase life insurance.</p> Signup and view all the answers

    To sell variable life insurance policies, an agent must receive:

    <p>Securities license, life insurance license, FINRA registration</p> Signup and view all the answers

    Which option allows the beneficiary to receive the death benefit and cash value upon the death of the insured?

    <p>Option B</p> Signup and view all the answers

    When an employee terminates coverage under the group, how long does the coverage continue?

    <p>31 days</p> Signup and view all the answers

    Which would have an IRS-required gap between cash value and death benefit?

    <p>Universal Life Option A</p> Signup and view all the answers

    Which type of insurance policy generates immediate cash value?

    <p>Single Premium Whole Life</p> Signup and view all the answers

    Which factors aren't considered when underwriting group insurance?

    <p>Insured's medical history</p> Signup and view all the answers

    In group life insurance policy, who may not select the beneficiary?

    <p>The employer</p> Signup and view all the answers

    When an insured renews a term 5 years later, what happens to the premium?

    <p>Premium goes up because he is older and needs to renew</p> Signup and view all the answers

    What is false regarding credit life insurance?

    <p>Benefits are paid to the borrower's beneficiary</p> Signup and view all the answers

    In a survivorship life policy, when does the insurer pay the death benefit?

    <p>Upon the last death</p> Signup and view all the answers

    What did a man discover about his 100k annually renewable term policy?

    <p>Required a premium increase each renewal</p> Signup and view all the answers

    Which best describes annually renewable term life insurance?

    <p>It is level term insurance.</p> Signup and view all the answers

    Which employees under a group plan are allowed to convert to individual insurance?

    <p>Those who have been insured by the group plan for over 5 years</p> Signup and view all the answers

    When would a 20-pay whole life policy endow?

    <p>At age 100</p> Signup and view all the answers

    Who is the beneficiary in credit life insurance?

    <p>Creditor</p> Signup and view all the answers

    A return of premium term life policy is written as what type of coverage?

    <p>Increasing</p> Signup and view all the answers

    In an adjustable life policy, what cannot be done?

    <p>Change the type of investment as the policy owner</p> Signup and view all the answers

    All are correct regarding credit life insurance except:

    <p>Benefits are paid to the borrower’s beneficiary</p> Signup and view all the answers

    Which statement is not true regarding a straight life policy?

    <p>Its premium steadily decreases over time.</p> Signup and view all the answers

    Which is not true regarding a decreasing term policy?

    <p>The payable premium amount steadily declines.</p> Signup and view all the answers

    Credit life insurance insures the life of whom?

    <p>The debtor</p> Signup and view all the answers

    If a life policy increases significantly in face amount or death benefit when the insured reaches a specific age, which policy is it?

    <p>Jumping juvenile policy</p> Signup and view all the answers

    Study Notes

    Limited-Pay Life Policies

    • An example is the Life Paid-up at age 65, which requires premiums to be paid only until age 65.

    Group Life Insurance

    • Cost is influenced by the ratio of men to women within the insured group.

    Regulation of Variable Life Policies

    • Regulated by the Federal Government, SEC, and Insurance Department; not by the Guaranty Association.

    Premiums in Survivorship and Joint Life Policies

    • A survivorship life policy generally has a lower premium compared to a joint life policy.

    Universal Life Options

    • Option A features a gradually increasing cash value while maintaining a level death benefit.

    First-Year Premiums

    • The least expensive first-year premium is typically found in annually renewable term insurance.

    Indexed Whole Life Policies

    • Cash value growth is variable and depends on market performance, unlike the fixed components of the policy.

    Traditional Level Premium Contracts

    • Straight Life insurance is classified as a traditional level premium contract.

    Juvenile Life Insurance

    • Juvenile Life is a limited payment policy on minors, with the parent as the applicant.

    Group Life Insurance Rejection

    • A group of skydivers was rejected for group life as their purpose was solely to obtain insurance coverage.

    Selling Variable Life Insurance

    • Agents need a securities license, life insurance license, and FINRA registration, but not SEC registration.

    Death Benefit Options

    • Option B allows the beneficiary to receive both the death benefit and cash value upon the insured's death.

    Group Coverage Continuation

    • Coverage remains in force for 31 days after an employee terminates their group insurance.

    IRS Requirements for Cash Value

    • Universal Life Option A must maintain a gap between cash value and death benefit as per IRS regulations.

    Immediate Cash Value Policies

    • Single Premium Whole Life policies generate immediate cash value.

    Group Insurance Underwriting

    • Underwriting does not consider the insured's medical history in group insurance.

    Beneficiary Selection in Group Life

    • Employers cannot select beneficiaries; employees must be allowed to choose.

    Term Insurance Renewals

    • Premiums increase upon renewing a term policy after a period, reflecting the insured's age.

    Credit Life Insurance Benefits

    • Benefits are paid to the creditor, not the borrower's beneficiary.

    Survivorship Life Policy Death Benefit Payment

    • The death benefit is paid out upon the last death in a survivorship life policy.

    Renewable Term Policy Characteristics

    • Annually renewable term policies require premium increases with each renewal due to the insured's age.

    Annually Renewable Term Insurance Definition

    • It is characterized as level term insurance.

    Employee Conversion Rights in Group Plans

    • Employees insured for over five years are allowed to convert to individual insurance.

    Endowment Age for Whole Life Policies

    • A 20-pay whole life policy will endow at age 100.

    Credit Life Insurance Beneficiary

    • The beneficiary of credit life insurance is the creditor.

    Return of Premium Term Life Policy

    • It is described as increasing coverage.

    Adjustable Life Policy Limitations

    • Policyholders cannot change the investment type within an adjustable life policy.

    Misconceptions about Credit Life Insurance

    • It's incorrect to claim benefits are paid to the borrower's beneficiary.

    Straight Life Policy Characteristics

    • It is false that premiums of a straight life policy decrease over time; they remain steady.

    Decreasing Term Policy Misunderstandings

    • The premium amount does not decrease, it remains constant throughout the policy duration.

    Credit Life Insurance Definition

    • It insures the life of a debtor against outstanding debts.

    Jumping Juvenile Policy

    • This type of policy increases the face amount or death benefit at a specific age of the insured.

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    Description

    Test your knowledge on key concepts from Chapter 3 of insurance studies. This quiz covers various aspects of life policies, including limited-pay life policies and regulations of variable life insurance. Challenge yourself with these flashcard questions to reinforce your understanding.

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