Insurance Chapter 4 Mod 3 Quiz

An endowment life insurance policy is characterized by all of the following, EXCEPT:

The beneficiary of a credit life insurance policy is the:

All of the following are true regarding credit life insurance, EXCEPT:

What policy is usually used for credit life insurance?

Who is the beneficiary of a credit life policy?

Which of the following is not a way that an endowment policy can mature?

Which policy will pay benefits on the death of the second insured?

Charlotte takes out a $14,000 loan. How much credit life insurance can the creditor take out on Charlotte?

A policy with flexible premiums based on a changing current interest rate is:

A policy known as interest-sensitive whole life is:

Upon the death of the last person insured, the _________ policy pays a death benefit.

Endowment Life Insurance

Endowment life insurance policies mature on a specific date or when the insured reaches a certain age (e.g., 20 years or age 65).
Cash value in endowment policies accumulates quickly, resulting in higher premiums.
Maturation options include death of the insured or reaching the policy period end; surrender of cash value is not a maturation option.

Credit Life Insurance

Credit life insurance policies are held by creditors and issued on the lives of debtors.
The creditor is the beneficiary of the credit life policy.
As debts are paid, the face amount of credit life insurance decreases, aligning with the remaining debt.
Credit life insurance may be offered individually or through group policies but is not limited to group sales.

Policy Types in Credit Life Insurance

Credit life insurance is typically issued as a decreasing term life policy.
The amount of credit life insurance cannot exceed the debt balance; thus, for a $14,000 loan, coverage can be up to $14,000 plus interest.

Survivorship Life Policy

A survivorship life policy (second-to-die policy) pays benefits only upon the death of the second insured individual.
Policy proceeds are secured only after the last insured person passes away.

Current Assumption Whole Life Insurance

Also referred to as interest-sensitive whole life, this policy features flexible premiums that fluctuate with the current interest rate.

Test your knowledge on endowment life insurance policies with this quiz from Chapter 4 Mod 3. Explore the characteristics of endowment contracts and identify exceptions to their features. Perfect for those studying insurance fundamentals.