Podcast
Questions and Answers
What happens to a policy that becomes a Modified Endowment Contract (MEC)?
What happens to a policy that becomes a Modified Endowment Contract (MEC)?
- It gains more tax advantages
- It becomes invalid
- It loses many of its tax advantages (correct)
- It provides more coverage
All of these are characteristics of an Adjustable Life policy, EXCEPT:
All of these are characteristics of an Adjustable Life policy, EXCEPT:
- It can change premiums
- Face amount can be adjusted
- Coverage can be increased or decreased
- Face amount can be adjusted using policy dividends (correct)
What is the most important factor to consider when determining whether to convert term insurance?
What is the most important factor to consider when determining whether to convert term insurance?
The cost
What kind of policy does F need for coverage that changes regularly according to a schedule?
What kind of policy does F need for coverage that changes regularly according to a schedule?
Under a Renewable Term policy, how is the renewal premium calculated?
Under a Renewable Term policy, how is the renewal premium calculated?
Which statement is correct about a Whole Life policy that accumulates cash value faster?
Which statement is correct about a Whole Life policy that accumulates cash value faster?
What describes a Modified Endowment Contract (MEC)?
What describes a Modified Endowment Contract (MEC)?
What type of life insurance are credit policies issued as?
What type of life insurance are credit policies issued as?
What type of policy has a premium increasing after the first five years?
What type of policy has a premium increasing after the first five years?
Under which provision can a father have policy premiums waived if he dies within 3 years after purchasing a policy for his daughter?
Under which provision can a father have policy premiums waived if he dies within 3 years after purchasing a policy for his daughter?
What type of insurance offers permanent life coverage with premiums that are payable for life?
What type of insurance offers permanent life coverage with premiums that are payable for life?
Which type of life insurance allows the policyowner level premiums and investment options?
Which type of life insurance allows the policyowner level premiums and investment options?
How long does the coverage normally remain on a limited-pay life policy?
How long does the coverage normally remain on a limited-pay life policy?
Term insurance expires at the end of the policy.
Term insurance expires at the end of the policy.
What type of life insurance policy provides cash value along with a level face amount?
What type of life insurance policy provides cash value along with a level face amount?
What does the word 'straight' denote when applied to Whole Life insurance?
What does the word 'straight' denote when applied to Whole Life insurance?
When is the face amount of a Whole Life policy paid?
When is the face amount of a Whole Life policy paid?
What kind of policy does K buy with a fixed premium for 5 years then increasing?
What kind of policy does K buy with a fixed premium for 5 years then increasing?
Which type of whole life insurance policy will provide the most rapid growth of cash value for a 35-year-old?
Which type of whole life insurance policy will provide the most rapid growth of cash value for a 35-year-old?
All of these statements about Equity Indexed Life Insurance are correct, EXCEPT:
All of these statements about Equity Indexed Life Insurance are correct, EXCEPT:
What feature limits the insurer's obligation for N, a student pilot, if he dies while flying?
What feature limits the insurer's obligation for N, a student pilot, if he dies while flying?
What will the insurer pay to P's beneficiary if she dies in a scuba-related accident after previously stating she does not dive?
What will the insurer pay to P's beneficiary if she dies in a scuba-related accident after previously stating she does not dive?
How much will the insurer pay the beneficiary of S's whole life policy if S dies of natural causes?
How much will the insurer pay the beneficiary of S's whole life policy if S dies of natural causes?
What will an insurer do if an interest payment on a policy loan is not made on time?
What will an insurer do if an interest payment on a policy loan is not made on time?
Which provision of a life insurance policy pays a stated benefit amount if an insured is blinded?
Which provision of a life insurance policy pays a stated benefit amount if an insured is blinded?
When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?
When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?
How much will the insurer pay if T commits suicide with an Accidental Death and Dismemberment rider?
How much will the insurer pay if T commits suicide with an Accidental Death and Dismemberment rider?
What action is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?
What action is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?
What action will the insurer take if N dies after failing to make a required premium payment?
What action will the insurer take if N dies after failing to make a required premium payment?
What will happen to M's policy with an outstanding loan at the time of death?
What will happen to M's policy with an outstanding loan at the time of death?
What will the beneficiary receive if the insured dies during the Grace Period?
What will the beneficiary receive if the insured dies during the Grace Period?
All of these statements concerning Settlement Options are true, EXCEPT:
All of these statements concerning Settlement Options are true, EXCEPT:
Which of the following statements is CORRECT about accelerated death benefits?
Which of the following statements is CORRECT about accelerated death benefits?
Which provision guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled?
Which provision guarantees that premiums will be waived if a Juvenile Life policyowner becomes disabled?
What type of life policy contains a monthly mortality charge as well as self-directed investment choices?
What type of life policy contains a monthly mortality charge as well as self-directed investment choices?
How can Variable Whole Life Insurance be described?
How can Variable Whole Life Insurance be described?
All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death, EXCEPT:
All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death, EXCEPT:
What is the option called that provides an additional death benefit for a limited amount of time at the lowest possible cost?
What is the option called that provides an additional death benefit for a limited amount of time at the lowest possible cost?
What action may an insurance company take upon discovering a misrepresentation on a life insurance policy application?
What action may an insurance company take upon discovering a misrepresentation on a life insurance policy application?
A Return of Premium life insurance policy is:
A Return of Premium life insurance policy is:
Study Notes
Life Insurance Fundamentals
- Modified Endowment Contracts (MEC) lose tax advantages when policy becomes MEC.
- Adjustable Life policies allow adjustments to face amount, but face amount changes can't be made using policy dividends.
- Cost is the primary factor when converting term insurance based on the insured's age.
Policy Types and Characteristics
- Limited-term life insurance with changing death benefits is a Decreasing term policy.
- Renewable Term policies calculate renewal premiums based on the insured's attained age.
- Whole Life policies accumulate cash value faster in early years if structured as 20-Pay Life.
Key Features of Insurance Policies
- Credit life insurance is issued as Term insurance.
- Modified Premiums Life involves initial lower premiums that increase after five years.
- Payor provision waives premiums if a parent dies shortly after purchasing a policy for their child.
Additional Policy Information
- Whole Life insurance provides lifelong coverage with premiums payable for life.
- Variable Life insurance lets policyowners choose from various investment options while maintaining level premiums.
- Coverage on limited-pay life policies generally lasts until the insured reaches age 100.
Policy Expiration and Benefits
- Term insurance expires at the end of the policy term.
- Whole Life combines cash value accumulation with a level face amount.
Payment and Exclusions
- The face amount of Whole Life is paid upon the insured's death or policy maturity.
- Modified Whole Life has fixed premiums for an initial period, after which they increase.
- Exclusions may limit insurer obligations, such as in the event of death during risky activities like flying.
Policy Claims and Loans
- Insurers will pay the full benefit minus outstanding loans if a policyholder dies with policy loans.
- During the Grace Period, if a premium is overdue, beneficiaries receive the full face amount minus past due premiums.
Settlement Options and Provisions
- Settlement options allow for systematic liquidation of death proceeds, but beneficiaries can also choose from options.
- Accelerated death benefits require the insured to have a terminal illness to qualify.
- The Payor Clause waives premiums if the juvenile policyholder becomes disabled.
Additional Considerations
- Collateral Assignment occurs when a life insurance policy is used as collateral for loans.
- Insurers may void policies for misrepresentations made during the contestable period if proven material.
- Return of Premium policies combine Whole Life with Increasing Term benefits.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your knowledge on life and health insurance concepts with these flashcards. Each card presents key terms and definitions relevant to modified endowment contracts, adjustable life policies, and term insurance conversion. Ideal for those preparing for life and health insurance examinations.
