Questions and Answers
What are the two major types of life insurance?
Which term policy has level premiums and a level face amount?
Level premium term
Which of the following is not a characteristic of decreasing term life insurance?
Which of the following policies has a level face amount with level premiums?
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___________ policies have premiums that fluctuate between the current rate and maximum rate, as stated in the policy.
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Term insurance is categorized by all of the following, EXCEPT:
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Which of the following characteristics does not describe convertible term life insurance policies?
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What part of a mortgage reduction policy decreases over time?
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All of the following characterize term life insurance, EXCEPT:
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What are the benefits of a convertible and renewable term life insurance policy?
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Term life insurance provides ________________. Whole life insurance provides _______________.
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All of the following are drawbacks of term life insurance, EXCEPT:
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All of the following statements regarding renewable term life insurance policies are false, EXCEPT:
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What policy would you recommend to Blake, who needs insurance to cover his mortgage?
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Which life insurance policy has annual increasing premiums and does not build cash value?
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Pure death protection only is provided by which life insurance policy?
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All of the following term life insurance policies have level premiums, EXCEPT:
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Mortgage protection insurance uses what type of life insurance coverage?
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Which type of life insurance policy allows a policyowner to renew a term policy and receive a lower premium by providing proof of insurability?
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Which type of life insurance coverage is used to provide mortgage protection?
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All of the following statements are true regarding annual renewable term (ART) policies, EXCEPT:
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All of the following are characteristics of term insurance, EXCEPT:
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What policy should Kara not consider if she desires steady premiums?
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Which term policy has increasing premiums and a level face amount?
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Which type of life insurance provides pure death protection?
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Study Notes
Life Insurance Overview
- Major types of life insurance: Permanent (whole) and Temporary (term).
- Term insurance provides pure death protection, while whole life offers death benefit and living benefits (cash values).
Term Life Insurance Characteristics
- Level premium term: Features a level face amount and consistent level premiums.
- Decreasing term: Often referred to as mortgage reduction insurance; face amount decreases to zero by policy expiration.
- Annual renewable term (ART): Has a level face amount but premiums increase annually.
- Convertible term: Allows conversion to permanent coverage without proof of insurability, affecting premium rates based on age.
Premium Structures
- Indeterminate premium policies: Fluctuate between current and maximum rates based on mortality and investments.
- Reentry term: Can renew existing term coverage at a lower premium with proof of insurability.
Cash Value Considerations
- Term policies do not accrue cash value; they only provide death protection.
- Whole life policies offer living benefits through cash value accumulation.
Policy Recommendations
- Decreasing term insurance is ideal for mortgage protection as the face amount aligns with mortgage balance.
- Interim term coverage is suited for short-term needs, such as one year of protection before purchasing whole life.
Special Considerations
- Insurance policies are often customizable; however, not all term policies have conversion options.
- As additional benefits, certain policies allow for renewal without insurability verification, encouraging long-term coverage.
Key Exclusions and Limitations
- Convertible term may lead to higher premiums upon conversion due to the age of the insured at that time.
- Term life policies are limited in terms of living benefits, which can lead to misconceptions regarding their utility beyond death benefits.
Studying That Suits You
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Description
Test your knowledge on life insurance with these flashcards. Focused on Chapter 4.1, this quiz covers the key terms and concepts related to permanent and temporary life insurance policies.
