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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?
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?
- Half the amount
- As high
- Higher
- Lower (correct)
The term 'fixed' in a fixed annuity refers to all of the following EXCEPT:
The term 'fixed' in a fixed annuity refers to all of the following EXCEPT:
- Amount and length of payments
- Death benefit (correct)
- Guaranteed rate of interest
- Equal annuity payments
What are the two components of a universal life policy?
What are the two components of a universal life policy?
- Insurance and investments
- Insurance and cash account (correct)
- Mortality cost and interest
- Separate account and policy loans
An insured has a variable life policy with a $100,000 face amount. At one time, the cash value exceeded $100,000 and was worth $150,000. During this time, the policy face amount was increased to $150,000. In the following year, the cash value took a significant decline and was worth only $70,000. What was the policy's face amount adjusted to?
An insured has a variable life policy with a $100,000 face amount. At one time, the cash value exceeded $100,000 and was worth $150,000. During this time, the policy face amount was increased to $150,000. In the following year, the cash value took a significant decline and was worth only $70,000. What was the policy's face amount adjusted to?
Which component increases in the increasing term insurance?
Which component increases in the increasing term insurance?
A straight life policy has what type of premium?
A straight life policy has what type of premium?
A life insurance policyowner skips her premium payment, but the policy does not lapse. Instead, the premium amount is deducted from the cash value of the policy. What type of policy is this?
A life insurance policyowner skips her premium payment, but the policy does not lapse. Instead, the premium amount is deducted from the cash value of the policy. What type of policy is this?
Variable life insurance is based on what kind of premium?
Variable life insurance is based on what kind of premium?
Which of the following statements is correct regarding a whole life policy?
Which of the following statements is correct regarding a whole life policy?
Who bears all the investment risk in a fixed annuity?
Who bears all the investment risk in a fixed annuity?
Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?
Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?
Which of the following is NOT true regarding the annuitant?
Which of the following is NOT true regarding the annuitant?
The death protection component of universal life insurance is always:
The death protection component of universal life insurance is always:
Which type of life insurance policy generates immediate cash value?
Which type of life insurance policy generates immediate cash value?
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Study Notes
Life Insurance Premiums
- Premiums for survivorship life policies are lower compared to joint life policies.
- Fixed annuities guarantee a specific rate of interest and equal payments, but the term "fixed" does not include the death benefit.
- Universal life policies consist of two components: insurance and a cash account.
Variable Life Policies
- A variable life policy's face amount can adjust but will not go below the guaranteed minimum; e.g., if cash value drops below $100,000, the face amount remains at $100,000.
- The death benefit in increasing term insurance is the component that grows over time.
- Straight life policies feature level annual premiums throughout the insured's lifetime.
Premium Payment Flexibility
- In universal life insurance, skipping premium payments is allowed if there is sufficient cash value, with payments deducted from this value.
- Variable life insurance is characterized by level fixed premiums that do not fluctuate.
Whole Life Policy Features
- Whole life policy owners are entitled to policy loans during the life of the contract.
- The investment risk in fixed annuities is entirely borne by the insurance company.
Policy Characteristics
- Universal life policies allow policyholders to skip premium payments given adequate cash value.
- A level term policy pays a death benefit if the insured passes away during the premium-paying period, with no benefits if death occurs after that term.
Annuity Considerations
- The annuitant must be a natural person and can also be the same individual who owns the annuity; they are entitled to receive benefits based on their life expectancy.
- The death protection component of universal life insurance is structured as annually renewable term insurance.
Cash Value Generation
- Single premium life insurance policies generate immediate cash value, unlike level or decreasing term policies.
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