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Questions and Answers
How are survivorship life insurance policies helpful in estate planning?
How are survivorship life insurance policies helpful in estate planning?
Provide funds to help pay taxes
The type of multiple protection coverage that pays on the death of the last person is called a(n)
The type of multiple protection coverage that pays on the death of the last person is called a(n)
survivorship life policy
Under a Modified Endowment Contract, what are the likely tax consequences?
Under a Modified Endowment Contract, what are the likely tax consequences?
Pre-death distributions will become taxable
All of these are valid options for an Adjustable Life Policy EXCEPT
All of these are valid options for an Adjustable Life Policy EXCEPT
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A policyowner may change two policy features on what type of life insurance?
A policyowner may change two policy features on what type of life insurance?
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A life insurance policy that has premiums fully paid up within a stated time period is called
A life insurance policy that has premiums fully paid up within a stated time period is called
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What kind of life insurance policy covers two or more people with the death benefit payable upon the last person's death?
What kind of life insurance policy covers two or more people with the death benefit payable upon the last person's death?
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A securities license is required for a life insurance producer to sell variable life insurance.
A securities license is required for a life insurance producer to sell variable life insurance.
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Which of these riders will pay a death benefit if the insured's spouse dies?
Which of these riders will pay a death benefit if the insured's spouse dies?
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A life insurance policy which contains cash values that vary according to its investment performance of stocks is called
A life insurance policy which contains cash values that vary according to its investment performance of stocks is called
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What would the death benefit be if Rob purchased a standard whole life policy with a $500,000 death benefit?
What would the death benefit be if Rob purchased a standard whole life policy with a $500,000 death benefit?
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Which of these describes the result of a modified endowment contract that failed to meet the seven-pay test?
Which of these describes the result of a modified endowment contract that failed to meet the seven-pay test?
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Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive?
Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive?
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Decreasing term life insurance is often used to
Decreasing term life insurance is often used to
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Which of the following are the premium payments for a Universal life policy NOT used for?
Which of the following are the premium payments for a Universal life policy NOT used for?
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All of these statements concerning whole life insurance are false EXCEPT
All of these statements concerning whole life insurance are false EXCEPT
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The least expensive option to pay off a 30-year mortgage balance would be
The least expensive option to pay off a 30-year mortgage balance would be
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Index whole life insurance contains a securities component that acts as a(n)
Index whole life insurance contains a securities component that acts as a(n)
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A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate that is higher than the guaranteed rate is called
A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate that is higher than the guaranteed rate is called
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What is the advantage of adding a children's term rider?
What is the advantage of adding a children's term rider?
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Which of these would be the best example of a limited pay life insurance policy?
Which of these would be the best example of a limited pay life insurance policy?
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What happens to the coverage under a children's term rider when that child reaches a certain specified age?
What happens to the coverage under a children's term rider when that child reaches a certain specified age?
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A Modified Endowment Contract (MEC) is best described as
A Modified Endowment Contract (MEC) is best described as
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A renewable Term Life insurance policy allows the policyowner the right to renew the policy
A renewable Term Life insurance policy allows the policyowner the right to renew the policy
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What is the automatic continuance of insurance coverage referred to as?
What is the automatic continuance of insurance coverage referred to as?
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Which of these riders will pay a death benefit if the insured's spouse dies?
Which of these riders will pay a death benefit if the insured's spouse dies?
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Level premium permanent insurance accumulates a reserve that will eventually
Level premium permanent insurance accumulates a reserve that will eventually
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A Renewable Term Life insurance policy can be renewed
A Renewable Term Life insurance policy can be renewed
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All of these statements concerning whole life insurance are false EXCEPT
All of these statements concerning whole life insurance are false EXCEPT
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The statement which best describes the relationship between the premiums of a whole life policy and the premium payment period is
The statement which best describes the relationship between the premiums of a whole life policy and the premium payment period is
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What kind of policy is Peter's if 80% to 90% of the premium is invested in traditional fixed income securities?
What kind of policy is Peter's if 80% to 90% of the premium is invested in traditional fixed income securities?
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When a decreasing term policy is purchased, it contains a decreasing death benefit and
When a decreasing term policy is purchased, it contains a decreasing death benefit and
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What type of life insurance coverage is the least expensive option to pay off a 30-year mortgage balance?
What type of life insurance coverage is the least expensive option to pay off a 30-year mortgage balance?
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A business will typically use which type of life insurance to cover their employees?
A business will typically use which type of life insurance to cover their employees?
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Which of these is NOT considered to be a common life insurance nonforfeiture option?
Which of these is NOT considered to be a common life insurance nonforfeiture option?
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All of these are valid options for what a policyowner may do with policy dividends EXCEPT
All of these are valid options for what a policyowner may do with policy dividends EXCEPT
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Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies?
Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies?
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Which dividend option would an insurer invest the policyowner's money and add any interest earnings as the dividends accrue?
Which dividend option would an insurer invest the policyowner's money and add any interest earnings as the dividends accrue?
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Life insurance policies will normally pay for losses arising from
Life insurance policies will normally pay for losses arising from
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If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies?
If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies?
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If an insured dies during the grace period with no premiums paid
If an insured dies during the grace period with no premiums paid
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All of these are common exclusions to a life insurance policy EXCEPT
All of these are common exclusions to a life insurance policy EXCEPT
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A life insurance policyowner does NOT have the right to
A life insurance policyowner does NOT have the right to
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A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a(n)
A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a(n)
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All of these are standard exclusions found in a life insurance policy EXCEPT
All of these are standard exclusions found in a life insurance policy EXCEPT
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An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period?
An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period?
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A whole life insurance policy accumulates cash value that becomes
A whole life insurance policy accumulates cash value that becomes
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What is an insurance policy's grace period?
What is an insurance policy's grace period?
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What is the name of the provision which states that a copy of the application must be attached to the policy when issued?
What is the name of the provision which states that a copy of the application must be attached to the policy when issued?
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An insured individual and the policy's beneficiary die from the same accident. The common disaster provision states the insurer will continue as if
An insured individual and the policy's beneficiary die from the same accident. The common disaster provision states the insurer will continue as if
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The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums paid
The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums paid
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In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST
In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST
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A provision in a whole life policy that allows a policyowner to terminate the policy in return for a reduced paid-up policy of the same type is called a(n)
A provision in a whole life policy that allows a policyowner to terminate the policy in return for a reduced paid-up policy of the same type is called a(n)
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A provision that allows a policyowner to withdraw a policy's cash value interest free is a(n)
A provision that allows a policyowner to withdraw a policy's cash value interest free is a(n)
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Study Notes
Life Insurance Essentials
- Survivorship life insurance policies assist in estate planning by providing funds to help pay taxes on assets.
- A survivorship life policy is a type of multiple protection insurance that pays upon the death of the last insured person.
- Under a Modified Endowment Contract (MEC), pre-death distributions are likely to become taxable due to not meeting the seven-pay test.
- Adjustable Life Policies allow changes to premium and face amount features, but nonforfeiture options cannot be used to enhance the death benefit.
- Limited payment insurance refers to a life insurance policy with premiums that are paid up within a specified time frame.
- Last Survivor Life insurance covers two or more individuals, with benefits payable only upon the last insured's death.
- A life insurance producer must possess a securities license to sell variable life insurance products.
- Family Term Insurance riders provide death benefits if the insured's spouse dies.
- Variable Whole Life insurance has cash values that fluctuate based on the performance of investments in common stocks.
- When Rob, who purchased a standard whole life policy with a $500,000 death benefit, died at age 60, the full death benefit amount was payable.
- Modified Endowment Contracts that fail the seven-pay test lead to taxable pre-death distributions.
- Endowment policies pay the face value at the end of a specified period if the insured is still alive.
- Decreasing term life insurance is often utilized to cover home mortgage balances.
- Premium payments for Universal life policies do not fund separate account investments.
- When a whole life policy is surrendered, income taxes may be owed on any gain.
- The statement "the shorter the payment period, the higher the premium" reflects the nature of whole life insurance.
- Equity index whole life policies invest 80% to 90% in traditional fixed income securities, with the remainder tied to stock index contracts.
- Decreasing term policies feature a decreasing death benefit while maintaining level premiums.
- Group life insurance policies are commonly used by businesses to cover employees.
- Collateral assignments facilitate temporary relinquishment of ownership rights to secure loans.
- The grace period is the duration an insurer continues coverage while accepting late premium payments.
- Policyowner dividends can accumulate with interest or be used in various ways, but accumulating without interest is not an option.
- A Payor benefit rider waives premiums on a juvenile life insurance policy if the responsible parent dies.
- A prorated death benefit is paid based on the appropriate premium for an insured whose age was misstated.
- The common disaster provision stipulates insurers will act as if the insured survived the beneficiary in the event both die simultaneously in an accident.
- A life insurance policy's entire contract provision mandates that a copy of the application be attached to the policy upon issuance.
- The suicide clause provides for a return of premiums minus indebtedness, without interest, if suicide occurs within a specified period after policy inception.
- To activate the reinstatement clause of a lapsed policy, the insured must provide evidence of insurability.
- Nonforfeiture provisions in cash value life insurance allow the owner to terminate the policy in exchange for a reduced paid-up policy.
- A partial surrender permits the policyowner to withdraw cash value without incurring interest.
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Description
Test your knowledge on various life insurance concepts, including survivorship policies, adjustable life policies, and the implications of Modified Endowment Contracts. This quiz covers essential terms and definitions vital for understanding life insurance in estate planning and financial security.
