Podcast
Questions and Answers
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?
What does the word 'level' in Level Term describe?
What does the word 'level' in Level Term describe?
The face amount
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?
Last Survivor Life insurance
What is the automatic continuance of insurance referred to as?
What is the automatic continuance of insurance referred to as?
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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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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)?
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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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An interest-sensitive life insurance policy owner may be able to withdraw the policy's cash value interest-free. The provision that allows this is called?
An interest-sensitive life insurance policy owner may be able to withdraw the policy's cash value interest-free. The provision that allows this is called?
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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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How are survivorship life insurance policies helpful in estate planning?
How are survivorship life insurance policies helpful in estate planning?
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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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Joe has a life insurance policy that has a face amount of $300,000. After a number of years, the policy's cash value accumulates to $50,000 and the face amount becomes $350,000. What kind of policy is this?
Joe has a life insurance policy that has a face amount of $300,000. After a number of years, the policy's cash value accumulates to $50,000 and the face amount becomes $350,000. What kind of policy is this?
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Rob purchased a standard whole life policy with a $500,000 death benefit when he was age 30. If he died at age 60, the death benefit would be?
Rob purchased a standard whole life policy with a $500,000 death benefit when he was age 30. If he died at age 60, the death benefit would be?
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The premium for a Modified whole life policy is?
The premium for a Modified whole life policy is?
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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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A spouse and child can be added to the primary insured's coverage as what kind of rider?
A spouse and child can be added to the primary insured's coverage as what kind of rider?
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Shirley has a $500,000 10-year non-renewable level term life policy. If she dies 15 years after the policy's inception date, how much will her beneficiary receive?
Shirley has a $500,000 10-year non-renewable level term life policy. If she dies 15 years after the policy's inception date, how much will her beneficiary receive?
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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 subject to income taxation under a Modified Endowment Contract (MEC)?
Which of these is NOT subject to income taxation under a Modified Endowment Contract (MEC)?
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Which type of policy combines the flexibility of a universal life policy with investment choices?
Which type of policy combines the flexibility of a universal life policy with investment choices?
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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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A limited payment whole life policy provides?
A limited payment whole life policy provides?
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All of these are characteristics of a universal life insurance policy EXCEPT?
All of these are characteristics of a universal life insurance policy EXCEPT?
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A securities license is required for a life insurance producer to sell?
A securities license is required for a life insurance producer to sell?
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Donald is the primary insured of a life insurance policy and adds a children's term rider. What is the advantage of adding this rider?
Donald is the primary insured of a life insurance policy and adds a children's term rider. What is the advantage of adding this rider?
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What type of life insurance offers flexible premiums, a flexible death benefit, and the choice of how the cash value will be invested?
What type of life insurance offers flexible premiums, a flexible death benefit, and the choice of how the cash value will be invested?
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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 types of life insurance are normally used for key employee indemnification?
What types of life insurance are normally used for key employee indemnification?
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Jonas is a whole life insurance policy owner and would like to add coverage for his two children. Which of the following products would allow him to accomplish this?
Jonas is a whole life insurance policy owner and would like to add coverage for his two children. Which of the following products would allow him to accomplish this?
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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 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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Reggie purchased a life insurance policy with a face amount of $500,000. After 15 years, the cash value has accumulated to $100,000 and the policy's face amount has become $600,000. Which type of life insurance policy is this?
Reggie purchased a life insurance policy with a face amount of $500,000. After 15 years, the cash value has accumulated to $100,000 and the policy's face amount has become $600,000. Which type of life insurance policy is this?
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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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A Renewable Term Life insurance policy can be renewed at a predetermined date or age, regardless of the insured's health.
A Renewable Term Life insurance policy can be renewed at a predetermined date or age, regardless of the insured's health.
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Julie has a $100,000 30-year mortgage on her new home. What type of life insurance could she purchase that is designed to pay off the loan balance if she dies within the 30-year period?
Julie has a $100,000 30-year mortgage on her new home. What type of life insurance could she purchase that is designed to pay off the loan balance if she dies within the 30-year period?
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A Renewable Term Life insurance policy allows the policy owner the right to renew the policy without producing proof of insurability.
A Renewable Term Life insurance policy allows the policy owner the right to renew the policy without producing proof of insurability.
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Under a Modified Endowment Contract (MEC), what are the likely tax consequences?
Under a Modified Endowment Contract (MEC), what are the likely tax consequences?
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A single premium cash value policy can be described as?
A single premium cash value policy can be described 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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Krissa purchases a 10-year level term life insurance policy that has a death benefit of $200,000. Which of these statements is true?
Krissa purchases a 10-year level term life insurance policy that has a death benefit of $200,000. Which of these statements is true?
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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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Study Notes
Life Insurance Policies Overview
- Universal life policies use premiums primarily for death benefits and administrative costs rather than direct investments.
- The term "level" in Level Term insurance refers to a consistent face amount throughout the policy's term.
- Last Survivor Life insurance provides benefits after the death of the last insured individual, covering multiple people.
Policy Terminology
- Renewal signifies the automatic continuance of coverage under an insurance policy.
- Variable whole life policies have cash values that fluctuate based on investment performance.
- Survivorship life policies ensure payment upon the death of the last insured person, commonly used for estate planning.
Coverage Features
- Children's term riders terminate coverage when children reach a specified age.
- Partial surrender allows policy owners to withdraw cash value from interest-sensitive policies without incurring immediate tax liabilities.
- Adjustable Life Policies do not utilize nonforfeiture options to enhance death benefits.
Death Benefits and Premiums
- Decreasing term policies feature declining death benefits but maintain level premiums.
- In Universal Life policies, the cash value can exceed the initial face amount over time.
- The death benefit of a whole life policy remains constant irrespective of cash value accumulation, as demonstrated in discussions about Rob's policy.
Premium Variations
- Modified whole life policies have lower initial premiums that increase over time, unlike typical whole life policies.
- The relationship between premiums and payment periods indicates that shorter payment terms result in higher premiums.
- Family term riders facilitate the addition of dependents to primary insured coverage.
Insurance Types and Riders
- Non-renewable level term policies do not provide benefits if the insured dies after the coverage period.
- Group policies are commonly utilized by businesses for employee coverage.
- Modified Endowment Contracts (MECs) exclude death benefits from taxation, while pre-death distributions can incur tax liabilities.
Policy Benefits and Flexibility
- Variable universal life policies allow for flexible death benefits and investment choices, catering to changing financial needs.
- Limited payment policies guarantee lifetime coverage while ensuring premiums are fully paid within a set timeframe.
- Child term riders enable whole life policyholders to extend coverage to their children easily.
Investment and Taxation Aspects
- MECs accumulate cash values that surpass IRS limits, leading to potential taxable distributions.
- Universal life insurance features a guaranteed interest rate, with opportunities for higher earnings based on performance.
- The comparison of cash value growth and death benefits in universal life policies shows significant variations, as seen with Reggie's policy.
Additional Policy Insights
- Endowment policies pay out the face amount at the end of a specified term if the insured is alive.
- Renewable Term Life insurance can be renewed without requiring evidence of insurability, ensuring continuous coverage.
- Decreasing term insurance is ideal for covering obligations like mortgages by aligning coverage with outstanding loan balances.
Special Considerations
- Single premium cash value policies require only one payment to achieve full coverage.
- Family term insurance riders provide death benefits in the event of a spouse's death, adding a layer of financial security to the primary insured.
- Whole life policies with limited pay structures offer significant savings on premiums after a defined period while still providing ample coverage.
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Description
Test your knowledge on various life insurance policies, including universal, term, and last survivor policies. This quiz covers essential terminology and coverage features, offering insights into the nuances of life insurance. Perfect for anyone looking to deepen their understanding of insurance concepts!
