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Life Insurance Policies - Exam 1 Flashcards
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Life Insurance Policies - Exam 1 Flashcards

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Questions and Answers

What is true about a variable insurance policy?

  • Guarantees a minimum rate of return
  • Does not guarantee an assignment provision
  • Does not guarantee a return on its investment accounts (correct)
  • Does not allow the policyowner to assume the investment risk
  • Which statement about a whole life policy is correct?

  • Beneficiary may be changed only with the consent of the premium payor
  • Death benefit can usually be adjusted
  • Premiums are flexible
  • Cash value may be borrowed against (correct)
  • Which statement is correct regarding the premium payment schedule for whole life policies?

  • Premiums are payable throughout the insured's lifetime/coverage lasts until death of the insured (correct)
  • Premiums are payable until age 65/coverage lasts a lifetime
  • A single premium is paid at time of application/coverage lasts until retirement
  • Premiums are payable for a set period/coverage expires at that point
  • A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as?

    <p>Variable Life</p> Signup and view all the answers

    What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?

    <p>Decreasing Term</p> Signup and view all the answers

    How does a typical Variable Life Policy investment account grow?

    <p>Through mutual funds, stocks, bonds</p> Signup and view all the answers

    S is covered by a whole life policy. Which insurance product can cover his children?

    <p>Child Term Rider</p> Signup and view all the answers

    When is the face amount paid under a Joint Life and Survivor policy?

    <p>Upon death of the last insured</p> Signup and view all the answers

    What type of life policy covers two people and pays upon the death of the last insured?

    <p>Survivorship</p> Signup and view all the answers

    Which of these characteristics is consistent with a Straight Life policy?

    <p>Premiums are payable for as long as there is insurance coverage in force</p> Signup and view all the answers

    Which is true concerning a Variable Universal Life policy?

    <p>Policyowner controls where the investment will go and selects the amount of the premium payment</p> Signup and view all the answers

    Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?

    <p>Variable Universal Life</p> Signup and view all the answers

    A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?

    <p>20-Pay Life accumulates cash value faster than Straight Life</p> Signup and view all the answers

    Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?

    <p>Variable Life</p> Signup and view all the answers

    Additional coverage can be added to a Whole Life policy by adding a(n):

    <p>Decreasing Term Rider</p> Signup and view all the answers

    Study Notes

    Life Insurance Policies Overview

    • Variable Insurance Policy: Guarantees a minimum return but does not ensure returns on investment accounts or allow policyholders to take on investment risk.
    • Whole Life Policy: Cash value can be borrowed against; premiums are paid throughout the insured's lifetime until death.
    • Premium Payment Schedules: Whole life policies have premiums payable for the insured's entire life, ensuring coverage lasts until death.

    Types of Life Insurance Policies

    • Variable Life Insurance: Offers fluctuating death benefits based on the performance of an underlying investment portfolio.
    • Decreasing Term Policy: Death benefit adjusts periodically and is issued for a specified time frame.
    • Survivorship Policy: Covers two individuals, paying out upon the death of the last insured.

    Investment Accounts and Growth

    • Growth of Variable Life Policy: Investment accounts typically grow through mutual funds, stocks, and bonds, offering potential for higher returns.

    Riders and Additional Coverage

    • Child Term Rider: Coverage option specifically for policyholder's children.
    • Decreasing Term Rider: Accessible by adding to a Whole Life policy for additional temporary coverage.

    Unique Features of Policies

    • Joint Life and Survivor Policy: Face amount is paid upon the last insured's death.
    • Straight Life Policy: Premiums are maintained for the duration of coverage; no adjustments to premium or death benefits permitted.
    • Variable Universal Life Policy: Allows policyholders control over investment directions and premium amounts.

    Cash Value Accumulation

    • 20-Pay Life Policy: Suitable for those who want faster cash value accumulation compared to Straight Life.
    • Impact of Insurer's Financial Rating: Determines cash value accumulation rates in both Straight Life and 20-Pay Life policies.

    Premium and Investment Choices

    • Variable Life Policy Features: Characterized by level premiums combined with a range of investment options and higher growth potential.

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    Description

    Test your knowledge on life insurance policies through these flashcards focused on provisions, options, and riders. Each card offers a term and a definition to enhance your understanding of variable and whole life policies. Perfect for exam preparation!

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