Podcast
Questions and Answers
Which policy requires a producer to register with the National Association of Securities Dealers (NASD) before selling?
Which policy requires a producer to register with the National Association of Securities Dealers (NASD) before selling?
- Term Life
- Adjustable Life
- Variable Life (correct)
- Whole Life
N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?
N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?
- 30 Pay Life (correct)
- 20 Pay Life
- Term Life
- Whole Life
What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?
What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?
- Term Life
- Variable Life
- Whole Life (correct)
- Universal Life
Which of these statements describe a Modified Endowment Contract (MEC)?
Which of these statements describe a Modified Endowment Contract (MEC)?
All of these statements about Equity Indexed Life Insurance are correct EXCEPT:
All of these statements about Equity Indexed Life Insurance are correct EXCEPT:
A variable insurance policy guarantees a return on its investment accounts.
A variable insurance policy guarantees a return on its investment accounts.
Credit Life insurance is issued in an amount not to exceed what?
Credit Life insurance is issued in an amount not to exceed what?
A Limited-Pay Life policy has what kind of premium payments?
A Limited-Pay Life policy has what kind of premium payments?
K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?
K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?
What kind of premium does a Whole Life policy have?
What kind of premium does a Whole Life policy have?
All of these are characteristics of an Adjustable Life policy EXCEPT:
All of these are characteristics of an Adjustable Life policy EXCEPT:
Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?
Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?
Which is true concerning a Variable Universal Life policy?
Which is true concerning a Variable Universal Life policy?
T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?
T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
Study Notes
Life Insurance Policies Overview
- Variable Life Insurance requires producers to register with the National Association of Securities Dealers (NASD); considered both an insurance and securities contract due to investment risk transfer to the policyowner.
- 30 Pay Life policy features level premiums and permanent protection, concluding payments by retirement age.
- Whole Life Insurance provides a death benefit at the insured's death or upon reaching age 100, designed to accumulate cash value over time.
Modified Endowment Contracts (MEC)
- MECs exceed the maximum premium limits, losing favorable tax benefits. This is determined by the 7-pay test, discouraging aggressive premium payments that lead to early paid-up status.
Equity Indexed Life Insurance
- Permanent life insurance linked to stock market indices; the concept of adjusting premiums based on investment performance is incorrect.
Variable Insurance Policies
- These policies do not guarantee returns on investment accounts; policyowners bear the investment risk with no assurances on cash values or interest rates.
Credit Life Insurance
- Issued to cover the debt amount, ensuring loans are repaid in case of the debtor's death.
Limited-Pay Life Insurance
- Features premium payments constrained to a designated number of years, permitting policyholders to complete payment in a set timeframe.
Modified Whole Life Insurance
- Premiums are fixed for an initial period, then increase, while the death benefit remains constant throughout.
Whole Life Policy Premiums
- This type of insurance has a level premium structure, ensuring predictable payment amounts.
Adjustable Life Insurance
- Offers adjustable terms, but the face amount cannot be changed using policy dividends.
Conversion Provision
- Allows policyowners to transition a term life policy to a permanent one without proof of insurability.
Variable Universal Life Policy
- Empowers policyowners with control over investment direction and the flexibility to select premium payment amounts and timings.
Renewable Term Insurance
- Guarantees continued coverage renewal after the initial policy period even without evidence of insurability.
Variable Universal Life Characteristics
- Comprises monthly mortality charges and allows for self-directed investment choices, providing savings and growth potential linked to market performance.
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Description
Explore the different types of life insurance policies including Variable Life Insurance, 30 Pay Life, Whole Life, and Modified Endowment Contracts (MEC). This quiz delves into the specifics of each policy type, their features, and the implications of premium payments. Test your knowledge on the mechanics and benefits of these financial products.
