Life Insurance Policies Overview

Questions and Answers

Which of the following actions is NOT possible with a Universal Life policy?

Cash value can be withdrawn

Flexible premium payments are allowed

Premiums may be applied as a credit against income tax (correct)

Policy can be converted to a different type

If X wants to buy $50,000 worth of permanent protection on his/her spouse and $25,000 worth of 10-year coverage on X under the same policy, what should the applicant purchase?

A whole life policy with other insured rider

All of these statements about Equity Indexed Life insurance are correct EXCEPT:

Allows for flexible premium payments

Can be affected by stock market performance

Offers a variable interest rate

Cash value has a minimum rate of accumulation (correct)

Life insurance immediately creates an estate upon the death of an insured. Which policy is characterized by a guaranteed minimum death benefit?

Credit Life insurance Signup and view all the answers

The investment gains from a Universal Life Policy usually go toward?

The cash value Signup and view all the answers

A Family Income Policy is a combination of?

Whole life and Decreasing Term Insurance Signup and view all the answers

All of these are characteristics of an Adjustable Life policy EXCEPT:

Face amount can be adjusted using policy dividends Signup and view all the answers

F needs life insurance with a death benefit that changes regularly according to a schedule. What kind of policy is needed?

Decreasing term policy Signup and view all the answers

Which statement is TRUE regarding Variable Whole Life policy?

A minimum guaranteed death benefit is provided Signup and view all the answers

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

Child term rider Signup and view all the answers

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

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

Which type of policy BEST identifies one in which the cash value may fluctuate due to changing assumptions regarding mortality cost, interest, and expense factors?

Universal Life Signup and view all the answers

Which of the following statements is CORRECT about the period in which a Term Policy can be converted?

It varies according to the contract Signup and view all the answers

G purchased a Family Income policy at age 40. The policy has a 2-year pay rider period. If G were to die at age 50, how long would G's family receive an income?

10 years Signup and view all the answers

A Limited-Pay Life policy has?

Premium payments limited to a specified number of years Signup and view all the answers

Which statement about a whole life policy is correct?

Cash value may be borrowed against Signup and view all the answers

S is close to retiring and would like to purchase a policy that will yield greater gains than bonds but will protect the principal with a minimum level of risk. What product would S be advised to purchase?

Equity index insurance Signup and view all the answers

Under a graded Premium policy, the premiums?

Are lower during the policy's early years Signup and view all the answers

A life insurance policy that provides a policy owner with cash value along with a level face amount is called?

Whole life Signup and view all the answers

What kind of premium does a Whole Life policy have?

Level Signup and view all the answers

A term life insurance policy matures?

Upon the insured's death during the term of the policy Signup and view all the answers

Which combination plan is designed to protect an insured from an unpaid mortgage balance upon premature death?

Joint Life Signup and view all the answers

Universal Life Policy is sometimes referred to as an unbrided Life policy because the owner can see the interest earned, cost of insurance, and?

Expense charges Signup and view all the answers

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

Upon death of the last insured Signup and view all the answers

Which types of permanent life insurance policies offers the highest initial cash value?

Single premium Signup and view all the answers

N is a 40 year old applicant who wants to retire at age 70 and is looking for a life insurance policy with level premiums, permanent protection, and be paid up at retirement. Which should N purchase?

30 pay life Signup and view all the answers

The coverage on a group credit life policy is limited to:

The insured total loan value Signup and view all the answers

What kind of policy pays the face value upon the death of the insured or when the insured reaches 100?

Whole life Signup and view all the answers

Which policy requires an agent to register with the NASD before selling?

Variable Life Signup and view all the answers

What type of license insurance are credit policies issued as?

Term 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?

Decreasing term Signup and view all the answers

An architecture firm would lose a lot of money if its project manager died. Which type of policy should the firm purchase on its project manager?

Key person insurance Signup and view all the answers

M purchases a $70,000 life insurance policy with premium payments of $550 a year for the first 5 years. Beginning the sixth year, the premium will increase to $800 a year but will remain level thereafter. What type of policy did M purchase?

Modified premium life Signup and view all the answers

D needs life insurance that provides coverage for a limited amount of time while paying the lowest possible premium. What kind of policy is needed?

Level term Signup and view all the answers

All of these insurance products require an agent to have proper FINRA securities registration to sell them, EXCEPT for:

Modified Whole Life Signup and view all the answers

Which characteristic is CORRECT about interest-sensitive whole life?

There is a flexible premium payment Signup and view all the answers

Which types of Term Life policies most likely contains a Renewability feature?

10 year convertible term Signup and view all the answers

A Whole Life Insurance Policy endows when the?

Cash value equals the death benefit Signup and view all the answers

K purchased a $10,000 Life Policy that will pay the face amount to her if she lives to age 65, or to her beneficiary if she dies before 65. What type of policies did K purchase?

Endowment at age 65 Signup and view all the answers

What type of life policy covers 2 people and pays upon the death of the last insured?

Survivorship Signup and view all the answers

Study Notes

Life Insurance Policies and Features

Universal Life Policy: Premiums can be credited against income tax; investment gains contribute to cash value.
Whole Life Policy: Provides permanent coverage with a level premium; cash value is borrowable; characterized by guaranteed death benefits through a child term rider.
Equity Indexed Life Insurance: Offers a minimum rate of cash value accumulation; subject to changing factors affecting cash value.
Family Income Policy: Combines whole life and decreasing term insurance for financial planning.
Decreasing Term Policy: Coverage decreases over time; suitable for temporary needs with changing death benefits.
Adjustable Life Policy: Allows adjustments to face amounts; dividends do not affect adjustments.
Joint Life Policy: Designed to cover mortgage balances upon premature death; pays out upon first death among insured individuals.

Policy Terms and Conversion Features

Term Life Insurance: Matures upon the insured's death during the policy term; periods for conversion vary depending on the contract.
Graded Premium Policy: Lower premiums during the early policy years; adjust to higher rates later on.
Variable Life Policy: Provides a minimum guaranteed death benefit; requires agents to be registered with NASD for sale.
Survivorship Policy: Covers two individuals, paying upon the death of the last insured.

Specific Scenarios for Policy Purchase

Child Term Rider: Coverage for children under a whole life policy.
Equity Index Insurance: Recommended for those seeking higher gains with risks managed.
Modified Premium Life: Features an initial lower premium that increases after a set period; maintains face amount.
Level Term Policy: Provides coverage for a limited time at the lowest premium cost.
Key Person Insurance: Protects a business against the loss of a crucial employee; designed to cover financial loss.

Miscellaneous Features and Characteristics

Interest Sensitive Whole Life: Offers flexible premium payment and cash value sensitivity to interest rates.
Credit Life Policy: Coverage is limited to the total insured loan value; ensures financial stability for loan repayment.
Endowment Policy: Provides benefits at a specified age or upon death before that age; exemplified by policies effective at age 65.
Single Premium Policy: Offers the highest initial cash value among permanent insurance options; allows for immediate cash accumulation.

These notes encapsulate essential insights related to various life insurance policies and their features, aiding in efficient study and preparation.

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Description

This quiz explores various types of life insurance policies, including universal, whole, and term life insurance. Learn about the features, benefits, and suitability of each policy type, helping you understand the best options for financial planning. Perfect for anyone looking to deepen their knowledge of life insurance products.

Life Insurance Policies Overview

Questions and Answers

Which of the following actions is NOT possible with a Universal Life policy?

If X wants to buy $50,000 worth of permanent protection on his/her spouse and $25,000 worth of 10-year coverage on X under the same policy, what should the applicant purchase?

All of these statements about Equity Indexed Life insurance are correct EXCEPT:

Life insurance immediately creates an estate upon the death of an insured. Which policy is characterized by a guaranteed minimum death benefit?

The investment gains from a Universal Life Policy usually go toward?

A Family Income Policy is a combination of?

All of these are characteristics of an Adjustable Life policy EXCEPT:

F needs life insurance with a death benefit that changes regularly according to a schedule. What kind of policy is needed?

Which statement is TRUE regarding Variable Whole Life policy?

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

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

Which type of policy BEST identifies one in which the cash value may fluctuate due to changing assumptions regarding mortality cost, interest, and expense factors?

Which of the following statements is CORRECT about the period in which a Term Policy can be converted?

G purchased a Family Income policy at age 40. The policy has a 2-year pay rider period. If G were to die at age 50, how long would G's family receive an income?

A Limited-Pay Life policy has?

Which statement about a whole life policy is correct?

S is close to retiring and would like to purchase a policy that will yield greater gains than bonds but will protect the principal with a minimum level of risk. What product would S be advised to purchase?

Under a graded Premium policy, the premiums?

A life insurance policy that provides a policy owner with cash value along with a level face amount is called?

What kind of premium does a Whole Life policy have?

A term life insurance policy matures?

Which combination plan is designed to protect an insured from an unpaid mortgage balance upon premature death?

Universal Life Policy is sometimes referred to as an unbrided Life policy because the owner can see the interest earned, cost of insurance, and?

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

Which types of permanent life insurance policies offers the highest initial cash value?

N is a 40 year old applicant who wants to retire at age 70 and is looking for a life insurance policy with level premiums, permanent protection, and be paid up at retirement. Which should N purchase?

The coverage on a group credit life policy is limited to:

What kind of policy pays the face value upon the death of the insured or when the insured reaches 100?

Which policy requires an agent to register with the NASD before selling?

What type of license insurance are credit policies issued as?

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

An architecture firm would lose a lot of money if its project manager died. Which type of policy should the firm purchase on its project manager?

M purchases a $70,000 life insurance policy with premium payments of $550 a year for the first 5 years. Beginning the sixth year, the premium will increase to $800 a year but will remain level thereafter. What type of policy did M purchase?

D needs life insurance that provides coverage for a limited amount of time while paying the lowest possible premium. What kind of policy is needed?

All of these insurance products require an agent to have proper FINRA securities registration to sell them, EXCEPT for:

Which characteristic is CORRECT about interest-sensitive whole life?

Which types of Term Life policies most likely contains a Renewability feature?

A Whole Life Insurance Policy endows when the?

K purchased a $10,000 Life Policy that will pay the face amount to her if she lives to age 65, or to her beneficiary if she dies before 65. What type of policies did K purchase?

What type of life policy covers 2 people and pays upon the death of the last insured?

Study Notes

Life Insurance Policies and Features

Policy Terms and Conversion Features

Specific Scenarios for Policy Purchase

Miscellaneous Features and Characteristics

Studying That Suits You

Description

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