Types of Insurance Policies

Questions and Answers

If a 10-year term life policy contains a renewability provision, the policy will renew without evidence of insurability.

True

What type of life insurance gives the greatest amount of coverage for a limited period of time?

Universal Life

Whole Life

Variable Life

Term Life (correct)

Which policy did Y purchase?

Whole Life policy with an other shared rider

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

Survivorship Signup and view all the answers

All of these insurance types require FINRA except:

Modified Whole Life Signup and view all the answers

Which type of term insurance may be renewable?

Level Signup and view all the answers

In order to sell a ________ life policy, a producer is required to register with the financial industry regulatory authority.

Variable Signup and view all the answers

Credit Life insurance is typically issued with which type of coverage?

Decreasing term Signup and view all the answers

At what point does a whole life insurance policy endow?

When the cash value equals the death benefit Signup and view all the answers

What kind of policy is needed for temporary coverage with a changing death benefit?

Decreasing term policy Signup and view all the answers

Which policies best fit K's need for maximum protection per dollar of annual premium?

Straight life 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 universal life policy is sometimes referred to as an unbundled life policy because the owner can see the interest earned, expense charges and the?

Cost of insurance Signup and view all the answers

The cash value in a ________ life policy may fluctuate to reflect changing assumptions regarding mortality costs, interest and expense factors.

Universal 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. Which of these statements made by the producer would be correct?

20 pay life accumulates cash faster than straight life Signup and view all the answers

How long does coverage normally remain on a limited pay life policy?

Age 100 Signup and view all the answers

Credit life insurance is issued in an amount not to exceed the amount of the loan.

True Signup and view all the answers

How does a typical Variable Life Policy investment account grow?

Through mutual funds, stocks, and bonds Signup and view all the answers

What type of policy is best suited for S, age 40, who wants to adjust coverage as needs change?

Universal life Signup and view all the answers

What type of term coverage allows for continuation after policy expiration?

Renewable Signup and view all the answers

A variable insurance policy does not guarantee a return on investment accounts.

True Signup and view all the answers

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. Signup and view all the answers

What type of policy would offer a 40-year-old the quickest accumulation of cash value?

20 pay life Signup and view all the answers

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

Single premium Signup and view all the answers

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

Joint life Signup and view all the answers

Additional coverage can be added to a whole life policy by adding?

Decreasing term rider 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 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

Which life insurance policies combine term insurance with an investment element?

Universal life Signup and view all the answers

Which information is not required to be included in a whole life policy?

Policy's guaranteed dividend table Signup and view all the answers

What kind of life insurance policy pays a specified monthly income to a beneficiary for years and then pays a lump sum benefit at the end of that 30 years?

Family Maintenance Policy Signup and view all the answers

Which of these needs is satisfied by adjustable life insurance?

Insured's need for flexible premiums Signup and view all the answers

Whole life insurance policies are contractually guaranteed to provide each of the following except?

Partial withdrawal features beyond a surrender charge period Signup and view all the answers

Which of these statements about equity indexed insurance is correct except?

The premiums can be lowered or raised based on investment performance Signup and view all the answers

The combination of whole life & ________ term insurance is referred to as a family income policy.

Decreasing Signup and view all the answers

What kind of premium does a whole life policy have?

Level Signup and view all the answers

A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as?

Variable Life Signup and view all the answers

Whole life insurance is sometimes referred to as straight life. What does straight life indicate when using this phrase?

The duration of payment periods Signup and view all the answers

Which of these would be considered a limited pay life policy?

Life paid up at age 70 Signup and view all the answers

K pays 20,000 for a 20-year endowment policy for 10 years and dies in an accident. How much will the insurance company pay the beneficiary?

20,000 death benefit Signup and view all the answers

A _____ life policy offers the owner investment in products such as money market funds, long-term bonds, and equities.

Variable Signup and view all the answers

What kind of life policy supplies an income stream over a set period of time that starts when the insured dies?

Family Maintenance policy Signup and view all the answers

Which of the following types of policies pays a benefit if the insured goes blind?

AD&D Signup and view all the answers

When is the face amount of a whole life policy paid?

When the insured dies or at policy maturity date, whichever happens first. Signup and view all the answers

Which of these is an element of variable life policy?

Fixed level premium Signup and view all the answers

Variable life insurance can be described as?

Both an insurance and securities product Signup and view all the answers

The amount of coverage on a group credit life policy is limited to?

The insured total loan value Signup and view all the answers

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

Whole life Signup and view all the answers

STOLI is when a person purchases life insurance to sell to a?

3rd party with insurable interest Signup and view all the answers

A 15-year mortgage is best protected by what kind of life policy?

15 year decreasing term Signup and view all the answers

Q would like to purchase 100,000 of permanent protection on his wife and 50,000 term coverage on himself under the same policy. What kind of policy should Q purchase?

Whole life with other insured rider Signup and view all the answers

Which is true concerning a variable universal life policy?

The policy owner controls where the investment will go and selects the amount of premium paid. Signup and view all the answers

When is the face amount paid under a joint life and survivor policy?

Upon death of last insured Signup and view all the answers

A company that owns a life insurance policy on one of its key employees may do all of the following except?

Change the policy interest rate Signup and view all the answers

G purchased a family income policy at age 40. The policy has a 20-year 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

T would like to ensure 10,000 is available in 10 years to replace a roof on his house. What kind of 10,000 policy should T purchase?

10 year endowment Signup and view all the answers

A policy that becomes a Modified Endowment Contract will lose many of its tax advantages.

True Signup and view all the answers

Who benefits in IOLI when the insured dies?

The policy owner Signup and view all the answers

Life insurance that covers an insured whole life with level premiums paid over a LIMITED time is called?

Limited Pay life Signup and view all the answers

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these applies?

Conversion provision 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 still protect the principal with a minimum level of risk. Which product would S be advised to purchase?

Equity index insurance Signup and view all the answers

P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of 20,000 at the end of the 20-year period. What kind of policy is this?

Family Maintenance policy Signup and view all the answers

Which of the following policies is characterized by a flexible premium and death benefit and allows the policy owner control of the investment aspect of the plan?

Variable Universal Life Signup and view all the answers

Under a Renewable term policy, the renewal premium is calculated on the basis of what?

Insured's attained age Signup and view all the answers

What kind of life insurance product covers children under their parents' policy?

Term rider Signup and view all the answers

A _____ term policy is normally used when covering an insured mortgage balance.

Decreasing Signup and view all the answers

A life policy that contains a monthly mortality charge as well as self-directed investment choices is called?

Variable universal life policy Signup and view all the answers

Which of the following is considered an element of a variable life policy?

Underlying equity investment Signup and view all the answers

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

Variable Signup and view all the answers

Which type of life insurance gives the greatest amount of coverage for a limited period of time?

Term Life Signup and view all the answers

Which of these is not interest sensitive?

Modified Whole Life Signup and view all the answers

Under a graded premium policy, the premiums

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

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

Whole Life Signup and view all the answers

Which of these types of policies may not have the automatic premium loan provision attached to it?

Decreasing term Signup and view all the answers

When a life insurance policy exceeds certain IRS table values, the result would create which of the following?

MEC: Modified Endowment Contract Signup and view all the answers

What type of life insurance are credit policies issued as?

Term Signup and view all the answers

Variable life products require a producer to?

Hold a life insurance license and a securities license Signup and view all the answers

Which of the following actions require a policy owner to provide proof of insurance in adjustable life policy?

Increase of face amount Signup and view all the answers

K purchased life insurance in 1986 which paid 10% interest in the early years of the policy. Twenty years after the purchase, she received a notice from the insurer stating that the policy will soon terminate unless a much higher premium is paid because of falling interest rates. This type of policy is known as?

Universal Signup and view all the answers

Which of the following types of term life policies most likely contain a renewability feature?

10 year convertible term Signup and view all the answers

Term life policies that have the ability to be converted to permanent coverage may do so during what?

A specific time period Signup and view all the answers

Which of the following life insurance policies combine term insurance with an investment element?

Universal Signup and view all the answers

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

Survivorship Signup and view all the answers

A _______ life policy combines investment choices with a form of term coverage.

Variable universal Signup and view all the answers

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

Variable life Signup and view all the answers

K, age 45, and his wife, age 43, have 3 children. They purchase a family policy that covers K's wife until age 65. All of these situations would pay a death benefit except?

K's wife dies at age 66 Signup and view all the answers

K buys a policy where the premium stays fixed for the first five years. The premium increases in year 6 and stays level, all while the death benefit remains the same. What kind of policy is this?

Modified whole life Signup and view all the answers

All of these characteristics of an adjustable life policy except?

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

Term insurance has which of the following characteristics?

Expires at the end of the policy period Signup and view all the answers

Which of these statements describe a MEC?

Exceeds the max amount of premium that can be paid into a policy and still have it recognized as an insurance contract Signup and view all the answers

A universal life policy is sometimes referred to as an unbundled life policy because an owner can see the interest earned, cost of insurance and?

The expense charges Signup and view all the answers

An architect firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager?

Key person insurance Signup and view all the answers

J issued a life insurance policy with a death benefit of 100,000. She pays 600 a year in premium for the first 5 years. The premium increases to 900 per year in the 6th year and remains level after. The policy death benefit remains the same. Which type of life insurance is this?

Modified premium life Signup and view all the answers

J is a 35-year-old looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?

20 pay life Signup and view all the answers

P owns a 25,000 life policy that pays the face amount to him if he lives to age 70 or his beneficiary if he dies before age 70. What kind of policy is this?

Endowment at age 70 Signup and view all the answers

N is a 40-year-old applicant who would like to retire at age 70. He is looking to buy an insurance policy with level premiums, permanent protection, and paid up at retirement. Which should N purchase?

30 year pay life Signup and view all the answers

What type of life insurance incorporates flexible premiums and adjustable death benefit?

Universal life Signup and view all the answers

If a 10-year life policy contains a renewability provision, the policy will renew without evidence of insurability.

True Signup and view all the answers

Which statement is true regarding a variable whole life policy?

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

Study Notes

Types of Insurance Policies

A 10-year term life policy with a renewability provision will renew without requiring evidence of insurability.
Term life insurance provides the greatest amount of coverage for a limited time period.
Whole Life policies can include riders that provide additional coverage for other insured individuals.
Survivorship policies cover two persons and pay upon the death of the insured.
Modified whole life does not require FINRA registration unlike other types.
Level term insurance can be renewable, providing flexibility for the policyholder.
To sell a variable life policy, producers must register with the Financial Industry Regulatory Authority (FINRA).
Credit life insurance typically uses decreasing term coverage, corresponding to the loan balance.
Whole life insurance policies endow when cash value equals the death benefit.
A decreasing term policy is suited for those needing coverage with a regularly changing death benefit.
Straight life policies offer the most protection per premium dollar spent in permanent life insurance.
Universal Life Policies typically allocate investment gains towards cash value accumulation.
Universal life policies are called unbundled because they allow visibility into interest earned and costs.
Cash value in universal life policies may fluctuate based on mortality costs and expenses.
A 20 pay life policy accumulates cash value faster in the early years than a straight life policy.
Limited pay life insurance coverage normally lasts until age 100.
Credit life insurance amounts should not exceed the total loan balance.
Variable Life Policies grow through mutual funds, stocks, and bonds.
Universal life policies allow for adjustments based on changing life needs.
Renewable term policies permit continuation of coverage after original terms expire, adjusting premiums accordingly.
Variable life policies do not guarantee returns on investment accounts.
Whole life policies require premiums to be paid for the insured’s lifetime, lasting until death.
A 20 pay life policy yields rapid cash value accumulation in the early years.
Single premium permanent life insurance typically offers the highest cash value.
Joint life policies protect against unpaid mortgage balances upon the insured's premature death.
Whole life insurance combines a stable death benefit with a cash value component.
A Family Maintenance policy provides a specified monthly income for a set period after death, followed by a lump sum.
Adjustable life insurance accommodates the insured's need for flexible premium payments.
Variable life policies include underlying equity investments, providing potential for growth.
Both level premiums and varying investments are characteristics of flexible variable whole life policies.
Credit policies in life insurance are generally offered as term insurance.
Converting a term to a whole life policy can occur without proof of good health through a conversion provision.
Insurance exceeding certain IRS thresholds is classified as a Modified Endowment Contract (MEC).
Key person insurance is suitable for businesses insuring vital employees, safeguarding against financial losses.
Modified premium life policies see increasing premiums after an initial stable period.
A family income policy combines whole life and decreasing term elements, offering regular income and a death benefit.
Universal life insurance features flexible premiums and adjustable death benefits, making it adaptable to policyholders' needs.
Life insurance generates an estate upon the insured’s death with guarantees on minimum death benefits.
The death benefit under a joint life and survivor policy is paid upon the death of the last insured.

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Description

This quiz covers various types of insurance policies, including term life, whole life, and survivorship policies. Test your understanding of key features and regulatory requirements related to insurance. Ideal for students and professionals looking to enhance their knowledge of insurance products.