Questions and Answers
Which statement is NOT true regarding a Straight-Life Policy?
Which of the following is true regarding the insurance amount in a credit life policy?
What is the purpose of establishing the target premium for a universal life policy?
To keep the policy in force
What is the Payor Benefit Rider?
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What is Modified Life?
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What type of policy has the least expensive first-year premium payment?
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Which of the following types of insurance policies is most commonly used in credit life insurance?
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What must a domestic insurer issue variable contracts establish?
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Both Universal Life and Variable Universal Life have what feature?
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In term policies, what happens to the premium throughout the term of the policy?
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What type of policy increases in face amount when the insured reaches a specified age?
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What is a Level Term Policy?
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How does the premium in a Survivorship Life policy compare to a Joint Life policy?
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If a policyholder withdraws a portion of the cash value and incurs a fee, what type of policy do they likely have?
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What type of policy issues certificates of insurance to insureds?
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What is Indexed Universal Life?
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What happens to premium payments in a Limited Pay Whole Life policy?
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Which of the following is TRUE regarding an indeterminate premium whole life policy?
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What is Credit Life Insurance?
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How does the face amount change in a Decreasing Term Policy?
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In an Adjustable Life policy, which of the following can be changed by the policy owner?
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Which of the following policies would be classified as a traditional level premium contract?
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What is a Family Policy?
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How does the death benefit under the Universal Life Option B change?
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What does Universal Life allow the policy owner to do?
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What is Interest Sensitive Whole Life?
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What is Graded Premium Whole Life?
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What is Return of Premium (ROP)?
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What is a Family Maintenance Policy?
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What is Single Premium Whole Life?
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Which of the following features of the Indexed Whole Life policy is NOT fixed?
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Study Notes
Life Insurance Policies Overview
- Straight-Life Policy: Charged level premiums throughout the insured's life, guaranteeing a level death benefit; premiums do not steadily decrease over time.
- Credit Life Policy: Insures debtors only for the amount owed to creditors, ensuring the loan balance is covered in case of death.
- Universal Life Policy: Target premium established to maintain policy status, allows flexibility in premium payments.
Specialized Riders and Policy Features
- Payor Benefit Rider: Waives premiums for juvenile policies if the payer (often a parent) becomes disabled or passes away, covering until the insured turns 21.
- Modified Life: Features lower initial premiums that increase over the coverage duration.
Term Insurance Policies
- Annually Renewable Term: Offers the least expensive first-year premium; premiums increase yearly based on insured's age, with benefits level.
- Decreasing Term: Commonly used in credit life insurance; face amount decreases while the premium stays constant.
- Increasing/Level Term Policies: Maintain constant premiums, but face amounts may vary throughout the policy's term.
Unique Policy Types
- Jumping Juvenile Policy: Increases the face value significantly at a specified age, providing more coverage as the insured matures.
- Survivorship Life Policy: Covers multiple lives, pays out on the last death, leading to lower premiums compared to joint life policies.
Cash Value and Flexibility
- Universal Life: Allows for withdrawal from cash value; limits and fees apply, enabling financial flexibility.
- Indexed Universal Life: Combines features of universal life with cash value dependent on equity index performance, no securities license required to sell.
- Interest Sensitive Whole Life: Cash values can fluctuate based on company investments, diverging from fixed projections.
Additional Policy Options
- Family Policies: Enable coverage conversion to permanent insurance without needing to prove insurability.
- Return of Premium (ROP): Life insurance policy that refunds premiums paid if the insured survives the policy term or pays additional benefit if death occurs within the term.
- Family Maintenance Policy: Blends whole life with level term insurance, offering one-time payment upon death plus ongoing support payments.
Special Considerations
- Single Premium Whole Life: Requires a single lump-sum payment at inception, providing immediate coverage.
- Indexed Whole Life: Cash value growth is not fixed, while premiums remain constant; offers policyholders potential for higher returns based on market performance.
- Graded Premium Whole Life: Features lower premiums early on, which gradually increase until stabilization occurs after a set period.
Studying That Suits You
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Description
Test your knowledge on various types of life insurance policies with these flashcards. Assess your understanding of key concepts like Straight-Life Policies and Credit Life Policies. Perfect for students or professionals looking to refresh their insurance knowledge.
