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Questions and Answers
What does a level premium indicate?
What does a level premium indicate?
The premium is fixed for the entire duration of the contract.
What characterizes a noncontributory group term life plan?
What characterizes a noncontributory group term life plan?
The entire cost of the plan is paid for by the employer.
Which provision is NOT a requirement in a group life policy?
Which provision is NOT a requirement in a group life policy?
Accidental (AD&D) provision is not required in a group life policy.
What is accurate regarding an Individual Straight Life annuity?
What is accurate regarding an Individual Straight Life annuity?
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What does the Consideration clause in a life insurance policy indicate?
What does the Consideration clause in a life insurance policy indicate?
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What action will an insurer take if an interest payment on a policy loan is not made on time?
What action will an insurer take if an interest payment on a policy loan is not made on time?
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What can a policyowner do if an application for a bank loan requires collateral?
What can a policyowner do if an application for a bank loan requires collateral?
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What action will the insurer take if M dies without making the premium payment due on January 1?
What action will the insurer take if M dies without making the premium payment due on January 1?
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What feature would limit the insurer's obligation if N was killed while flying as a student pilot?
What feature would limit the insurer's obligation if N was killed while flying as a student pilot?
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Which life insurance rider allows the applicant to have excess coverage?
Which life insurance rider allows the applicant to have excess coverage?
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Whose life is covered on a life insurance policy with a payor benefit clause?
Whose life is covered on a life insurance policy with a payor benefit clause?
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What is the insurance company's promise to pay stated benefits in a life insurance contract called?
What is the insurance company's promise to pay stated benefits in a life insurance contract called?
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What will the beneficiary receive if the insured dies during the Grace Period?
What will the beneficiary receive if the insured dies during the Grace Period?
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What will happen if P's premiums are waived due to a disability?
What will happen if P's premiums are waived due to a disability?
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What special need does a policyowner require with an Adjustable Life insurance policy?
What special need does a policyowner require with an Adjustable Life insurance policy?
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What type of life insurance are credit policies issued as?
What type of life insurance are credit policies issued as?
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How long does coverage normally remain on a limited-pay life policy?
How long does coverage normally remain on a limited-pay life policy?
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What describes a Modified Endowment Contract (MEC)?
What describes a Modified Endowment Contract (MEC)?
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Which is an element of a Variable Life policy?
Which is an element of a Variable Life policy?
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What is the coverage limit on a group credit life policy?
What is the coverage limit on a group credit life policy?
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What type of life insurance incorporates flexible premiums and an adjustable death benefit?
What type of life insurance incorporates flexible premiums and an adjustable death benefit?
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What is correct regarding the premium payment schedule for whole life policies?
What is correct regarding the premium payment schedule for whole life policies?
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What type of life policy has a death benefit that adjusts periodically?
What type of life policy has a death benefit that adjusts periodically?
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What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years?
What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years?
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What kind of life insurance product covers children under their parent's policy?
What kind of life insurance product covers children under their parent's policy?
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What is true concerning a Variable Universal Life policy?
What is true concerning a Variable Universal Life policy?
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Study Notes
Premium Structures
- A level premium remains unchanged throughout the contract duration.
- In a noncontributory group term life plan, the employer covers the entire premium cost.
Group Life Policies
- An AD&D (Accidental Death & Dismemberment) provision is optional, not required, in group life insurance.
- Group credit life policies are limited to the total loan amount for coverage.
Annuities and Life Insurance Features
- Individual Straight Life annuities provide payments for the annuitant's lifetime.
- The insuring clause in a life insurance contract represents the company’s promise to fulfill stated benefits.
Policyowner Actions
- Unpaid interest on a policy loan is added to the loan balance automatically by insurers.
- Policyowners can assign policy ownership to a bank as collateral for loans.
Beneficiary Provisions
- If an insured dies during the grace period without paying premiums, beneficiaries receive the face amount minus outstanding premiums.
- In the case of a participating life policy, insured individuals who become disabled still qualify for declared dividends despite waived premiums.
Types of Life Insurance Policies
- Adjustable Life insurance offers flexible premium payments and an adjustable death benefit.
- Universal Life insurance combines flexible premiums with adjustable death benefits.
- Term riders allow for additional excess life insurance coverage.
- Decreasing term policies feature a periodically adjusting death benefit for a specified duration.
Special Provisions and Riders
- A Family Maintenance Policy provides monthly income for 30 years, followed by a lump sum payment.
- Term riders are specifically designed to cover children's insurance needs under a parent's policy.
- Variable Universal Life policies empower policyowners with control over investment placement and premium amounts.
Classification and Limitations
- Credit life insurance policies are typically categorized as term insurance.
- Modified Endowment Contracts (MEC) surpass the premium limits that exempt them from being categorized as life insurance.
- Coverage under a limited-pay life policy generally continues until the insured reaches the age of 100 years.
Key Life Insurance Concepts
- The consideration clause includes both a completed application and the initial premium payment.
- Policy conditions define the obligations of insurers, such as exclusions for certain hazards (e.g., risks associated with being a student pilot).
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