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Which of the following is NOT a characteristic of universal life insurance? A Flexible death benefit B Cash account C Fixed premium D Unbundled premium - ✔✔C Universal life policies allow the policy owner to increase the amount of premium going into the policy and to later decrease it again. They may even skip a premium payment. The rest of the features apply to universal life policies. Which of the following would help prevent a universal life policy from lapsing? A Corridor of insurance B Target premium C Face amount D Adjustable premium - ✔✔B The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime. A 20 - year family income policy was purchased effective April 1, 2001. The insured died four months later, on August 1, 2001. The beneficiary receives monthly income for A10 years. B19 years and 8 months.
C9 years and 8 months. D20 years. - ✔✔B Monthly benefits paid for the remainder of the 20 year benefit period. When the breadwinner that is insured by a Family Policy dies, what rights are provided to other family members that are covered under the policy? AThey can convert their coverage to permanent life insurance with evidence of insurability. BFamily members are not provided any rights. CThey can surrender the coverage for its cash value. DThey can convert their coverage to permanent life insurance without evidence of insurability.
- ✔✔D Family members may convert their term coverage to permanent insurance if requested within the time stated in the policy. Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources? AVariable life BTerm CWhole Life DAnnuity - ✔✔B Term insurance provides a death benefit only; cost per $1,000 of coverage is less than other types of policies that create cash values. Review Content
The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime. Which of the following is an example of a limited-pay life policy? ALevel Term Life BStraight Life CLife Paid-up at Age 65 DRenewable Term to Age 70 - ✔✔C Limited Pay Whole Life premiums are all paid by the time the insured reaches age 65. The policy endows when the insured turns 100. It is the premium paying period that is limited, not the maturity. An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10 - year term? AThe insured must provide evidence of insurability to renew the policy. BThe insured may only convert the policy to another term policy. CThe insured may renew the policy for another 10 years at the same premium rate. DThe insured may renew the policy for another 10 years, but at a higher premium rate. - ✔✔D Policies that are guaranteed renewable and convertible may be renewed, without evidence of insurability, for another like term, or may be converted to permanent insurance, without evidence of insurability. A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium? AIf the daughter is disabled for more than 3 months BIf the daughter is disabled for any length of time
CIf the father is disabled for more than 6 months DIf the father is disabled for at least a year - ✔✔C Payor benefit only pays if the owner, the father in this example, is disabled for at least 6 months. An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it? AGraded Premium Life BLimited-pay Life CVariable Life DAdjustable Life - ✔✔B In limited-pay policies, the premiums for coverage will be completely paid-up well before age 100, usually after a specified number of years. Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? AJumping Juvenile BJuvenile Premium Provision CWaiver of Premium DPayor Benefit - ✔✔D If the payor (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21. All of the following are true regarding a decreasing term policy EXCEPT
AAnnually Renewable Term. BIncreasing Term. CDecreasing Term. DLevel Term. - ✔✔A Annually renewable term is the purest form of term insurance. The death benefit remains level, but the premium increases each year with the insured's attained age. In decreasing policies, while the face amount decreases, the premium remains constant throughout the life of the contracts. In level term and increasing term policies, the premium also remains level for the term of the policy. Therefore, in the other types of level policies, the first-year premium would not be different from any other year. W owns a policy in which she is covered as the bread-winner with permanent insurance and with decreasing term insurance in the form of a rider. What type of policy is this? AFamily Protection Policy BFamily Income Policy CFamily Policy DFamily Maintenance Policy - ✔✔B If the insured dies during the income period of a family income policy, monthly benefits are paid to the survivors for the balance of the income phase. The death benefit is then paid to the beneficiary. During the income phase, the insurer retains the cash value and death benefit to invest and generate interest. Which of the following best defines target premium in a universal life policy? AThe maximum amount the policyowner may pay on a policy BThe minimum amount to make sure the policy is annually renewable CThe corridor of insurance
DThe recommended amount to keep the policy in force throughout its lifetime - ✔✔D The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime. What type of whole life insurance policy has premiums that are adjusted so that during the first years of the policy, the premiums are lower than those of a straight whole life policy, and in subsequent years the premiums are higher than those of a straight whole life policy? AIndexed life BIndeterminate premium CEnhanced life DModified life - ✔✔D Modified life policies were developed to attract young professionals who have a large financial investment in their education and training, but starting their professional careers, they have limited resources to buy insurance. Modified life is a permanent policy, but in the early years, the premiums are similar to that of a term policy; in later years, the premiums are increased to build cash values and cause the policy to endow. Concerning Juvenile Life insurance, which of the following statements is INCORRECT? AJuvenile Life is classified as any life insurance purchased by a minor. BUsually a parent or guardian is the applicant for insurance on the life of a minor. CIt can be a limited premium payment policy. DJuvenile Life is classified as any life insurance written on the life of a minor. - ✔✔A Juvenile Life insures the life of a minor. It does not need to be purchased by a minor.
Straight whole life policies have a level guaranteed face amount and a level premium for the life of the insured. Both Universal Life and Variable Universal Life have a ADecreasing premium. BIncreasing premium. CFlexible premium. DLevel fixed premium. - ✔✔C Variable universal life, like universal life itself, has a flexible premium that can be increased or decreased as the policyowner chooses, so long as there is enough value in the policy to fund the death benefit. In a survivorship life policy, when does the insurer pay the death benefit? AIf the insured survives to age 100 BUpon the last death CUpon the first death DHalf at the first death, and half at the second death - ✔✔B Survivorship life pays on the last death rather than upon the first death. A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20 - year period. What type of policy is this? AOrdinary life policy BLimited pay whole life
CLevel term DTerm to specified age - ✔✔C A 20 - year term policy is written to provide a level death benefit for 20 years. During partial withdrawal from a universal life policy, which portion will be taxed? ALoan BInterest CCash value DPrincipal - ✔✔B During the withdrawal, the interest earned on the withdrawn cash value may be subject to taxation. Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? AUniversal life BVariable life CDecreasing term DStraight whole life - ✔✔A The policyowner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. In fact, the policyowner may even skip paying a premium and the policy will not lapse as long as there is sufficient cash value at the time to compensate for the nonpayment of premium.
A Modified Life policy would be best. It charges a lower premium for the first few policy years and then a higher level premium for the remainder of the life of the policy. These policies were developed to make the purchase of whole life insurance more attractive for individuals who have limited financial resources but will be able to afford higher premiums in the near future. Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be ADiscounted. BAdjusted to the insured's age at the time of renewal. CDetermined by the health of the insured. DBased on the issue age of the insured - ✔✔B Which of the following riders would NOT cause the Death Benefit to increase? AAccidental Death Rider BPayor Benefit Rider CGuaranteed Insurability Rider DCost of Living Rider - ✔✔B What kind of policy allows withdrawals or partial surrenders? AVariable whole life BUniversal life C20-pay life DTerm policy - ✔✔B What do Modified Life and Straight Life policies have in common?
AGraded premium BTemporary protection CAccumulation of cash value DSame amount of premium - ✔✔C All of the following are true about variable products EXCEPT AThe cash value is not guaranteed. BPolicyowners bear the investment risk. CThe premiums are invested in the insurer's general account. DThe minimum death benefit is guaranteed. - ✔✔C When an annuity is written, whose life expectancy is taken into account? AAnnuitant BBeneficiary CLife expectancy is not a factor when writing an annuity. DOwner - ✔✔A Which of the following is TRUE regarding the accumulation period of an annuity? AIt is also referred to as the annuity period. BIt is a period of time during which the beneficiary receives income CIt is limited to 10 years. DIt is a period during which the payments into the annuity grow tax deferred. - ✔✔D
CThis option pays specific amount until the funds are exhausted. DThe annuitant may select how big the payments will be. - ✔✔A Which of the following is NOT true regarding the annuitant? AThe annuitant's life expectancy is taken into consideration for the annuity. BThe annuitant receives the annuity benefits. CThe annuitant must be a natural person. DThe annuitant cannot be the same person as the annuity owner. - ✔✔D Which of the following best describes a pure life annuity settlement option? ABenefits are paid for a fixed period of time, specified when the policy begins to pay. BPure life provides payments for as long as both the annuitant and the spouse are living. CPure life provides payments for as long as the annuitant is alive. DPure life guarantees that all the proceeds will be paid out. - ✔✔C Which of the following best describes what the annuity period is? AThe period of time from the effective date of the contract to the date of its termination BThe period of time during which accumulated money is converted into income payments CThe period of time from the accumulation period to the annuitization period DThe period of time during which money is accumulated in an annuity - ✔✔B
Which of the following will NOT be an appropriate use of a deferred annuity? ACreating an estate BAccumulating retirement funds CAccumulating funds in an IRA DFunding a child's college education - ✔✔A If an annuitant dies before annuitization occurs, what will the beneficiary receive? ACash value of the plan BEither the amount paid into the plan or the cash value of the plan, whichever is the greater amount CEither the amount paid into the plan or the cash value of the plan, whichever is the lesser amount DAmount paid into the plan - ✔✔B Which of the following is another term for the accumulation period of an annuity? APay-in period BPremium period CLiquidation period DAnnuity period - ✔✔A A deferred annuity is surrendered prior to annuitization. Which of the following best describes the nonforfeiture value of the annuity? AThe surrender value will not be more than 80% of the cash value in the annuity at the time of surrender. BThe surrender value should be equal to 100% of the premium paid, minus any prior withdrawals and surrender charges.
DDepreciation period - ✔✔D Which of the following is NOT true regarding the accumulation period of an annuity? AIt would not occur in a deferred annuity. BIt is the period during which the annuity payments earn interest. CIt is the period over which the annuitant makes payments into an annuity. DIt is also known as the pay-in period. - ✔✔A Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be? AInstallments for a fixed amount BInstallment refund CCash refund DInstallments for a fixed period - ✔✔D Which of the following products requires a securities license? AFixed annuity BEquity Indexed annuity CDeferred annuity DVariable annuity - ✔✔D Which of the following is NOT true about a group annuity? AIt can be owned by individual employees.
BIt can be noncontributory. CIt can be qualified. DIt can be tax deferred. - ✔✔A In an annuity, the accumulated money is converted into a stream of income during which time period? APayment period BAmortization period CConversion period DAnnuitization period - ✔✔D Your client's employer does not offer a company-wide annuity contract. What type of annuity contract could your client obtain? AIndividual BIndependent Group Contract CSingle DNonqualified - ✔✔A An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it? AFlexible premium BImmediate CDeferred
