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100
When the insured purchased a new home, he wanted to purchase a life insurance policy that would protect his family against losing it should he die before the mortgage was paid. Which of the following life policies is best suitable for that need? A. Whole life B. Level term C. Decreasing term D. Return of premium
Decreasing term Decreasing term is a type of life insurance that features a level premium and a death benefit that decreases each year over the duration of the policy. This is primarily used when the amount of needed protection is time sensitive or decreases over time. This type of coverage is commonly purchased to insure the payment of a mortgage or other debts.
100
Which of the following statements is true regarding a universal life policy? A. The insurer sets the cash value and premium payment period B. The death benefit can be increased without evidence of insurability C. The premiums can be decreased by the insured D. It is issued without a guaranteed interest rate
The premiums can be decreased by the insured Universal life insurance is also known as flexible premium adjustable life. The policyholder has the flexibility to increase the amount of premium paid into the policy and to later decrease it again. 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 cover the monthly deductions for cost of insurance
100
Which of the following would be considered a disadvantage of term insurance? A. If the insured dies during the term, the policy pays only the accumulated cash value B. If the insured dies after the end of the term, there is no death benefit to the beneficiary C. The policy provides the smallest amount of coverage for the highest premium D. It cannot be renewed or converted to a permanent policy
If the insured dies after the end of the term, there is no death benefit to the beneficiary Term insurance is temporary protection. It only provides coverage for a specified period of time. It is also known as pure life insurance and provide for the greatest amount of coverage for the lowest premium as compared to any other form of protection. There is usually a maximum age above which coverage will not be offered or at which coverage cannot be renewed. * If the insured dies during this term, he policy pays the death benefit to the beneficiary * If the policy is canceled or expires prior to the insured's death, nothing is payable at the end of the term * There is no cash value or other living benefits
100
How does continuous premium straight life differ from 20-year limited pay life?
The premiums for straight life will be spread over the insured's lifetime, thus enabling the insurance company to charge a lower annual premium. When the premium-paying period is condensed to 20 years, a higher annual premium is required
100
The most common type of whole life insurance where premiums are payable over the whole life of the insured to age 100 is called A. Limited payment B. Life paid-up premium C. Continuous premium (straight) life D. Single premium whole life
Continuous premium (straight) life This policyowner pays the premium from the time the policy is issued until the insured's death or age 100.
200
An annually renewable term policy: A. Increases in premium based on the insured's health B. Maintains a level premium each year C. Renews each year with an increased premium based on insured's age D. Increases in coverage each year
Renews each year with an increased premium based on insured's age
200
With a traditional whole life policy, the death benefit: A. Remains constant over time B. Increases over time C. Decreases over time D. Becomes pure death protection after 20 years
Remains constant over time This is also known as straight life. Straight life is the basic whole life policy. The policyowner pays the premium from the time the policy is issued until the insured's death or age 100 whichever occurs first. Of the common whole life policies, straight life will have the lowest annual premium
200
The renewable provision allows the policyowner to renew the coverage at the expiration date A. Without evidence of insurability B. Only with evidence of insurability C. With evidence of insurability if the insurer requires it D. With evidence of insurability if the insured risk has increased
Without evidence of insurability The policy is guaranteed to be renewable at expiration date without proof of insurability but, the premium increases according to the attained age as the probability of death increases
200
What are the death benefit options in universal life policies?
Option A - the death benefit remains level while the cash value gradually increases, thereby lowering the pure insurance with the insurer in the later years. Option B - the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases. At any point in time the total death benefit will always be equal to the face amount of the policy plus the current amount of cash value.
200
The time period during which an annuitant contributes to an annuity is called: A. The annuity period B. The accumulation period C. The deferred growth D. The savings period
The accumulation period - This is also known as the pay-in period and is the period of time during which the payments earn interest on a tax-deferred basis
300
Bonus Question #1 You can wager an amount as high as your team points!! What happens to the benefit if the annuitant dies during the accumulation period?
If the annuitant dies before annuitization (or payout period), his/her beneficiary will receive the amount paid into the plan or the cash value, whichever is greater
300
Whose life expectancy is taken into consideration in an annuity? A. Owner B. Annuitant C. Beneficiary D. Life expectancy is not a factor in annuities
Annuitant This is the person who receives the benefits or payments from the annuity. The annuitant and contract owner do not need to be the same person but, most often are. A corporation, trust or other legal entity may own the annuity but, the annuitant MUST be a natural person
300
Bonus Question #3 You can wager an amount as high as your team points!! What are the characteristics of whole life insurance?
Permanent protection to the insured’s age 100 with living benefits such as cash value, policy loans and non-forfeiture options.
300
What features of an adjustable life policy can be changed by the policyowner?
The premium or the premium paying period, the face amount and the period of protection
300
Bonus Question #4 You can wager an amount as high as your team points!! What are the three factors that determine the premium for a particular policy?
Mortality, Interest & Expense
400
Which of the following is an example of a limited-pay life policy? A. Straight life B. Life paid-up at age 65 C. Renewable term to age 70 D. Endowment maturing at age 65
Life paid-up at age 65 This type of policy was designed so that the premiums for coverage will be completely paid-up well before age 100. Life paid-up at age 65 is where the coverage is completely paid-up by the insured's age 65. These types of policies are suited for those insured who do not want to be paying premiums beyond a certain point in time
400
An insured receives a monthly summary of his life insurance policy. The cash value this month is significantly lower than it was last month. What type of policy is it? A. Adjustable B. Variable C. Term D. Whole life
Variable This type of insurance is a level, fixed premium, investment-based product. These policies have fixed premiums and a guaranteed minimum death benefit. The cash value in the policy, however, is not guaranteed and fluctuates with the performance of the portfolio in which the premiums have been invested by the insurer. The policyowner bears the investment risk in variable contracts
400
Which of the following is true regarding a joint life policy? A. It pays a death benefit after the last insured's death B. Premium is based on the average age of the insureds C. It is a form of group life insurance D. It is used to offset the liability of the estate tax upon the insured's death
Premium is based on the average age of the insureds Joint life is a single policy that is designed to insure two or more lives. Joint life policies can be in the form of term insurance or permanent insurance. The premium for joint life would be less than for the same type and amount of coverage on individual policies. It is more commonly found as joint whole life. The premium is based on a joint average age that is between the ages of the insureds and the death benefit is paid upon the first death ONLY.
400
Which authorities regulate variable life policies?
Variable life insurance products are dually regulated by the State and Federal Government the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA) and the State Department of Insurance
400
An individual inherited a large sum of money at age 40 and wanted to use it to provide a guaranteed income after his retirement at age 60. Which of the following types of annuities would best meet this need? A. Immediate B. Flexible premium C. Deferred D. Variable
Deferred A deferred annuity is one in which the income payments begin sometime after one year from the date of purchase. Deferred annuities can be funded with either a single lump sum or through periodic payments. Periodic payments can vary from year to year. The longer the annuity is deferred, the more flexibility for payment or premiums it allows.
500
An individual owns an adjustable life policy. Sometime in the future he wants to increase the death benefit. Which of the following statements is correct regarding the death benefit increase? A. The death benefit cannot be increased B. It can only be increased when the policy has developed cash value C. It can only be increased by exchanging the existing policy for whole life D. It can be increased by providing evidence of insurability
It can be increased by providing evidence of insurability
500
Bonus Question #2 You can wager an amount as high as your team points!! An annuity has two distinct periods. What are they called and what happens during each?
The accumulation period also known as the pay-in period, is the period of time over which the annuitant makes payments into an annuity. The annuity period, also referred as the annuitization period or liquidation period (payout period) is the time when money is distributed to the annuitant.
500
The insured is also the policyowner of a whole life policy. What age must the insured attain in order to receive the policy's face amount? A. 62 B. 70 1/2 C. 95 D. 100
100 Whole life policies endow at the insured's age 100, which means the cash value created by the accumulation of premium is scheduled to equal the face amount of the policy at age 100.
500
How do annuities differ from life insurance policies?
Annuities liquidate an estate (life insurance creates an estate), annuities pay income to the annuitant while he or she is still living (life insurance policies pay the death benefit)
500
Which type of life insurance policy generates immediate cash value? A. Single premium B. Level term C. Variable life D. Decreasing term
Single premium Single premium whole life is designed to provide a level death benefit to the insured's age 100 for a one-time lump-sum payment. The policy is completely paid-up after one premium and generates immediate cash
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