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Question
Which of the following policies is designed to be used in estate planning to pay estate taxes for married couples?
A
Universal Life
B
Joint Life
C
Joint Survivorship Life Policy
D
Variable Life
A
Universal Life
B
Joint Life
C
Joint Survivorship Life Policy
D
Variable Life
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Question
Amounts paid out under the accelerated benefits rider:
A
Are deducted from policy's death benefit
B
Are considered to be acc. death benefits
C
Can be used as a Medicare suppl policy
D
May be used as a disability income benefit if disabled
A
Are deducted from policy's death benefit
B
Are considered to be acc. death benefits
C
Can be used as a Medicare suppl policy
D
May be used as a disability income benefit if disabled
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L&H 3
| Question | Answer |
|---|---|
| Which of the following policies is designed to be used in estate planning to pay estate taxes for married couples? A Universal Life B Joint Life C Joint Survivorship Life Policy D Variable Life | Joint Survivorship Life Policy: pays the death benefit to pay estate taxes once the second spouse dies |
| Amounts paid out under the accelerated benefits rider: A Are deducted from policy's death benefit B Are considered to be acc. death benefits C Can be used as a Medicare suppl policy D May be used as a disability income benefit if disabled | Are deducted from the policy's death benefit: insureds who need funds for health care to collect some or all of the policy's death benefit while they are still living |
| What is the name of the rider that requires that the premium payor become totally and permanently disabled before it will pay a claim? A Jumping Waiver B Minor age waiv of premium C Payor Benefit (Waiver of Payor's Premium) D Juvenile Waiver | Payor Benefit (Waiver of Payor's Premium): most typically available on a juvenile insurance policy. The premium is waived if the premium payor becomes totally disabled or dies prior to the juvenile's reaching the age of majority |
| Which of the following is not a true characteristic of permanent protection Whole Life? A Premiums are payable to age 100 in old policies, and to age 121 in new policy B Death benefit typically level C Prems are flexible D The insr bears all risk | Premiums are flexible: Flexible premiums are not a characteristic of a Whole Life Insurance Policy. |
| All about Uni Life are true, except: AThe prem paid can be inc, decr, or skip BThe mort charge is determ annually, by age CThe fixed exp charge fro policy r ded monthly from cash value DInc in face amount do not req proof of insurability if < $100,000 | Increases in face amount do not require proof of insurability if under $100,000:Any increase in the face amount will require evidence of insurability |
| At what age does the cash value equal the face amount of a traditional whole life policy issued 25 years ago? A 95 B 100 C 85 D 115 | Traditional Whole life is permanent protection that matures at the insured's age of 100. It pays the face amount to the owner if the insured lives to age 100. |
| All of the following are reasons why a new policy issued thru term conversion costs more, excpt: A The insd's health changed for the worse B The new policy was issued at attaind age C new policy is permanent D new policy has cash values | The insured's health has changed for the worse:: Conversion is done without proof of insurability. |
| If PO wants to inc death benefit Adj Life policy, whats req? ARem any cash value fro policy, convert to Term L BAct w/i first 5 yrs of policy issue CPay back prems & interest so that=as if policy issued w/ tht face amt DProve insbility for increase | Prove insurability for the increase: |
| Which of the following traditional whole life policies has the lowest first-year annual premium? A 30-pay life B 10-pay life C 20-pay life D 40-pay life | 40-pay life:The longer the premium paying period, the lower the premium |
| POV: Concerned unable to pay the premiums on whole life policy in the event of a total disability...wh/ RIDER? A Payor Benefit B Disability Income Benefit C Waiver of Cost of Insurance D Waiver of Premium | Waiver of Premium: waive premiums for a disabled insured. If the insured also wanted to replace income due to disability, then he or she would purchase the Waiver of Premium/Disability Income Rider. |
| $50,000 permanent life policy that she purch 4 years ago that has disability waiver of premium. The insured becomes dsbld, pays prem during waiting period until waiver begins>Once the waiver begins, what happens to the prems she paid during the wait prd? | The insurer refunds it:Once the waiver of premium takes effect, it is retroactive to the date of the disability=essentially the disability was covered from the first day |
| If an insured has a Life Paid-Up at 75 Policy (a limited-pay life paid-up at age 75), what would the beneficiary receive if the insured died at age 68? | The face amount The full face amount (death benefit) is payable to the beneficiary any time death occurs while the policy is in force. |
| what is a type of life insurance that provides an amount of coverage that diminishes while the policy is in effect and is most often used to pay an outstanding loan or mortgage balance upon the death of the insured? | Decreasing term |
| Flexible premium adjustable life is another name for: | Universal Life |
| Which Term Life insurance policy would have the highest initial premium, all else being equal? A 20-year Term B 1-year Term C 5-year Term D 10-year Term | 20 year: The longer the term period, the higher the initial term premium |
| All are true w/ re-entry term, except: Apolicy's prem based on rates by the insr @time of re-entry Bpolicy's prem based on the premium class appr by company Cpolicy's prem based on insd's original age D policy's based on the insured's attained age | The new policy's premium will be based on the insured's original age: new policy's premium will be based on the insured's attained age, the rates in effect by the insurer at the time of re-entry, and the premium class approved by the company. |
| A $100,000 policy with a waiver of premium rider and $30,000 of cash value is in force. The base policy costs $750 rider is $50. What is total prem annually the policyowner must pay to keep policy in force? A $750 B $700 C $800 D $50 | 800: Riders such as the waiver of premium are a provided benefit for an additional cost, therefore the annual premium would be $800 ($750 + $50). |
| Which statement is true 4 BOTH Universal Life and Whole Life? A guartd min interest rate is determined at policy issuance BThe policy is supported by the insr's general account CPolicy loans and partial withdrawals allowed DThe death benefit is adjbl | B The policy is supported by the insurer's general account:Both are supported by the insurer's general account--in other words, neither uses a separate account. The other answer options are only true for Universal Life |
| X has a life insurance policy that is no longer wanted or needed and is considering selling their policy: X gets___ if premiums are $10,000 annually, the cash value is $200,000, and the face amount is $1,000,000? | More than $200,000 but less than $1,000,000 A Life Settlement is similar to a viatical settlement in that it is the sale of an existing life insurance policy to a third party for more than its cash surrender value, but less than its death benefit. |
| A universal life policy with a back-end load: | Makes a service charge when the policy is surrendered: allows cash value to accumulate quickly since money stays in longer. Surr. charges made money withd/policy is surrend. chrgs reprst backend load & put in place@issue for spec per time on dec scale |
| If a universal life policy with the increasing death benefit option has an initial face amount of $75,000 and cash value of $10,000, the actual death benefit would be | $85,000: The increasing death benefit option (Option B) of a universal life policy equals the face amount of the policy plus the cash value accumulated. |
| 1 w/ individual Term Insurance can convert policy by ? AW/o prov proof of insblty, pay highr prems on attained age BProve insblty and pay same level prem CProve insblty &pay higher prems on attned age DW/o prov proof insblty and pay same level prem | A Without providing proof of insurability, pay higher premiums based on her attained age:she will pay a higher premium because she is older than when she purchased the Term Policy, and because she is converting to a Permanent Policy |
| what disabling acts would NOT normally be excluded form the waiver of premium rider? | Injury sustained while a paying passenger of a scheduled airline flight Waiver of premium coverage is generally not available for self-inflicted injuries or for injuries received while committing a crime or while in military service in time of war. |
| Which Whole Life insurance policies has lowest ann prem paym per $1,000 of coverage for 35-yr-old, all factors being equal? A 30-Pay Ordinary Life B 20-Pay Ordinary Life C Limited Pay Ordinary Whole to age 85 D Ordinary Straight Whole Life | Ordinary Straight Whole Life The longer the premium-paying period, the lower the annual premium. A $100,000 Ordinary Straight Whole Life Policy spreads the payments out over a longer period of time than a limited premium payment policy |
| Term insurance differs from permanent insurance in that term: | Builds no cash value, pays a death benefit only Term insurance provides death benefits only, at lower premiums, with no cash value accumulation or living benefits. |
| Z suffers a total and permanent disability. The policy he has requires a premium payment of $100 per month. He is on claim for 100 months. Initially, how much did Z have to pay before the waiver of premium benefit on his policy started? | $600 There is usually a maximum 6-month elimination period before premiums are waived. |
| Which of the following policies cannot have a premium payment period of less than to age 100? A Limited Pay Life B Ordinary Straight Whole Life C Adjustable Life D Indeterminate Premium | Ordinary Straight Whole Life Straight Whole Life premium schedule is level and payable to age 100 or death of the insured, whichever comes first. |
| If an insured's policy includes the waiver of premium rider, what happens when the age is reached where the rider no longer applies? | The premium for the policy is reduced |
| A 22 year-old applicant for life insurance has lim budget for prems. Which policies would provide for the highest face value, for the lowest premium amount? A 10 Year Term B Annually Renewable Term C 30 year Term D 20 Year Term | Annually Renewable Term: Term insurance does not accumulate cash value. The shortest term period offers the lowest cost per $1,000 of coverage at the outset and in the early years |
| Which of the following uses convertible term to help lower premiums initially and then allows you the right to purchase permanent insurance? A Graded premium whole life B Universal life C Modified whole life D Variable life | Modified whole life: modifies a whole life policy to use term at the beginning to lower premiums and then converts to whole life later. The purpose is to make whole life affordable in the early years. |
| What rider is designed to help the insured offset the effects of future inflation on the policy's face amount? | Cost of Living: allows for the policy's death benefit to keep up with inflation without having to prove insurability but with an increase in premium to reflect the added risk to the insurer |
| Which of the following is designed for someone with a large insurance need but with limited cash flow? A Whole Life Insurance B Home Service Life Insurance C Term Life Insurance D Variable Life Insurance | Term Life Insurance: Term Insurance is pure protection (i.e. no cash value develops.) Its cost per thousand dollars of coverage is significantly lower initially than Permanent Insurance. |
| An existing term life insurance policy may be exchanged for a new term life insurance policy on the ______ date. | re-entry: The policy will specify when the Re-Entry can take place. |
| An insured owning an Adjustable Life Policy enjoys a policy that has characteristics of both ______ and _______. | B Permanent and Term |
| Universal Life and Variable Universal Life share all of the following characteristics, except: A Flexible premiums B The investment risk C Adjustable death benefit options D Policy loans, surrenders, and partial withdrawals are permitted | investment risk- universal has min death benefit |
| Which of the following pays a current interest rate and guarantees a minimum interest rate that will be credited to cash values of the life policy? A Variable Whole Life B Variable Universal Life C Universal Life D Ordinary Whole Life | Universal Life: Universal Life insurance has a current interest rate which is generally higher than the guaranteed minimum interest rate. It depends on the interest rates the insurer can earn on the assets in its general account. |
| All regarding term life insurance renewability correct, except: APrems increase @beg each renewal period B similar to re-entry provision in some term policies CRenewable term costs more than non-renewable term DNo evidence of insurability is required | It is similar to the re-entry provision found in some term policies |
| Bert is the owner and insured of a permanent life insurance policy he purchased 20 years ago. never missed a premium payment. He would like to buy a new car but account is low. How can he obtain the necessary funds while still maintaining coverage? | Take a policy loan from the insurer |
| Who receives the endowment value of a whole life policy? | the policy owner: The policyowner retains all rights in the policy up to and including receiving the endowment proceeds. |
| Amounts paid out under the accelerated benefits rider | Are deducted from the policy's death benefit |
| Life insurance that does not require a medical exam is known as: | Simplified Issue |
| The cash value of a permanent life insurance policy can be used for | Cash values can be used as nonforfeiture options, policy loans, full or partial surrenders, but not for accidental death benefits. |
| A life insurance premium is paid each month. The insurer then subtracts a mortality and expense charge from the policy's cash value. This best describes what type of life insurance policy | Universal Life |
Created by:
rachel krystopowicz