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Flashcards in 2 - Basic Types of Individual Life Insurance Deck (21)
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1
Q

All Life policies have the following characteristics:

A
  • death benefit paid in a lump sum is NOT income taxable
  • qualifying for life insurance is primarily based on the health of the proposed insured
  • any cash accumulations are tax-differed
2
Q

Mortality

A

-frequency of death at any given age

3
Q

Term Life insurance is often referred to as…

A
  • “pure” life coverage

- does not build a cash value

4
Q

Term Life is an excellent option to…

A

-cover mortgage or child support payments if the insured dies

5
Q

Special features of Term Life:

A
  • right to renew for another period of time to term

- right to convert to another form of life

6
Q

2 Methods of Converting Term Life

A
  • Attained Age Method

- Original Age Method

7
Q

Attained Age Method

A

-converted at current age

8
Q

Original Age

A

-converted at age policy was issued

9
Q

3 types of Term Life

A
  • Level Term Life
  • Decreasing Term Life
  • Increasing Term Life
10
Q

Types of Level Term Life

A
  • 5 year
  • 10 year
  • 20 year
  • Term to Age 65
  • Annual Renewable Term
11
Q

J purchases a new auto that he will make payments for 5 years . What type of life insurance policy would be best to pay off the debt if J were to die prematurely?

A

-5 year Decreasing Term

12
Q

Renewable Level Term Life insurance can be renewed at the end of the term:

A

-w/out evidence of continued good health at time of renewal

13
Q

Limited-pay Whole Life insurance policies:

A

-Require a limited number of premium payments in return for the death benefit until the policy maturity date.

14
Q

K, a 35-year-old building contractor, wants financial protection for his family while $100,000 of his assets is tied up in a building project for the next five (5) years. K expects the financial risk to decrease throughout the five (5) year period. Which of the following types of life insurance policies would give him financial protection at the lowest premium cost?

A

-$100,00 5-year decreasing term

15
Q

This increases in a whole life policy every time a premium is paid:

A

-the cash value

16
Q

What is the primary use for Term Life insurance?

A

-provide pure life insurance protection

17
Q

At age 35, J bought a $50,000 life insurance policy for which the beneficiary will be paid the face amount if J dies before age 60. J will pay premiums until he reaches age 55, but the insurance protection continues to policy maturity. Which type of policy did J purchase?

A

-20-pay Endowment at age 60

18
Q

What policy has the fastest cash accumulation?

A

-Endowments

19
Q

J, age 25, purchased a 20-year Family Maintenance policy effective April 1, 1995. J died March 1, 2015. J’s beneficiary will receive monthly income from the policy for:

A

-20 years

20
Q

B, age 40, purchases a $50,000 life insurance policy. The premium charged when the policy is issued is lower than normal Whole Life policy rates. With this policy the premium increases after five (5) years. The premium becomes level and will NOT have any further increases. What policy does B own?

A

-Modified Premium Whole Life

21
Q

Ordinary Whole Life is also known as….

A
  • traditional
  • straight
  • continuous premium