Chapter 2 Flashcards
Types Of Policies (15 cards)
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 policies is best suitable for that need?
A. Whole life
B. Level Term
C. Decreasing Term
D. Return of premium
C. Decreasing Term
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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
D. Increases in coverage each year
C. Renews each year with an increased premium
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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
B. The accumulation period
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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
B. Life paid-up at age 65
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Which of the following features of the Indexed Whole Life policy is NOT fixed?
A. Premium
B. Death Benefit
C. Policy period
D. Cash Value growth
D. Cash Value growth
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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.
C. The premiums can be decreased by the insured
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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 over 20 years
A. Remains constant over time
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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
B. Annuitant
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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
B. Variable
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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
C. Deferred
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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 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
B. If the insured dies after the term, there is no death benefit to the beneficiary
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
A. Without evidence of insurability
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Which type of life insurance policy generates immediate cash value?
A. Single Premium
B. Level Term
C. Variable Life
D. Decreasing Term
A. Single Premium
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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
B. Premium is based on the average age of the insureds
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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
D. 100
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