Life Insurance Policies

Question 1

Accumulate

Answer 1

Build up

Question 2

The insured’s age at the time the policy is renewed or replaced

Answer 2

Attained age

Question 3

A policy’s savings element or living benefit

Answer 3

Cash Value

Question 4

Deferred

Answer 4

Withheld or postponed until a specified time or event in the future

Question 5

To have cash value of a whole life policy reach the contractual face amount

Answer 5

Endow

Question 6

The amount of benefit stated in the life insurance policy

Answer 6

Face amount

Question 7

Contracts that offer guaranteed minimum or fixed benefits

Answer 7

Fixed life insurance products

Question 8

Policy termination due to nonpayment of premium

Answer 8

Lapse

Question 9

The premium that does not change throughout the life of a policy

Answer 9

Level premium

Question 10

Nonforfeiture Values

Answer 10

Benefits in a life insurance policy that the policyowner cannot lose even if the policy is surrendered or lapses.

Question 11

In life polices, the time when the face value is paid out

Answer 11

Policy Maturity

Question 12

Contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance

Answer 12

Variable life insurance products

Question 13

Financial instruments that may trade for value (e.g., stocks, bonds, options)

Answer 13

Securities

Question 14

Temporary protection AKA pure life insurance that provides the greatest amount of coverage for the lowest premium. Also has no cash value

Answer 14

Term insurance

Question 15

3 types of term insurance

Answer 15

1. Level
2. Increasing
3. Decreasing

Question 16

Level in level term insurance refers to the death benefit, which does;

Answer 16

NOT change

Question 17

Provides a level death benefit and level premium during the policy term. However, if the policy renews after the term, the new premium will increase based on the person attained age.

Answer 17

Level premium

Question 18

ART: the purest form of term insurance. Death benefit remains the same, no proof of insurability needed upon renewable but premium increases with attained age upon each renewal.

Answer 18

Annually renewable term

Question 19

Commonly used to insure payment of mortgage or other debts if the insured dies prematurely. Premium remains the same but death benefit decreases each year.

Answer 19

Decreasing Term

Question 20

Often used by insurance companies to fund certain riders that provide a refund of premiums or a gradual increase in total coverage, such as the cost of living or return of premium riders.

Premium remains the same but death benefit increases each year.

Answer 20

Increasing Term

Question 21

Provides lifetime (permanent) protection and accumulates cash value.

Endow at the insured’s age of 100

Answer 21

Whole life insurance

Question 22

3 basic types of whole life insurance

Answer 22

1. Straight life (Continuous Premium)
2. Limited Pay
3. Single Premium

Question 23

Has the lowest annual pemium out of the 3 whole life policies.

The policyowner pays the premium from the time the policy is issued until the insured’s death or age 100 (whichever occurs first).

AKA: Ordinary life or Continuous Premium Whole Life)

Answer 23

Straight life

Question 24

Shorter period = higher premium payments

For the insureds who do not want to be paying premiums beyond a certain point in time.

Answer 24

Limited Payment

Question 25

SPWL: designed to provide a level death benefit to the insured's age 100 for a one-time, lump-sum payment. Paid-up after one premium and generates immediate cash.

Answer 25

Single premium whole life

Question 26

Best policy for individuals who do not have the financial resources starting out, but will have them in the future. It charges a lower premium similar to term rates in the first few years usually 3-5 years and then the higher premium kicks in for the remainder of the insured's life.

Answer 26

Modified life

Question 27

Somewhat similar to modified life it starts out with premiums that are approximately 50% or lower than the premium of a straight life and then gradually increases each year for a period of 5 or 10 years and then remains level therafter.

Answer 27

Graded-premium whole life

Question 28

Referred to as Current Assumption A whole life policy that provides a guaranteed death benefit to age 100. The insurer sets the initial based on current assumptions about risk, interest and expense.

Answer 28

Interest-sensitive whole life

Question 29

Equity index whole life insurance where the cash value is dependent upon the performance of the equity index , such as S&P 500 although there is a guaranteed minimum interest rate. Policy face amount increases annually to keep pace with inflation ( Consumer Price Index increases) without requiring evidence of insurability.

Answer 29

Indexed whole life

Question 30

Created to provide the best of both worlds for the policyowner (term and whole) can convert to either one but insurability is required for death benefit increases and lower premium type policies Policy owner can change premium, face amount or period of protection Cash value only develops when the premiums paid are more than the cost of the policy.

Answer 30

Adjustable life

Question 31

AKA: Flexible Premium Adjustable life: meaning the owner has the flexibility to increase the amount of premium paid into the policy and to later decrease it again.

Answer 31

Universal life

Question 32

The amount needed to keep the policy in force for the current year. Paying this way will make the policy perform as an annually renewable term product

Answer 32

Minimum premium

Question 33

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.

Answer 33

Target Premium

Question 34

If an insurer skips a premium payment on a _______ _________ policy, the missing premium may be deducted from the policy's cash value. The policy will NOT lapse.

Answer 34

Universal life

Question 35

Death Benefit Options in a Universal policy

Answer 35

1. Option A: level death benefit option where death benefit remains the same and cash value increases. 2. Option B: increasing death benefit meaning death benefit gradually increases each year by the amount that the cash value increases.

Question 36

Sometimes referred as Variable whole life insurance; is a level, fixed premium investment-grade product

Answer 36

Variable life

Question 37

Variable life insurance products are dually regulated by which state and federal government agencies:

Answer 37

1. SEC: securities and exchange commission 2. FINRA/NASD

Question 38

Agents selling variable life products must be:

Answer 38

Registered with FINRA Licensed by state to sell life insurance Recieve a securities license Also required to take the Michigan Variable annuities exam

Question 39

Written as annually renewable term insurance The master contract is for the employer, and certificates of insurance are for the individual insureds.

Answer 39

Group insurance

Question 40

When converting from group life insurance to individual life insurance:

Answer 40

Evidence of insurability is not required