Chapter 4 Mod 5 Quiz: Variable Products – Flashcards

Gerald would be able to choose where he wants his premiums invested with a variable life insurance policy. The correct answer is: Variable life

The cash value is invested in the insurer's separate account, and is, therefore, not guaranteed. The correct answer is: Cash value

Term policies do not build cash value, and, therefore, the interest rate is irrelevant. The correct answer is: Decreasing term

Death protection is deducted from cash value. The correct answer is: Death protection is not deducted from cash value

Variable universal life is universal life insurance with a separate account. The correct answer is: Variable universal life

Interest earned is credited to the cash value. The correct answer is: Interest earned is credited to the death benefit.

These are all characteristics of variable whole life insurance. Universal life and variable universal life insurance have flexible premiums. The correct answer is: Variable whole life

The Securities Act of 1933 ruled that applicants for a variable product must receive a prospectus. It also laid out a clear definition of a security product. The correct answer is: Securities Act of 1933

The Securities Act of 1933 defines a securities product. The correct answer is: Defines a securities product

The 12% rule prevents producers from using illustrations with projected interest rates greater than 12% to induce people to purchase policies. They are not bound by NAIC, and they are regulated as both insurance and securities. The correct answer is: The 12% rule

Any agent selling variable products must have a securities license in addition to a life insurance license. The correct answer is: Variable life

The Securities Act of 1934 requires sales representatives who sell variable products to have a Series 6 license. The law also regulates sales representatives_ duties. The correct answer is: Securities Act of 1934

Premiums for variable products are invested in the insurer's separate account. The correct answer is: The insurer's separate account

Variable whole life policies have a guaranteed minimum death benefit. The cash value is tied to the separate account, which is not guaranteed. The correct answer is: Death benefit

A variable life policy cannot be proposed in a sales scenario unless a prospectus precedes or accompanies the proposal, because it is considered a security. The correct answer is: To sell a variable life insurance policy, the proposal must be accompanied by a prospectus

Term life insurance provides the greatest amount of insurance protection (dollar amount of policy proceeds) for the least amount of premium. Remember that term life insurance simply provides death protection, not living benefits. The correct answer is: Term life insurance

The variable universal life policy DOES have cash value that varies with the performance of the investment. The correct answer is: It has no cash value.

The Investment Company Act of 1940 requires insurers to maintain a separate account for variable investments and establishes a cap for sales fees. The correct answer is: Requires insurer to maintain a separate account for variable investments

These are all characteristics of variable life insurance. Universal life and variable universal life insurance have flexible premiums. The correct answer is: Variable life

Variable life insurance policies permit policyowner's to choose where they want premiums invested. The correct answer is: Variable life

The prospectus details investments and features of a variable life insurance policy. The correct answer is: Prospectus

All of the items in the list differentiate the variable and universal life type policies. The correct answer is: All of the above

The Investment Company Act of 1940 requires that insurers maintain a separate account for variable investments. The correct answer is: Investment Company Act of 1940

Variable whole life policies have a guaranteed minimum death benefit. This death benefit may increase, based on the favorable investment activity in the separate account, but not decrease below the guaranteed minimum. The correct answer is: Is a guaranteed minimum, but may increase based on favorable investment activity in the separate account

Cash value is not guaranteed in variable life policies. The correct answer is: Guaranteed cash value

The face value of a variable universal life policy with option 2 stays constant. The death benefit increases because the cash value is allowed to increase. The correct answer is: Face value

Variable life policies have fixed, level premiums. Variable life policies guarantee a minimum death benefit, which is why premiums are fixed and level. The correct answer is: Variable life

Variable refers to the ability to invest in separate accounts, and universal refers to the flexibility in making premium payments. The correct answer is: the ability to invest in separate accounts whose values vary; the flexibility in making premium payments

Variable life policies have a guaranteed minimum death benefit, which is the policy face amount, but the policy cash value is not guaranteed since it is tied to the separate account. The correct answer is: separate account

Applicants for variable products must receive a prospectus at the time of policy application, which describes the investments, any charges imposed on the contract owner and policy features to help the applicant make an appropriate purchase. The correct answer is: Prospectus