Chapter 4 Mod 1 Quiz – Flashcards

There are two major types of life insurance: permanent (whole) and temporary (term). The correct answer is: Term and whole

Level premium term, also called level premium level term, has a level face amount and level premiums. Premiums tend to be higher than annual renewable term because they are level throughout the policy period. The correct answer is: Level premium term

Premiums are level in a decreasing term life policy. The policy face decreases to zero by the end of the policy period _ on the day of policy expiration, the face amount equals zero. Decreasing term policies are often called _mortgage reduction insurance_ because they are used to insure a mortgage. The correct answer is: The premium decreases to zero by the end of the policy period.

Level premium term, also called level premium level term, has a level face amount and level premiums. Premiums tend to be higher than annual renewable term because they are level throughout the policy period. The correct answer is: Level premium term

Indeterminate premium policies have premiums that fluctuate between the current rate and maximum rate, as stated in the policy. The fluctuating premiums account for the insurer's actual mortality expense and investment experience. The correct answer is: Indeterminate premium

Term policies do not accrue cash value. They only provide death protection. The correct answer is: Policy cash value grows tax-deferred

The original age is the insured's age upon purchase of the term life insurance policy. The correct answer is: The attained age is the insured's age upon purchase of the term life insurance policy.

A decreasing term policy (used for mortgage reduction insurance) has a decreasing face amount. The correct answer is: Face amount

Term life insurance provides pure death protection (pays a death benefit only). Whole life insurance (permanent protection) provides life insurance for the entire life of the insured. It also is said to provide a living benefit because it accrues cash value, which is available to the policy owner. The correct answer is: Term life insurance provides living benefits (cash accrual).

Renewable and convertible term life policies allow the insured to renew or convert coverage without needing to provide proof of insurability. The correct answer is: Proof of insurability is not required to convert or renew coverage.

Term life insurance provides pure death protection only. Whole life insurance provides death protection and living benefits (cash values). The correct answer is: pure death protection; death benefit and living benefits.

A drawback of term life insurance is that there are no living benefits _ term life insurance does not accrue cash value. The correct answer is: Living benefits are available to the policyholder in the form of cash accrual.

The perk with renewable term life insurance policies is that the insured has the option of renewing the policy without needing to provide evidence of insurability. The correct answer is: Renewable term life insurance policies are renewable at the insured's option.

Decreasing term policies have a decreasing face amount and level premiums. Term policies are less expensive than permanent policies. The correct answer is: Decreasing term

Annual renewable term life insurance has a level face amount with premiums that increase annually. Term life insurance policies do not build cash value. The correct answer is: Annual renewable term

Term life insurance provides pure death protection since it only pays a death benefit if the insured dies during the policy term. The correct answer is: Term life insurance

Annual renewable term (ART) provides a level face amount with an increasing premium. The correct answer is: Annual renewable term

With decreasing term life insurance, as the mortgage is paid off, the face amount decreases. The correct answer is: Decreasing term

Upon conversion, a convertible term policy will have higher premiums because permanent protection is more expensive than term protection. The correct answer is: Convertible term

In an increasing term life insurance policy, the death benefit increases as time passes. The correct answer is: The death benefit

Interim term coverage is intended for people who plan on purchasing whole life insurance coverage within a year. The correct answer is: Interim term

Convertible term life policies do not require the insured to show proof of insurability to convert the policy. Not every term life policy has the conversion option, but those that do will specify the new premium rate under the converted policy, which will be based on the insured's original or attained age. If the original age is used, the premiums will be lower than if the attained age is used. The correct answer is: The converted policy's premiums will be based on the insured's attained or original age.

Decreasing term is most commonly used to secure a loan or a mortgage. As the mortgage is paid off, the face amount decreases. The face amount always matches the balance of the mortgage. The correct answer is: Decreasing term

Reentry term allows a policyowner to renew existing term coverage and receive a lower premium by providing proof of insurability. The correct answer is: Reentry term

As the mortgage is paid off, the face amount decreases. The correct answer is: Decreasing term

ART policies are guaranteed renewable (until a certain age) without proof of insurability. The correct answer is: ART is guaranteed renewable on an annual basis with proof of insurability.

Term policies do not accrue cash value. They only provide death protection. Premiums increase as the policy is renewed, and the death benefit is only paid out if the insured dies during the policy term. The correct answer is: Cash value

Upon conversion, a renewable and convertible term policy will have higher premiums. Variable life insurance has fixed level premiums. With increasing and decreasing term, the face amount changes, not the premium. The correct answer is: Renewable and convertible term

Annual renewable term has a level face amount and increasing premiums. The correct answer is: Annual renewable term

Term life insurance provides pure death protection since it only pays a death benefit if the insured dies during the policy term. The correct answer is: Term