Life insurance Policies – Flashcards
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Insured buys a 5 year level premium term policy with a face amount of $10000. Policy also contains renewability and convertibility options. When insured renews in 5 years, what happens to the premium?
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It will increase because the insured will be 5 years older than when the policy was originally issued. It will remain level during the term of the policy, but upon renewal it will be based on the insured's attained age.
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What makes whole life permanent protection?
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coverage until death or until age 100
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An insured has a policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?
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Limited Pay Life
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What distinguishes a group life from individual life policy?
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reduced adverse selection. Group life requires a number of participants depending on the premium.
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A return of premium is referred to as what type of policy?
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Increasing: pays an additional benefit to the beneficiary equal to death benefit plus premiums paid.
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If employee wants to enter group insurance outside of open enrollment period, insurer may require
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proof of insurability
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Whats the difference between joint life and survivorship insurance?
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Joint life pays a death benefit on the first death, survivorship pays on the last.
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What are the ways to determine interest rates in Universal life policy?
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maintain profit margin between interest credited on in force policies and interest earned, declare annual rate by companies board of directors, tie current interest rates to treasury bills.
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What is not a way to determine an interest rate in a Universal Life policy?
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Estimate market conditions for the life of the policy.
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An insured owns a term policy with a guaranteed renewable option. When the end of the policy draws near, the insured answers medical questions in order to prove insurability and qualifies for discounted premium rate. Which describes this scenario?
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re-entry. this option is where the insured upon the end of a term policy with guaranteed renewable option, may answer medical questions to prove insurability.
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What is annually renewable term insurance?
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Level term insurance that offers the most insurance at the lowest cost.
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Variable life insurance is based on what kind of premium?
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level fixed premium, investment based.
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The policy owner of a Universal Life insurance policy can skip the premium and the policy will not lapse as long as
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The policy contains sufficient cash value to cover the cost of insurance
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The policy owner of an adjustable life policy wants to increase the death benefit. How can they do so?
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By providing evidence of insurability.
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In order to convert from a group policy to an individual policy, a person has to have been insured under the group policy for how many years?
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5
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Credit life insurance insures the life of the
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Debtor
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What does "level" refer to in level term insurance?
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Face Amount
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What is not allowed in Credit Life Insurance?
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Creditor requiring that a debtor buy insurance from a certain insurer
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Both Universal life and Variable Universal life have a
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Flexible premium
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What type of policy generates immediate cash value?
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Single Premium
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Annually renewable term policies provide a level death benefit for policies who's premium
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increases annually with the age of the insured
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Which of the following must an agent receive in order to sell variable term life insurance policies?
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FINRA registration
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Decreasing term policies have these characteristics:
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it has a lower premium than level term, The contract pays only in the event of death during the term and there is no cash value, the face amount steadily declines throughout the duration of the contract.
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What is not true concerning decreasing term life policies?
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the payable premium amount steadily declines throughout the duration of the contract. The premium amount remains level: only the face amount decreases.
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Universal life characterisitics
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the insurance company reserves the right to adjust the mortality charges and/or interest rate, the cash account accumulates on a tax deferred bias, universal life is a combination of term insurance and a separate savings account joined in a single contract.
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What would help prevent a universal life policy from lapsing?
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target premium. Recommended amount that should be paid on a policy in order to cover the cost of insurance protection and keep the policy in force.
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Which option for universal life allows the beneficiary to collect the death benefit and the premium amount at death?
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Option B
