Colorado Life Insurance
Final Exam Study Guide
A+ Score Guide
1. Continuous Premium Whole Life
Answer Premiums are the same each year for the
duration of the policy, if policyowner continues to make payments they will receive
cash value of policy.
- Also called straight life or ordinary life
- endows at age 100
2. Limited-Payment Whole Life
Answer Allow for a lifetime of premiums to be paid in a shorter period of time
- 10 pay or 20 pay - premiums payable in 10-20 level annual installments
- life paid up at age 65 - level annual installments from date of purchase to age 65
- cash value accumulates faster than continuous premium policy
- endows at age 100
3. Single Premium Whole Life
Answer One payment made at time of purchase, covers all future costs of
maintaining policy, create immediate cash value
4. Universal Life (UL)
Answer Premiums are flexible, not fixed, and accumulate as interest in the policy's
cash value
- only policyowner can change death benefits
- cost of insurance and fees withdrawn monthly
- option 1 - level death benefit, cash value rises quicker
,- option 2 - increasing death benefit plus cash account
5. Variable Life Insurance
Answer Separate account instead of guaranteed cash value, so there is the
insurance and an investment account
- to sell, one must have life insurance and securities licenses
- death benefit can increase, guaranteed benefit
6. Variable Universal Life
Answer Universal life with a separate investment account
- death benefit will be paid as long as there is sufficient cash value to pay the costs
of insurance
- no guaranteed death benefit
7. Interest-Sensitive Whole Life
Answer Cash value can increase beyond the stated guar- antee if economic
conditions warrant
- fixed level death benefit
- interest rate can fluctuate with economy
- cash value and death benefit can increase/grow
8. Equity-Indexed Universal Life
Answer Permanent life insurance that allows policyhold- ers to tie accumulation
values to stock market, current interest on cash account
9. Level Term Policy
Answer Death benefit is level and equals the face amount throughout the term of
coverage, premium is also level
10. Decreasing Term Policy
Answer Death benefit declines over coverage period until it reaches zero at end
of term, premium is level
, 11. Return of Premium Term Policy
Answer Return all or part of premium paid for policy
if insured is still alive at end of term, premium is higher and depends on percentage
of premium returned (100%, 50%)
12. Renewability
Answer Term policy guaranteed to renew/extend with the same policy period at
end of the term, no new application required, premium changes with each renewal
based on age
13. Convertability
Answer Term policy can be converted to a permanent type of policy, no new
application required, must be converted before the term expires
Premium for converted policy based on one of two things
- attained age - insured's age at time of conversion
- original age - insured's age at time original policy was written
14. Annuities
Answer Upside down life insurance, tax deferred savings for retirement,
protects people from living too long
15. Immediate Annuities (SPIA)
Answer Single lump-sum premium, payments to insured can start one month
after or latest delay of 1 year, only interest part of payment is subject to tax
16. Deferred Annuities (SPDA)
Answer Owner chooses amount and frequency of premi- um payments (flexible),
accumulated funds can be withdrawn at any time but may have surrender charge
17. Fixed Annuities
Answer Guaranteed against loss, supported by general account with assets,
earn interest during accumulation period, level payment during annuity period
Final Exam Study Guide
A+ Score Guide
1. Continuous Premium Whole Life
Answer Premiums are the same each year for the
duration of the policy, if policyowner continues to make payments they will receive
cash value of policy.
- Also called straight life or ordinary life
- endows at age 100
2. Limited-Payment Whole Life
Answer Allow for a lifetime of premiums to be paid in a shorter period of time
- 10 pay or 20 pay - premiums payable in 10-20 level annual installments
- life paid up at age 65 - level annual installments from date of purchase to age 65
- cash value accumulates faster than continuous premium policy
- endows at age 100
3. Single Premium Whole Life
Answer One payment made at time of purchase, covers all future costs of
maintaining policy, create immediate cash value
4. Universal Life (UL)
Answer Premiums are flexible, not fixed, and accumulate as interest in the policy's
cash value
- only policyowner can change death benefits
- cost of insurance and fees withdrawn monthly
- option 1 - level death benefit, cash value rises quicker
,- option 2 - increasing death benefit plus cash account
5. Variable Life Insurance
Answer Separate account instead of guaranteed cash value, so there is the
insurance and an investment account
- to sell, one must have life insurance and securities licenses
- death benefit can increase, guaranteed benefit
6. Variable Universal Life
Answer Universal life with a separate investment account
- death benefit will be paid as long as there is sufficient cash value to pay the costs
of insurance
- no guaranteed death benefit
7. Interest-Sensitive Whole Life
Answer Cash value can increase beyond the stated guar- antee if economic
conditions warrant
- fixed level death benefit
- interest rate can fluctuate with economy
- cash value and death benefit can increase/grow
8. Equity-Indexed Universal Life
Answer Permanent life insurance that allows policyhold- ers to tie accumulation
values to stock market, current interest on cash account
9. Level Term Policy
Answer Death benefit is level and equals the face amount throughout the term of
coverage, premium is also level
10. Decreasing Term Policy
Answer Death benefit declines over coverage period until it reaches zero at end
of term, premium is level
, 11. Return of Premium Term Policy
Answer Return all or part of premium paid for policy
if insured is still alive at end of term, premium is higher and depends on percentage
of premium returned (100%, 50%)
12. Renewability
Answer Term policy guaranteed to renew/extend with the same policy period at
end of the term, no new application required, premium changes with each renewal
based on age
13. Convertability
Answer Term policy can be converted to a permanent type of policy, no new
application required, must be converted before the term expires
Premium for converted policy based on one of two things
- attained age - insured's age at time of conversion
- original age - insured's age at time original policy was written
14. Annuities
Answer Upside down life insurance, tax deferred savings for retirement,
protects people from living too long
15. Immediate Annuities (SPIA)
Answer Single lump-sum premium, payments to insured can start one month
after or latest delay of 1 year, only interest part of payment is subject to tax
16. Deferred Annuities (SPDA)
Answer Owner chooses amount and frequency of premi- um payments (flexible),
accumulated funds can be withdrawn at any time but may have surrender charge
17. Fixed Annuities
Answer Guaranteed against loss, supported by general account with assets,
earn interest during accumulation period, level payment during annuity period
