COLORADO LIFE INSURANCE FINAL
EXAM 2026 TEST BANK REVIEW
COMPLETE QUESTIONS SOLUTIONS
A+
◉ 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
◉ Single Premium Whole Life. Answer: One payment made at time of
purchase, covers all future costs of maintaining policy, create immediate
cash value
◉ 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- cost of insurance and fees withdrawn monthly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
,◉ 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
◉ 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
◉ Interest-Sensitive Whole Life. Answer: Cash value can increase
beyond the stated guarantee if economic conditions warrant
- fixed level death benefit
- interest rate can fluctuate with economy
- cash value and death benefit can increase/grow
◉ Equity-Indexed Universal Life. Answer: Permanent life insurance that
allows policyholders to tie accumulation values to stock market, current
interest on cash account
◉ Level Term Policy. Answer: Death benefit is level and equals the face
amount throughout the term of coverage, premium is also level
, ◉ Decreasing Term Policy. Answer: Death benefit declines over
coverage period until it reaches zero at end of term, premium is level
◉ 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%)
◉ 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
◉ 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
◉ Annuities. Answer: Upside down life insurance, tax deferred savings
for retirement, protects people from living too long
◉ 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
EXAM 2026 TEST BANK REVIEW
COMPLETE QUESTIONS SOLUTIONS
A+
◉ 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
◉ Single Premium Whole Life. Answer: One payment made at time of
purchase, covers all future costs of maintaining policy, create immediate
cash value
◉ 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
,◉ 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
◉ 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
◉ Interest-Sensitive Whole Life. Answer: Cash value can increase
beyond the stated guarantee if economic conditions warrant
- fixed level death benefit
- interest rate can fluctuate with economy
- cash value and death benefit can increase/grow
◉ Equity-Indexed Universal Life. Answer: Permanent life insurance that
allows policyholders to tie accumulation values to stock market, current
interest on cash account
◉ Level Term Policy. Answer: Death benefit is level and equals the face
amount throughout the term of coverage, premium is also level
, ◉ Decreasing Term Policy. Answer: Death benefit declines over
coverage period until it reaches zero at end of term, premium is level
◉ 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%)
◉ 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
◉ 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
◉ Annuities. Answer: Upside down life insurance, tax deferred savings
for retirement, protects people from living too long
◉ 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
