Life Insurance: Type of Policies, Questions
and Correct Answers.
Agents selling variable life products must...
be registered with FINRA, have a securities license, and must be licensed within the state to sell life
insurance.
SEC registration is for...
securities, not agents.
The Family Income Policy provides....
Monthly income upon the death of the insured while maintaining permanent coverage until the end of
the income payments by combining decreasing term insurance and whole life insurance.
Which type of life insurance policy generates immediate cash value?
Single Premium
Straight Life policies
Charge a level annual premium throughout the insured's lifetime and provide a level, guaranteed death
benefit.
Universal Life Option A (Level Death Benefit option) policy must maintain...
a specified "corridor" or gap between the cash value and the death benefit, as required by the IRS.
If this corridor is not maintained, the policy is no longer defined as life insurance for tax purposes, and
consequently loses most of the tax advantages that have been associated with life insurance.
Adjustable life policies
Allow for increases or decreases in the face amount or premium, so long as the premium is sufficient to
pay for the mortality.
Any increase in face amount requires proof of insurability.
A Return of Premium term life policy is written as what type of term coverage?
Increasing
Return of premium (ROP) life insurance is
An increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the
amount of the premiums paid.
, The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse
as long as
The policy contains sufficient cash value to cover the cost of insurance.
The Return of Premium Rider is achieved by using
increasing term insurance.
When added to a whole life policy it provides that at death prior to a given age, not only is the original
face amount payable, but also all premiums previously paid are payable to the beneficiary.
A policy which pays monthly income upon the death of the breadwinner for a predetermined number
of years after death, plus a lump sum at death, and combines level term and whole life is known as
which policy?
Family maintenance
A Universal Life Insurance policy is best described as a/an
Annually Renewable Term policy with a cash value account.
A universal policy has two components:
an insurance component and a cash account.
The insurance component (or the death protection) of a universal life policy is always annual renewable
term insurance.
A domestic insurer issuing variable contracts must establish one or more
Separate Accounts
Any domestic insurer issuing variable contracts must establish one or more separate accounts.
The insurer must maintain in each separate account assets with a value at least equal to the reserves and
other contract liabilities connected to the account.
Any domestic insurer issuing variable contracts must establish
one or more separate accounts.
The insurer must maintain in each separate account assets with a value at least equal to the reserves and
other contract liabilities connected to the account.
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and
nothing if death occurs after the 20-year period. What type of policy is this?
Level Term
During partial withdrawal from a universal life policy, which portion will be taxed?
and Correct Answers.
Agents selling variable life products must...
be registered with FINRA, have a securities license, and must be licensed within the state to sell life
insurance.
SEC registration is for...
securities, not agents.
The Family Income Policy provides....
Monthly income upon the death of the insured while maintaining permanent coverage until the end of
the income payments by combining decreasing term insurance and whole life insurance.
Which type of life insurance policy generates immediate cash value?
Single Premium
Straight Life policies
Charge a level annual premium throughout the insured's lifetime and provide a level, guaranteed death
benefit.
Universal Life Option A (Level Death Benefit option) policy must maintain...
a specified "corridor" or gap between the cash value and the death benefit, as required by the IRS.
If this corridor is not maintained, the policy is no longer defined as life insurance for tax purposes, and
consequently loses most of the tax advantages that have been associated with life insurance.
Adjustable life policies
Allow for increases or decreases in the face amount or premium, so long as the premium is sufficient to
pay for the mortality.
Any increase in face amount requires proof of insurability.
A Return of Premium term life policy is written as what type of term coverage?
Increasing
Return of premium (ROP) life insurance is
An increasing term insurance policy that pays an additional death benefit to the beneficiary equal to the
amount of the premiums paid.
, The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse
as long as
The policy contains sufficient cash value to cover the cost of insurance.
The Return of Premium Rider is achieved by using
increasing term insurance.
When added to a whole life policy it provides that at death prior to a given age, not only is the original
face amount payable, but also all premiums previously paid are payable to the beneficiary.
A policy which pays monthly income upon the death of the breadwinner for a predetermined number
of years after death, plus a lump sum at death, and combines level term and whole life is known as
which policy?
Family maintenance
A Universal Life Insurance policy is best described as a/an
Annually Renewable Term policy with a cash value account.
A universal policy has two components:
an insurance component and a cash account.
The insurance component (or the death protection) of a universal life policy is always annual renewable
term insurance.
A domestic insurer issuing variable contracts must establish one or more
Separate Accounts
Any domestic insurer issuing variable contracts must establish one or more separate accounts.
The insurer must maintain in each separate account assets with a value at least equal to the reserves and
other contract liabilities connected to the account.
Any domestic insurer issuing variable contracts must establish
one or more separate accounts.
The insurer must maintain in each separate account assets with a value at least equal to the reserves and
other contract liabilities connected to the account.
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and
nothing if death occurs after the 20-year period. What type of policy is this?
Level Term
During partial withdrawal from a universal life policy, which portion will be taxed?
