Life & Health Insurance Exam Colorado Verified Answers

Life & Health Insurance Exam Colorado Verified Answers Traditional Whole Life -Ordinary (Straight) Life -Limited-Pay & Single-Premium Whole Life -Adjustable Whole Life Ordinary (Straight) Life -Until 100 or Death, whichever comes first -Permanent Protection -Rates & benefits based on law of large numbers (Mortality Rate) -Guaranteed, tax-deferred interest rate -Premium level, company's risk goes down as cash value goes up -Insurer keeps the cash value if death to offset risk -Lowest net cost in long run -Client has access to cash through cash surrender or policy loan -Rates are per unit of protection (1,000 is 1 unit)---TEST -Cash value is guaranteed -Cash value will equal face amount at policy maturity Limited-Pay & Single-Premium Whole Life -Premium paying period is shorter -Cash value still equals face amount at age 100 -20 pay life will be paid up in 20 years PL -Life Paid up at age 65, will be paid up at 65 LP -A single premium policy will have an immediate cash value (1-pay life)---TEST Adjustable Whole Life----TEST -Sold to clients with fluctuating incomes----TEST -Combination of term and whole life----TEST -Coverage may not be increased without physical exam---TEST Interest/Market Sensitive Whole Life Products -Universal Whole life -Variable Whole life -Variable/Universal Whole life -Equity-Indexed Life Universal Whole life -Guaranteed minimum interest rates -Extreme flexibility regarding premium PMTs----TEST -Most flexible product -Target premium based on projected earnings -Option A UL has level death benefits -Option B UL will pay beneficiary both face amount + cash value Variable Whole life -Cash value deposited into a separate account -Requires FINRA series 6 or 7 to sell -Used to be called NASD -Regulated by SEC -Regulated by FINRA (Financial Industry Regulatory Authority) -NYSE license not required -Minimum death benefit (face amount) is guaranteed---TEST -Has fixed premium---TEST Variable/Universal Whole life -Requires Finra(series 6 or 7) licenses to sell -Allows client to self-direct cash values into sub-account---TEST -Flexible premium Equity-Indexed Life -cash value, where minimum death benefit is guaranteed as well as the minimum earning on the cash value in the general account -Securities license is not required -Fixed Premium Term Life -Level Term -Decreasing Term -Increasing Term General Features of Term Insurance -Premium goes up every year -May be converted to whole life at current attained age regardless of health -May be renewable up to certain age without physical Level Term Both premium and face amount are level for period of time Decreasing Term -Face amount goes down but premium remains the same -Usually convertible to whole life regardless of health -Premium stays the same but cost increases as face amount decreases Increasing Term -Face amount goes up instead of down -Allows beneficiary to receive the face amount + premiums or cash values -Also known as Universal Life option B Special features of Term Insurance -Renewable/Convertible to whole up to certain date or age regardless of health -Conversion based on current age -May only convert to more expensive option -Cannot convert to term -Cannot convert to more coverage than you have Return of Premium under Term The premium for a return of premium policy is generally more than that for a term policy, but less than that of a traditional whole life policy