Life Insurance and Annuity Types Exam Questions and Answers Rated A+

Level - Face Amount Straight life policy - A level premium for the life of the insured Flexible premium deferred annuity - An annuity purchased with multiple payments that begin income payments after one year from the moment of purchase Annuity - A contract that provides a certain amount of income for the rest of the annuitant's life Joint life annuity - An annuity that provides a set amount of income for two or more persons with the income ceasing upon the first death Option A - A universal life option with a gradually increasing cash value and a level death benefit Limited-pay Whole Life - Life Paid-up at Age 65 Decreasing term insurance - Policy component that must decrease in face amount Annually renewable term policies - Annual premium based upon the insured's attained age Beneficiary - Recipient of annuity benefits if the annuitant dies during the accumulation period The insurer - Bearer of investment risk in a fixed annuity Cash value in a whole life insurance policy - Paid to the policyowner when the policy matures 20-year level term - Policy that pays a specified face amount if the insured dies during the 20-year premium-paying period Single premium deferred annuity - Annuity where payments become available no sooner than 1 year after purchase Life annuity with a 15-period certain pay - Payments for the life of the annuitant unless they die within the first 15 years, then payments last for 15 years Target premium for a universal life policy - Set to prevent the policy from lapsing Equity indexed annuity - An annuity that credits its interest based upon an index such as S&P 500 Annuitant - Recipient of income payments from an annuity Mortality tables - Used by insurance companies to predict life expectancy and death rates Variable annuity - Annuity type that requires an agent to have a securities license Single premium whole life - Whole life insurance policy that requires a single premium payment and endows at age 100 Straight life - An annuity suitable for someone who wants life-long payments Option A and Option B in universal life policies - Option A has a level death benefit, Option B has an increasing death benefit Immediate and deferred annuities - Two classifications based on when annuity payments begin Whole life insurance - Insurance type that performs the function of cash accumulation Interest earned on the withdrawn cash value - Taxable portion during partial withdrawal from a universal life policy Life income with period certain - An annuity settlement option providing income for life and guaranteed payments for a specified number of years Universal life - Life insurance policy type where premium payments can be skipped without policy lapsing Temporary, No Cash - There is no cash value to borrow against Joint Life = Average Age - The premium is based on the average age of the insureds Single = One payment, Flexible = Multiple - The number of payments that purchase the annuity Flexible = Adjustable Amount - Amount of premium Annuity = Lifetime Income - To provide income that the annuitant cannot outlive Yearly Renewable - Annually renewable term Adjustable = Flexible Choices - The amount and payment period of the premium, the face amount, and the period for protection Accumulation and annuitization (or pay-in and pay-out) - The two phases of an annuity Policyowner = Owner of Cash - The policyowner A life insurance and a securities license - License(s) required to sell variable annuities Upon the first death - When the death benefit is paid in a joint life policy Cash value and death benefit - Components referred to as 'variable' in a variable universal life insurance policy Permanent insurance (usually, whole life) - Type of life insurance offering an applicant a cash value element For 20 years or until the insured's death, whichever occurs first - Time period for premiums to be paid in a 20-pay whole life policy The annuitant receives payments from the annuity during the annuitization period; the beneficiary receives benefits after the annuitant's death - Difference between the annuitant and the beneficiary of an annuity Immediate annuity - Type of annuity that can be purchased with a single premium Term - Type of life insurance policy offering pure death protection Limited-pay whole life - Whole life policy that requires the policyowner to pay premiums for a specified number of years No, annuitant must always be a natural person - Whether a business or a corporation can be an annuitant Annuitant's estate - Entity to which annuity benefits are paid if no named beneficiary Annuitization period - Phase in which accumulated money in an annuity is converted into a stream of income When the premiums paid are more than the cost of the policy - When an adjustable life policy accumulates cash value Whole life - Type of life insurance policy providing permanent protection