Iowa Life Insurance: Final Exam
Group Life Insurance - (correct Answer) - life insurance that provides a master policy for a group; each
eligible group member receives a certificate of insurance
Individual Life Insurance - (correct Answer) - purchased by individuals; usually greater face value
Permanent Life vs. Term Life - (correct Answer) - Perm Life: whole life insurance that is effective for the
entire life of the insured up to age 100.
Term Life: insurance that is effective for a temporary time period, designated by the policy.
Participating Life vs. Nonparticipating Life - (correct Answer) - Participating Life: policies that pay
dividends to the policy holders.
Nonparticipating Life: policies that pay dividends to shareholders.
Fixed Life vs. Variable Life - (correct Answer) - Fixed Life: policies earn a constant rate of interest,
providing guaranteed minimum of benefits.
Variable Life: policies earn a fluctuating rate of interest & don't guarantee a certain cash value.
Ordinary (Straight) Life - (correct Answer) - basic whole life insurance with a level face amount, & level
premiums payable over the insured's entire life.
Limited Payment (LP) Whole Life Policies - (correct Answer) - the insured is covered for their entire life,
but premiums are pad for a limited time.
Single Premium Whole Life Policies - (correct Answer) - allows the insured to pay the entire premium in
one lump-sum, & have coverage for the insured's entire life.
Adjustable Life - (correct Answer) - a mix of whole & term life insurance.
Changes that can be made to the policy:
- raise/lower premium
-raise/lower the face amount
-change the coverage period
- change the premium-paying period
Universal Life Insurance - (correct Answer) - permanent cash-value insurance that combines term
insurance (death benefits) with a tax-sheltered savings/investment account that pays interest, usually at
competitive money market rates
Variable Whole Life - (correct Answer) - has fixed premiums & a guaranteed minimum death benefit just
, like OWL, but differs b/c it offers higher interest rates defending the policyowner against inflation
Variable Universal Life - (correct Answer) - product that blends many features of whole life, universal life,
and variable life. Key features are premium flexibility, cash value investment control, and death benefit
flexibility.
Interest Sensitive Whole Life - (correct Answer) - Premiums vary to reflect the insurer's changing
assumptions with regard to death investment and expense factors.
Equity-Indexed Universal Life - (correct Answer) - Equity-indexed universal life works the same way as
universal life insurance except the interest rate is tied to a stock market index.
Term Life Insurance - (correct Answer) - Insurance that provides financial protection from losses resulting
from a death during a definite period, or term.
Level Term - (correct Answer) - premiums and death benefits stay the same for the life of the policy
Decreasing Term - (correct Answer) - A type of life insurance that features a level premium and a death
benefit that decreases each year over the duration of the policy.
Return of Premium - (correct Answer) - The longer the term, the lower the premiums; premiums are
returned to the insured if no death benefit has been paid & are not taxable.
Annually Renewable Term - (correct Answer) - -Renews each year without proof of insurability
-Premiums increase due to attained age
Increasing Term - (correct Answer) - provides an increasing face amount over time based on specific
amounts or a percentage of the original face amount.
Special Features - (correct Answer) - Renewable Term: Policies that allow the policyowner to renew the
term policy after the designated term expires w/o having to prove insurability.
Convertible Term: Policies that allow policyowners to convert their term insurance into permanent
policies w/o showing proof of insurability.
Single Premium Immediate Annuity (SPIA) - (correct Answer) - A lump-sum payment is made w/ the
insurer & payments to the annuitant start immediately,
Single Premium Deferred Annuity (SPDA) - (correct Answer) - A deferred annuity purchase with a lump
sum
Flexible Premium Deferred Annuity - (correct Answer) - The annuity purchased with multiple payments,
whose benefit is paid more than one year after the purchase.
Fixed Annuities - (correct Answer) - have a guaranteed minimum interest rate at which the premium
payments accrue interest during the accumulation phase & a fixed interest rate at which level annuity
payments are paid during the annuity phase.
Variable Annuities - (correct Answer) - - Payments fluctuate according to the value of an account invested
primarily in common stocks
Group Life Insurance - (correct Answer) - life insurance that provides a master policy for a group; each
eligible group member receives a certificate of insurance
Individual Life Insurance - (correct Answer) - purchased by individuals; usually greater face value
Permanent Life vs. Term Life - (correct Answer) - Perm Life: whole life insurance that is effective for the
entire life of the insured up to age 100.
Term Life: insurance that is effective for a temporary time period, designated by the policy.
Participating Life vs. Nonparticipating Life - (correct Answer) - Participating Life: policies that pay
dividends to the policy holders.
Nonparticipating Life: policies that pay dividends to shareholders.
Fixed Life vs. Variable Life - (correct Answer) - Fixed Life: policies earn a constant rate of interest,
providing guaranteed minimum of benefits.
Variable Life: policies earn a fluctuating rate of interest & don't guarantee a certain cash value.
Ordinary (Straight) Life - (correct Answer) - basic whole life insurance with a level face amount, & level
premiums payable over the insured's entire life.
Limited Payment (LP) Whole Life Policies - (correct Answer) - the insured is covered for their entire life,
but premiums are pad for a limited time.
Single Premium Whole Life Policies - (correct Answer) - allows the insured to pay the entire premium in
one lump-sum, & have coverage for the insured's entire life.
Adjustable Life - (correct Answer) - a mix of whole & term life insurance.
Changes that can be made to the policy:
- raise/lower premium
-raise/lower the face amount
-change the coverage period
- change the premium-paying period
Universal Life Insurance - (correct Answer) - permanent cash-value insurance that combines term
insurance (death benefits) with a tax-sheltered savings/investment account that pays interest, usually at
competitive money market rates
Variable Whole Life - (correct Answer) - has fixed premiums & a guaranteed minimum death benefit just
, like OWL, but differs b/c it offers higher interest rates defending the policyowner against inflation
Variable Universal Life - (correct Answer) - product that blends many features of whole life, universal life,
and variable life. Key features are premium flexibility, cash value investment control, and death benefit
flexibility.
Interest Sensitive Whole Life - (correct Answer) - Premiums vary to reflect the insurer's changing
assumptions with regard to death investment and expense factors.
Equity-Indexed Universal Life - (correct Answer) - Equity-indexed universal life works the same way as
universal life insurance except the interest rate is tied to a stock market index.
Term Life Insurance - (correct Answer) - Insurance that provides financial protection from losses resulting
from a death during a definite period, or term.
Level Term - (correct Answer) - premiums and death benefits stay the same for the life of the policy
Decreasing Term - (correct Answer) - A type of life insurance that features a level premium and a death
benefit that decreases each year over the duration of the policy.
Return of Premium - (correct Answer) - The longer the term, the lower the premiums; premiums are
returned to the insured if no death benefit has been paid & are not taxable.
Annually Renewable Term - (correct Answer) - -Renews each year without proof of insurability
-Premiums increase due to attained age
Increasing Term - (correct Answer) - provides an increasing face amount over time based on specific
amounts or a percentage of the original face amount.
Special Features - (correct Answer) - Renewable Term: Policies that allow the policyowner to renew the
term policy after the designated term expires w/o having to prove insurability.
Convertible Term: Policies that allow policyowners to convert their term insurance into permanent
policies w/o showing proof of insurability.
Single Premium Immediate Annuity (SPIA) - (correct Answer) - A lump-sum payment is made w/ the
insurer & payments to the annuitant start immediately,
Single Premium Deferred Annuity (SPDA) - (correct Answer) - A deferred annuity purchase with a lump
sum
Flexible Premium Deferred Annuity - (correct Answer) - The annuity purchased with multiple payments,
whose benefit is paid more than one year after the purchase.
Fixed Annuities - (correct Answer) - have a guaranteed minimum interest rate at which the premium
payments accrue interest during the accumulation phase & a fixed interest rate at which level annuity
payments are paid during the annuity phase.
Variable Annuities - (correct Answer) - - Payments fluctuate according to the value of an account invested
primarily in common stocks
