Chapter 3 (Part 1)

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N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?

30 Pay Life

What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?

Whole Life

Which of these is an element of a Variable Life policy?

A fixed, level premium

Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?

Policyowner

A Limited-Pay Life policy has

premium payments limited to a specified number of years

Which statement about a whole life policy is correct?

Cash value may be borrowed against

What type of life insurance gives the greatest amount of coverage for a limited period of time?

Term life

What type of insurance offers permanent life coverage with premiums that are payable for life?

Whole Life

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?

Decreasing term

How does a typical Variable Life Policy investment account grow?

Through mutual funds, stocks, bonds

Which of these life products is NOT considered interest-sensitive?

Modified Whole Life

G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G’s family receive an income?

10 years

Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase?

Whole life policy with other insured rider

Which is true concerning a Variable Universal Life policy?

Policyowner controls where the investment will go and selects the amount of the premium payment

Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?

Conversion

Which type of policy is considered to be overfunded, as stated by IRS guidelines?

Modified Endowment Contract

Which of these statements describe a Modified Endowment Contract (MEC)?

Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract

Which of these would be considered a Limited-Pay Life policy?

Life Paid-Up at Age 70

Which statement is correct regarding the premium payment schedule for whole life policies?

Premiums are payable throughout the insured’s lifetime/ coverage lasts until death of the insured

What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?

Family Maintenance Policy

All of these insurance products require a producer to have proper FINRA securities registration in order to sell them EXCEPT for

Modified Whole Life

K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?

Modified Whole Life

All of these are characteristics of an Adjustable Life policy EXCEPT

face amount can be adjusted using policy dividends

When is the face amount paid under a Joint Life and Survivor policy?

upon death of the last insured

Which of these characteristics is consistent with a Straight Life policy?

Premiums are payable for as long as there is insurance coverage in force

F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?

Decreasing term policy

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