Chapter 4: Life Insurance Policies, Options And Riders

41 Questions | Total Attempts: 618

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Chapter 4: Life Insurance Policies, Options And Riders - Quiz

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Questions and Answers
  • 1. 
    What does the word "level" in Level Term describe?
    • A. 

      The period of coverage

    • B. 

      The face amount

    • C. 

      The premium payments

    • D. 

      The cash value

  • 2. 
    The least expensive option to pay off a 30-year mortgage balance would be
    • A. 

      Convertible term life

    • B. 

      Decreasing term life

    • C. 

      Adjustable term life

    • D. 

      Increasing term life

  • 3. 
    A life insurance policy that is subject to a contract interest rate is referred to as
    • A. 

      Adjustable life

    • B. 

      Group life

    • C. 

      Term life

    • D. 

      Universal life

  • 4. 
    A securities license is required for a life insurance producer to sell
    • A. 

      Modified life insurance

    • B. 

      Modified Endowment Contracts (MEC)

    • C. 

      Variable life insurance

    • D. 

      Universal life insurance

  • 5. 
    Donald is the primary insured of a life insurance policy and adds a children's term rider. What is the advantage of adding this rider?
    • A. 

      Can't be converted to permanent coverage without evidence of insurability

    • B. 

      Coverage can be different for each child

    • C. 

      Premiums on this rider are not required until the limiting age is reached

    • D. 

      Increase the policy's overall cash value

  • 6. 
    Rob purchased a standard whole life policy with a $500,000 death benefit when he was age 30. His insurance agent told him the policy would be paid up if he reached age 100. The present cash value of the policy equals $250,000. Rob recently died at age 60. The death benefit would be
    • A. 

      $250,000

    • B. 

      $750,000

    • C. 

      $375,000

    • D. 

      $500,000

  • 7. 
    Level premium permanent insurance accumulates a reserve that will eventually
    • A. 

      Equal the face amount of the policy

    • B. 

      Pay a dividend to the policyowner

    • C. 

      Require the policyowner to make periodic withdrawals

    • D. 

      Become larger than the face amount

  • 8. 
    What is the automatic continuance of insurance coverage referred to as?
    • A. 

      Renewal

    • B. 

      Reinstatement

    • C. 

      Resumption

    • D. 

      Renovation

  • 9. 
    Julie has a $100,000 30-year mortgage on her new home. What type of life insurance could she purchase that is designed to pay off the loan balance if she dies within the 30-year period?
    • A. 

      Adjustable life insurance

    • B. 

      Decreasing term insurance

    • C. 

      Increasing term insurance

    • D. 

      Modified life insurance

  • 10. 
    A Modified Endowment Contract (MEC) is best described as
    • A. 

      A life insurance contract which accumulates cash values higher than the IRS will allow

    • B. 

      An annuity contract which was converted from a life insurance contract

    • C. 

      A modified life contract which enjoys all the tax advantages of whole life insurance

    • D. 

      A life insurance contract where all withdrawals prior to age 65 are subject to a 10% penalty

  • 11. 
    Which of these riders will pay a death benefit if the insured's spouse dies?
    • A. 

      Guaranteed Insurability ride

    • B. 

      Family term insurance rider

    • C. 

      Family whole insurance rider

    • D. 

      Payor benefit rider

  • 12. 
    Which of the following policies does NOT build cash value?
    • A. 

      Term

    • B. 

      Straight life

    • C. 

      Endowment

    • D. 

      Variable Life

  • 13. 
    When a decreasing term policy is purchased, it contains a decreasing death benefit and 
    • A. 

      Increasing premiums

    • B. 

      Level premiums

    • C. 

      Decreasing premiums

    • D. 

      Variable premiums

  • 14. 
    What types of life insurance are normally used for key employee identification?
    • A. 

      Term, whole, and universal life insurance

    • B. 

      Increasing term insurance

    • C. 

      Joint, credit, and group life insurance

    • D. 

      Adjustable, permanent, and limited-pay life insurance

  • 15. 
    Shawn, Mike, and Dave are brothers who have a $100,000 "first to die" joint life policy covering all three of their lives. If Mike dies first, the policy proceeds 
    • A. 

      Will no longer provide insurance protection

    • B. 

      Will go to Mike's estate

    • C. 

      Will be divided by probate

    • D. 

      Will not be paid until the last brother dies

  • 16. 
    Jonas is a whole life insurance policyowner and would like to add coverage for his two children. Which of the following products would allow him to accomplish this?
    • A. 

      Child term rider

    • B. 

      Payor rider

    • C. 

      Family maintenance rider

    • D. 

      Family income rider

  • 17. 
    A limited payment whole life policy provides
    • A. 

      Protection for 20 years

    • B. 

      Lifetime protection

    • C. 

      Protection for more than one person

    • D. 

      Discounted premiums

  • 18. 
    Term insurance is appropriate for someone who
    • A. 

      Seeks living benefits for themselves

    • B. 

      Seeks a policy that builds cash value

    • C. 

      Seeks temporary protection and lower premiums

    • D. 

      Seeks permanent preotection and higher premiums

  • 19. 
    Joe has a life insurance policy that has a face amount of $300,000. After a number of years, the policy's cash value accumulates to $50,000 and the face amount becomes $350,000. What kind of policy is this?
    • A. 

      Increasing Term Life policy

    • B. 

      Nonparticipating policy

    • C. 

      Modified Whole Life policy

    • D. 

      Universal Life policy

  • 20. 
    Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive?
    • A. 

      Adjustable life policy

    • B. 

      Modified life policy

    • C. 

      Endowment policy

    • D. 

      Universal life policy

  • 21. 
    The two major actions required for a policyholder to comply with the Reinstatement Clause are
    • A. 

      Provide evidence of insurability, agree to a new incontestable period

    • B. 

      Provide evidence of insurability, pay past due premiums

    • C. 

      Pay past due premiums, agree to a new incontestable period

    • D. 

      Pay past due premiums, agree to a reduction in coverage

  • 22. 
    Which of these is NOT a characteristic of the Accelerated Death Benefit option?
    • A. 

      The face amount ad policy premium are not affected by the payment

    • B. 

      Before payment of the benefit made, specific conditions mujst exist, such as suffering from a terminal illness

    • C. 

      There may be a dollar limit on the maximum benefit

    • D. 

      The benefit can be offered as a rider at a specific extra cost or may be at no cost

  • 23. 
    A provision that allows a policyowner to withdraw a policy's cash value interest free is a(n)
    • A. 

      Partial surrender

    • B. 

      Waiver of premium

    • C. 

      Automatic premium loan

    • D. 

      Grace period

  • 24. 
    A life insurance policyowner was injured in an automobile accident which results in a total and permanent disability. Which rider would pay a monthly amount because of this disability?
    • A. 

      Long-term care rider

    • B. 

      Disability income rider

    • C. 

      Annuity rider

    • D. 

      Waiver of premium

  • 25. 
    Under a life insurance policy, what does the insuring clause state?
    • A. 

      The agent's obligation to provide the proper amount of coverage

    • B. 

      The insurer's obligation to return all premiums upon an approved death claim

    • C. 

      The insurer's obligation to pay a death benefit upon an approved death claim

    • D. 

      The agent's obligation to pay a death benefit upon an approved death claim

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