Chapter 2

The policyowner of an adjustable life policy wants to increase the death benefit. which of the following statements is correct regarding this change?

• The death benefit can be increased only by exchanging the existing policy for a new one

• The death benefit can be increased by providing evidence of insurability

• The death benefit can be increased only when the policy has developed a cash value

• The death benefit cannot be increased

The death benefit under the Universal Life Option B

• Remains level

• Increases for the first few years of the policy, and then levels off

• Decreases by the amount that the cash value increases

• Gradually increases each year by the amount that the cash value increases

All of the following statements are true regarding installments for a fixed period annuity settlement option EXCEPT

• It is a life contingency option

• The insurer determines the amount for each payment

• It will pay the benefit for a designated period of time

• The payments are not guaranteed for life

Which of the following is NOT true regarding the accumulation period of an annuity?

• It is the period during which the annuity payments earn interest

• It would not occur in a deferred annuity

• It is the period over which the owner makes payments into an annuity

• It is also known as the pay-in period

If the owner of a whole life policy who is also the insured dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?

• A full death benefit

• A death benefit equal to the cash value of the policy

• The face amount minus the premiums that would have been collected until the insured reached the age of 100

• 50% of the death benefit

The death protection component of Universal Life Insurance is always

• Annually Renewable Term

• Adjustable Life

• Whole Life

• Decreasing Term

Which of the following is INCORRECT regarding a $100,000 20-year level term policy?

• The policy will expire at the end of the 20-year period

• The policy premiums will remain level for 20 years

• At the end of 20 years, the policy's cash value will equal $100,000

• If the insured dies before the policy expired, the beneficiary will receive $100,000

An annuity owner is funding an annuity that will supplement her retirement. Because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a (n)

• Variable Annuity

• Flexible Annuity

• Immediate Annuity

• Equity Indexed Annuity

Which of the following types of policies will provide permanent protection?

• Credit Life

• Whole Life

• Term Life

• Group Life

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT

• Most term policies contain a convertibility option

• Evidence of insurability is not required

• Upon conversion, the premium for the permanent policy will be based upon attained age

• Upon conversion, the death benefit of the permanent policy will be reduced by 50%