Chapter 1 Review Part 2

When the breadwinner that is insured by a Family Policy dies, what rights are provided to other family members that are covered under the policy?

• They can surrender the coverage for its cash value.

• They can convert their coverage to permanent life insurance without evidence of insurability

• They can convert their coverage to permanent life insurance with evidence of insurability.

• Family members are not provided any rights.

Which of the following policies would be classified as a traditional level premium contract?

• Variable Universal Life

• Straight Life

• Adjustable Life

• Universal Life

In Modified Life policies, what happens to the premium?

• It varies at the beginning, but levels out by the end of the third year.

• It is level at the beginning and increases after the first few years

• It always remains level

• It is higher during the first policy years

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?

• Straight whole life

• Universal Life

• Variable life

• Increasing Term

Which statement is NOT true regarding a Straight Life policy?

• It has the lowest annual premium of the three types of Whole Life policies.

• Its premium steadily decreases over time, in response to its growing cash value.

• The face value of the policy is paid to the insured at age 100.

• It usually develops cash value by the end of the third policy year.

Graded-Premium Whole Life policy premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will

• Be level thereafter

• Continue to increase

• Return to the initial premium amount

• Decrease again

Which of the following is TRUE regarding an indeterminate premium whole life policy?

• The premium can be raised up to a guaranteed maximum rate

• The premium is lower in the first year of the policy; then it is gradually raised every year.

• The premium is level throughout the life of the policy.

• The premium is usually higher in the first few years of the policy.

Both Universal Life and Variable Universal Life have a

• Decreasing premium

• Increasing premium

• Flexible premium

• Level Fixed premium

All of the following are true regarding a decreasing term policy EXCEPT

• The death benefit is $0 at the end of the policy term.

• The contract pays only in the event of death during the term and there is no cash value.

• The face amount steadily declines throughout the duration of the contract.

• The payable premium amount steadily declines throughout the duration of the contract.

A domestic insurer issuing variable contracts must establish one or more

• Annuity accounts

• General accounts

• Separate accounts

• Liability accounts