Ch. 4 Types of Policies

An insured owns a term insurance policy in which the amount of protection remains

constant during the term period. What kind of term insurance does he own?

• Decreasing

• Annually renewable

• Level

• Increasing

An annually renewable term policy

• Increases in premium based on the insured’s health

• Maintains a level premium each year

• Renews each year with an increased premium

• Increases in coverage each year

Which of the following amounts must increase in an increasing term policy?

• Length of Term

• Premiums

• Interest rate

• Death Benefit

A 35 year old insured’s five year level term policy will probably renew to a

• Decreasing term with age 40 premiums

• 5-year level term with age 35 premiums

• 5-year level term with age 40 premiums

• Whole life with age 35 premiums

The type of policy that can be changed from one that does not accumulate cash value to

one that does is a

• Convertible term policy

• Level term policy

• Whole life policy

• Renewable term policy

All of the following statements regarding whole life insurance are true EXCEPT

• The face amount of the policy stays the same as long as the policy remains in force

• The shorter a premium period is, the faster the cash value will grow

• The policy’s cash value decreases each year the policy is in force

• Whole life insurance is designed to mature at age 100

How long does coverage continue on a limited–pay whole life policy?

• 20 years on a 20-pay policy

• 65 years on a life paid-up at 65

• Death or age 100

• 10 years on a 10-pay policy

If a single premium (lump sum) is paid on a whole life policy, cash value will

• Be available immediately

• Be available in 5 years

• Be available at age 59 1/2

• Never be available

An equity-indexed life insurance policy’s cash value is usually linked to an index

such as the

• Moody’s Corporate Bond Yield

• Consumer Price Index (CPI)

• Inflation Rate

• Standard and Poor’s 500

An Adjustable Life policy allows for the policy owner to do all of the following EXCEPT

• Choose the face amount.

• Set the premium

• Choose the period of protection.

• Choose the investment vehicle