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Flashcards in Economic basis – Lesson 3 Deck (28)
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0
Q

It is common practice for policy loans to be made on which type of policy?

A

Ordinary life policies

1
Q

What type of policy contains living benefits?

A

Permanent insurance

2
Q

A single premium whole life policy endows prior to age 100 due to the sizable premium that is paid at the time of purchase. True or false?

A

False

3
Q

A life insurance policy that continues to provide protection after the premium period has ended is called what?

A

Limited payment life policy

4
Q

Term insurance is designed to meet the needs at the lowest cost?

A

A temporary protection to cover financial obligations that will be repaid in a defined time span.

5
Q

Term insurance differs from permanent life insurance and that term:

A

Term builds no cash value but does pay a death benefit

6
Q

A convertible term life insurance policy allow the insured to:

A

Change to a permanent plan of insurance without evidence of insurability at standard rates.

7
Q

Which form of insurance could be the best suited to make sure a mortgage is paid off if the borrower dies?

A

Credits life policy

8
Q

What type of policy provides a death benefit for all family members?

A

Family protection policy

9
Q

What is a major difference between a family income policy and a family maintenance policy?

A

The major difference is the length of time the monthly benefit will be paid.

10
Q

What type of policy might contain a payor benefit rider?

A

Juvenile policy

11
Q

A joint life policy written as a first to die might be used for what situation?

A

Business partners who wish to be able to buy out a deceased partner.

12
Q

Variable life insurance has a guaranteed minimum death benefit but no guaranteed cash values. True or false?

A

True

13
Q

What type of life insurance policy will require an agent to hold a securities license in order to sell?

A

Variable life insurance

14
Q

What type of life insurance policy will provide a 25-year-old woman with the most rapid growth of cash value?

A

20-pay life

15
Q

Industrial life insurance:

A

Is an individual policy with a low face amount of insurance, usually $10,000 or less.

16
Q

Characteristics of renewable term are:

A

Level face amounts; increasing premium.

17
Q

A modified endowment contract:

A

Has negative tax consequences.

18
Q

What is the characteristic of a family protection policy?

A

Covers all family members plus newborns and adopted children.

19
Q

A joint life policy written as a second to die policy or last survivor policy:

A
  1. Insures husband-and-wife
  2. Mostly used as an estate planning tool.
  3. Usually written for $1 million or more.
20
Q

Does a life agent need to have a life insurance license and a securities license in order to sell universal life?

A

No

21
Q

What does life insurance create?

A

Any immediate estate.

22
Q

Name the three categories of all life insurance:

A
  1. Ordinary insurance
  2. Group insurance
  3. Industrial insurance
23
Q

Ordinary insurance can be classified as:

A

Temporary or permanent

24
Q

What type of policy has a face amount that increases automatically as the consumer price index increases?

A

Indexed whole life policy

25
Q

What type of policy have a lower premiums in the first years – usually 3 to 5 years – followed by a higher premium for the life of the contract?

A

Modified whole life policy

26
Q

Money withdrawn from a Modified Endowment contract (MEC) is subject to unfavorable tax rules. True or false?

A

True

27
Q

In a family protection policy, the coverage for the child normally starts when the child is a few days old and continues to what age? Spouse?

A
  1. Frequently 18

2. Until 65