EXAMFX Life Insurance Policy Types 2

Question 1

Which type of life insurance policy combines a savings component with permanent death benefit protection?

Accepted Answer

Whole life

Answer

Whole life insurance combines a level death benefit with a cash value savings component that grows on a tax-deferred basis.

Question 2

A universal life insurance policy's flexible premium feature allows the policyowner to do which of the following?

Accepted Answer

Vary premium amounts within policy limits

Answer

Universal life's flexible premium feature lets policyowners pay varying amounts as long as the cash value remains sufficient to cover the cost of insurance.

Question 3

What distinguishes variable life insurance from whole life insurance?

Accepted Answer

Variable life cash value is invested in separate accounts

Answer

Variable life insurance directs cash value into separate investment accounts (subaccounts), subjecting it to market risk unlike whole life's guaranteed cash value.

Question 4

An indexed universal life (IUL) policy credits interest based on which of the following?

Accepted Answer

Performance of a stock market index

Answer

IUL policies link interest credits to the performance of a stock market index (such as the S&P 500), subject to caps and floors.

Question 5

A 20-pay whole life policy differs from a straight whole life policy in that the:

Accepted Answer

Premiums are paid over 20 years instead of for life

Answer

A 20-pay whole life policy requires premium payments for only 20 years while providing permanent coverage for the insured's entire life.

(EXAMFX) Exam FX Insurance Practice Test

(EXAMFX) Exam FX Insurance Practice Test

EXAMFX Life Insurance Policy Types 2