EXAMFX Life Insurance Policy Types 3

Question 1

Which of the following best describes a joint life (first-to-die) insurance policy?

Accepted Answer

Covers two insureds and pays upon the first death

Answer

A joint life (first-to-die) policy covers two insureds and pays the death benefit upon the death of the first to die, leaving the survivor without coverage.

Question 2

An endowment policy matures when the insured:

Accepted Answer

Reaches a specified age or dies, whichever comes first

Answer

An endowment policy pays the face amount either at the end of the endowment period or upon the insured's death, whichever occurs first.

Question 3

Modified premium whole life policies are characterized by:

Accepted Answer

Lower initial premiums that increase after a specified period

Answer

Modified premium whole life features reduced premiums during the initial period (often 3–5 years) that then increase to a higher level for the remainder of the policy.

Question 4

Graded premium whole life is different from modified premium whole life in that graded premium policies have:

Accepted Answer

Premiums that gradually increase over several years before leveling off

Answer

Graded premium whole life features premiums that increase gradually over multiple years (not in a single jump) before leveling off at a permanent amount.

Question 5

Which life insurance policy type is most commonly used to fund buy-sell agreements between business partners?

Accepted Answer

Whole life or universal life

Answer

Permanent policies like whole life or universal life are commonly used to fund buy-sell agreements because they provide both a death benefit and cash value accumulation.

(EXAMFX) Exam FX Insurance Practice Test

(EXAMFX) Exam FX Insurance Practice Test

EXAMFX Life Insurance Policy Types 3