Life & Health Insurance Types of Life Policies Flashcards
7 cards from real Life & Health Insurance Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Life & Health Insurance Types of Life Policies flashcards as text
A universal life insurance policy's cash value earns interest based on which of the following?
Answer: Current market interest rates declared by the insurer
Universal life cash value earns interest at a current declared rate set by the insurer, which can fluctuate but must meet a guaranteed minimum.
Which type of life insurance policy allows the policyowner to skip premium payments as long as the cash value is sufficient to cover the cost of insurance?
Answer: Universal life
Universal life's flexible premium feature allows the policyowner to reduce or skip payments if accumulated cash value can cover the monthly deductions.
A 20-pay whole life policy differs from an ordinary whole life policy in that it:
Answer: Requires premiums to be paid for only 20 years while coverage remains permanent
A 20-pay whole life policy is fully paid up after 20 annual premiums, but the death benefit protection continues for the insured's entire lifetime.
Which of the following best describes a graded premium whole life policy?
Answer: Premiums that start low and increase over a specified period, then level off
Graded premium whole life starts with lower-than-normal premiums that gradually increase over several years before leveling off at a higher permanent amount.
Joint life insurance pays the death benefit:
Answer: Upon the death of any one insured covered under the policy
A joint life (first-to-die) policy pays the death benefit when the first of the covered insureds dies, at which point the policy ends.
What is the primary purpose of a survivorship life (second-to-die) policy?
Answer: To fund estate taxes or leave a legacy after both spouses die
Survivorship life insures two people and pays the death benefit only after both die, making it ideal for estate planning and paying estate taxes.
An indexed universal life (IUL) policy credits interest based on:
Answer: A stock market index such as the S&P 500, subject to a cap and floor
IUL policies link interest crediting to a market index but protect against loss with a floor (often 0%) while limiting upside with a cap rate.