Life & Health Insurance Types of Life Policies Flashcards
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Read the first 7 Life & Health Insurance Types of Life Policies flashcards as text
Which of the following statements about a straight life (ordinary whole life) policy is CORRECT?
Answer: The policy matures when the cash value equals the face amount at age 100 (or 121 under newer tables)
Under traditional whole life policies, the cash value grows until it equals the face amount at the policy's maturity age (historically 100, now often 121 under the 2001 CSO table).
An agent explains that a policy's death benefit will equal the face amount plus the accumulated cash value at death. This describes a:
Answer: Universal life policy with increasing death benefit option
Universal life Option B (increasing death benefit) pays the face amount plus the policy's accumulated cash value, so the total death benefit grows over time.
Family income policy combines which two types of coverage?
Answer: Whole life and decreasing term
A family income policy combines a whole life base policy with decreasing term insurance to provide monthly income for a specified period if the insured dies early.
What distinguishes a family maintenance policy from a family income policy?
Answer: The family maintenance policy uses level term insurance, providing income for a full fixed period from the date of death
A family maintenance policy uses level (not decreasing) term, so if the insured dies at any point during the term, the full income period (e.g., 20 years) begins from the date of death.
Juvenile life insurance written with a 'payor benefit' rider ensures that:
Answer: Premiums are waived if the adult payor dies or becomes totally disabled before the child reaches a specified age
The payor benefit rider waives future premiums on a juvenile policy if the adult payor (usually a parent) dies or becomes totally disabled before the insured child reaches the policy's specified age.
A single premium whole life policy is best described as a policy that is:
Answer: Paid for with one lump-sum premium and immediately paid-up for life
A single premium whole life policy requires only one premium payment at issue, after which the policy is fully paid-up and remains in force for the insured's lifetime.
A level term policy differs from a decreasing term policy primarily because:
Answer: The face amount stays constant throughout the policy period in a level term policy
In a level term policy both the face amount and the premium remain constant for the entire term, whereas decreasing term reduces the death benefit while premiums stay level.