Life & Health Insurance Exam Life & Health Insurance Types of Life Policies 2

Question 1

A universal life insurance policy's cash value earns interest based on which of the following?

Accepted Answer

Current market interest rates declared by the insurer

Answer

Universal life cash value earns interest at a current declared rate set by the insurer, which can fluctuate but must meet a guaranteed minimum.

Question 2

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?

Accepted Answer

Universal life

Answer

Universal life's flexible premium feature allows the policyowner to reduce or skip payments if accumulated cash value can cover the monthly deductions.

Question 3

A 20-pay whole life policy differs from an ordinary whole life policy in that it:

Accepted Answer

Requires premiums to be paid for only 20 years while coverage remains permanent

Answer

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.

Question 4

Which of the following best describes a graded premium whole life policy?

Accepted Answer

Premiums that start low and increase over a specified period, then level off

Answer

Graded premium whole life starts with lower-than-normal premiums that gradually increase over several years before leveling off at a higher permanent amount.

Question 5

Joint life insurance pays the death benefit:

Accepted Answer

Upon the death of any one insured covered under the policy

Answer

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.

Life & Health Insurance Exam Practice Test

Life & Health Insurance Exam Practice Test

Life & Health Insurance Exam Life & Health Insurance Types of Life Policies 2