Life & Health Insurance Exam Life & Health Insurance Types of Life Policies 3

Question 1

Which of the following life policies is classified as 'interest-sensitive'?

Accepted Answer

Universal life

Answer

Universal life is interest-sensitive because its cash value growth and required premiums are affected by the current interest rates declared by the insurer.

Question 2

A variable life insurance policy transfers investment risk to the:

Accepted Answer

Policyowner

Answer

In variable life, the policyowner selects investment subaccounts and bears the full investment risk, meaning the cash value and potentially the death benefit can decrease.

Question 3

What license is required to sell variable life insurance products in addition to a life insurance license?

Accepted Answer

A FINRA securities registration (Series 6 or 7)

Answer

Variable products are classified as securities, so agents must hold both a state life insurance license and a FINRA securities registration to sell them.

Question 4

A modified whole life policy is characterized by:

Accepted Answer

Lower premiums in the early years that increase after a specified period

Answer

Modified whole life charges reduced premiums for an initial period (commonly 3–5 years) and then increases them to a higher level-premium rate for the rest of the policy.

Question 5

Which of the following policies provides the HIGHEST initial face amount for the lowest premium?

Accepted Answer

Term life

Answer

Term insurance provides pure death protection with no cash value, allowing insurers to offer large face amounts at minimal initial cost.

Life & Health Insurance Exam Practice Test

Life & Health Insurance Exam Practice Test

Life & Health Insurance Exam Life & Health Insurance Types of Life Policies 3