LLQP Insurance Product Types 2 — Questions and Answers
Question 1: Which type of permanent life insurance policy has a cash value that grows based on the performance of investment sub-accounts chosen by the policyholder?
- Whole life insurance
- Variable life insurance (Correct answer)
- Universal life insurance
- Term life insurance
Correct answer: Variable life insurance
Variable life insurance links cash value growth to investment sub-accounts, so performance depends on market results chosen by the policyholder.
Question 2: A client wants a life insurance policy that offers flexible premiums and adjustable death benefits. Which product best fits this need?
- 20-year term policy
- Whole life policy
- Universal life policy (Correct answer)
- Endowment policy
Correct answer: Universal life policy
Universal life insurance provides flexibility to adjust both the premium payments and the death benefit within policy limits.
Question 3: An endowment policy differs from whole life insurance primarily because it:
- Has no cash value component
- Pays the face amount if the insured survives to a specified date (Correct answer)
- Only covers accidental death
- Does not require medical underwriting
Correct answer: Pays the face amount if the insured survives to a specified date
An endowment policy matures and pays the face amount to the living insured at a specified date, unlike whole life which pays only at death.
Question 4: Which annuity type guarantees a fixed interest rate for the accumulation period and provides a predictable income stream?
- Variable annuity
- Fixed annuity (Correct answer)
- Indexed annuity
- Immediate annuity
Correct answer: Fixed annuity
A fixed annuity credits a guaranteed interest rate during accumulation and converts to a predictable, fixed income stream at payout.
Question 5: A joint and survivor annuity primarily benefits:
- A single retiree wanting maximum monthly income
- Two individuals who need income to continue after the first annuitant dies (Correct answer)
- A policyholder seeking a lump-sum death benefit
- An employer funding a group pension plan
Correct answer: Two individuals who need income to continue after the first annuitant dies
A joint and survivor annuity continues income payments to the surviving annuitant after the first annuitant's death.
Question 6: Which feature of a universal life policy allows the policyholder to skip premium payments without lapsing the policy?
- Waiver of premium rider
- Automatic premium loan provision
- Flexible premium option using accumulated cash value (Correct answer)
- Guaranteed insurability rider
Correct answer: Flexible premium option using accumulated cash value
Universal life policies can use accumulated cash value to cover premiums when the policyholder chooses not to pay, as long as sufficient cash value exists.
Question 7: A survivorship life (second-to-die) policy pays the death benefit:
- When the first insured dies
- When both insureds have died (Correct answer)
- At the policy's maturity date regardless of deaths
- Only if both insureds die simultaneously
Correct answer: When both insureds have died
Survivorship life insurance pays the death benefit only after both insureds have died, making it popular for estate planning.
LLQP Insurance Product Types 2
Which type of permanent life insurance policy has a cash value that grows based on the performance of investment sub-accounts chosen by the policyholder?