LLQP Insurance Product Types 5

Question 1

Which type of annuity allows the contract holder to begin receiving income payments almost immediately after a lump-sum purchase?

Accepted Answer

Single premium immediate annuity (SPIA)

Answer

A single premium immediate annuity (SPIA) converts a lump-sum payment into income that begins within one month to one year of purchase.

Question 2

A graded death benefit life insurance policy is designed primarily for:

Accepted Answer

Individuals who cannot qualify for standard life insurance due to health issues

Answer

Graded death benefit policies provide guaranteed issue coverage to individuals who cannot pass standard underwriting, but pay reduced benefits if death occurs in early policy years.

Question 3

Under a variable universal life (VUL) policy, the policyholder bears the investment risk because:

Accepted Answer

Cash value is allocated to separate account sub-accounts subject to market fluctuation

Answer

In a VUL policy, cash value is invested in separate account sub-accounts, so gains and losses depend on market performance and the policyholder assumes this risk.

Question 4

A life insurance policy loan against cash value is best described as:

Accepted Answer

A loan from the insurer using cash value as collateral, accruing interest

Answer

A policy loan allows the insurer to lend money to the policyholder using the policy's cash value as collateral, with interest accruing until repaid.

Question 5

Which long-term care insurance policy feature protects the benefit amount against the rising cost of care over time?

Accepted Answer

Inflation protection rider

Answer

An inflation protection rider automatically increases the daily or monthly benefit amount annually (often 3-5% compound) to keep pace with rising care costs.

LLQP - Life License Qualification Program Practice Test

LLQP - Life License Qualification Program Practice Test

LLQP Insurance Product Types 5