LLQP Life Insurance Product Types 3

Question 1

Which type of life insurance policy combines a death benefit with a tax-deferred savings component that earns interest at a rate tied to a market index?

Accepted Answer

Indexed universal life insurance

Answer

Indexed universal life (IUL) insurance links the cash value growth to a market index like the S&P 500, offering potential upside with a floor protecting against losses.

Question 2

A 'graded benefit' whole life policy typically means:

Accepted Answer

The full death benefit is not paid if death occurs within the first few policy years

Answer

Graded benefit policies pay a reduced death benefit (often return of premiums plus interest) if the insured dies within the first 2-3 policy years, then the full benefit applies.

Question 3

What distinguishes a modified premium whole life policy from a standard whole life policy?

Accepted Answer

Premiums are lower in the early years and higher thereafter

Answer

Modified premium whole life charges lower premiums during an initial period (typically 3-5 years), then higher level premiums for the remainder of the policy.

Question 4

Which policy feature allows a whole life policyholder to receive the policy's cash value minus any loans as a lump sum by surrendering the policy?

Accepted Answer

Cash surrender value

Answer

The cash surrender value is the amount the policyholder receives upon voluntarily terminating a whole life policy before death or maturity.

Question 5

A 'survivorship' (second-to-die) life insurance policy pays the death benefit when:

Accepted Answer

Both insureds have died

Answer

Survivorship life insurance covers two lives and pays the death benefit only after both insureds have died, commonly used for estate planning.

LLQP - Life License Qualification Program Practice Test

LLQP - Life License Qualification Program Practice Test

LLQP Life Insurance Product Types 3