LLQP Life Insurance Product Types 4

Question 1

What is the primary characteristic of an endowment policy?

Accepted Answer

It pays the face amount either upon death or when the insured reaches a specified age

Answer

An endowment policy matures and pays the face amount to the living insured at the end of the endowment period, or pays the death benefit if the insured dies before maturity.

Question 2

Under a variable universal life (VUL) policy, who bears the investment risk of the separate account sub-accounts?

Accepted Answer

The policyholder

Answer

In a VUL policy, the policyholder directs cash value into separate account sub-accounts and bears the full investment risk, meaning cash value can decrease.

Question 3

Which non-forfeiture option converts a lapsed whole life policy into a paid-up term policy for the same face amount?

Accepted Answer

Extended term insurance

Answer

Extended term insurance uses the cash value to purchase term insurance for the original face amount for as long a period as the cash value will support.

Question 4

A 'return of premium' (ROP) term policy differs from standard term by:

Accepted Answer

Refunding all premiums paid if the insured outlives the policy term

Answer

ROP term insurance returns all premiums paid if the insured survives to the end of the policy term, at the cost of significantly higher premiums than standard term.

Question 5

A universal life policy's 'Option B' (increasing) death benefit means:

Accepted Answer

The death benefit equals the face amount plus the accumulated cash value

Answer

Under Option B (or Option 2), the death benefit equals the stated face amount plus the policy's cash value, so it increases as cash value accumulates.

LLQP - Life License Qualification Program Practice Test

LLQP - Life License Qualification Program Practice Test

LLQP Life Insurance Product Types 4