CA PSI LIFE ACCIDENT AND HEALTH EXAM 4
EXAMPREP QUESTIONS AND DETAILED
SOLUTIONS
◉ Disadvantages of term life insurance.
Answer: The protection provided by term life insurance policies
terminates when the policy terminates.
◉ Whole life insurance.
Answer: Provides for the payment of a death benefit or face amount
of coverage upon the death of the insured, regardless of when the
death occurs.
◉ Ordinary whole life.
Answer: The most basic form of whole life insurance where
premiums are payable as long as the insured is alive.
◉ Limited payment whole life.
Answer: Predetermined premium for a limited payment period.
◉ Single-premium whole life policy.
,Answer: The most expensive whole life policy initially, creating an
immediate nonforfeiture value (cash value).
◉ Modified whole life insurance.
Answer: Characterized by an initial premium lower than that of
straight whole life insurance for an introductory period.
◉ Graded premium whole life plan.
Answer: Characterized by a lower premium than straight whole life
in the early years, with premiums increasing annually for the initial
period.
◉ Enhanced whole life insurance.
Answer: Also referred to as economatic life or extraordinary life, it is
a low-premium, participating, permanent life insurance policy.
◉ Indexed whole life insurance.
Answer: Includes contracts where the policyholder can share in a
percentage of the growth of an indexed investment.
◉ Adjustable life insurance.
Answer: Distinguished by combining flexibility and permanent
insurance into a single plan.
,◉ Universal life insurance.
Answer: Essentially a term policy with cash value (savings), flexible
premiums, and an adjustable death benefit.
◉ Universal Life Policy Surrender.
Answer: The policy owner may surrender the universal life policy
for its entire cash value at any time.
◉ Target Premium.
Answer: A suggested premium used in universal life policies.
◉ Universal Life Insurance Death Benefit Options.
Answer: Offers two options: Option A equals cash values plus
remaining pure insurance; Option B equals face amount plus cash
values.
◉ Indexed Universal Life Insurance.
Answer: Combines features of traditional life insurance with
potential earned interest based on equity index movement.
◉ Variable Life Insurance.
Answer: A type of life insurance where the death benefit and cash
value vary based on investment performance.
, ◉ Tax-Deferred Cash Value.
Answer: Deposited in a separate account and invested in securities.
◉ Fixed Premium.
Answer: A permanent insurance where the owner controls the
investment portion.
◉ Variable Universal Life.
Answer: A hybrid of universal life and variable whole life with
flexible premiums and investment control.
◉ Family Plan Policy.
Answer: Designed to cover all family members under one policy.
◉ Family Maintenance Policy.
Answer: Consists of both whole life and level term insurance,
providing income for a specific period after the insured's death.
◉ Joint Life Policy.
Answer: Covers two or more people and pays a benefit upon the first
death.
EXAMPREP QUESTIONS AND DETAILED
SOLUTIONS
◉ Disadvantages of term life insurance.
Answer: The protection provided by term life insurance policies
terminates when the policy terminates.
◉ Whole life insurance.
Answer: Provides for the payment of a death benefit or face amount
of coverage upon the death of the insured, regardless of when the
death occurs.
◉ Ordinary whole life.
Answer: The most basic form of whole life insurance where
premiums are payable as long as the insured is alive.
◉ Limited payment whole life.
Answer: Predetermined premium for a limited payment period.
◉ Single-premium whole life policy.
,Answer: The most expensive whole life policy initially, creating an
immediate nonforfeiture value (cash value).
◉ Modified whole life insurance.
Answer: Characterized by an initial premium lower than that of
straight whole life insurance for an introductory period.
◉ Graded premium whole life plan.
Answer: Characterized by a lower premium than straight whole life
in the early years, with premiums increasing annually for the initial
period.
◉ Enhanced whole life insurance.
Answer: Also referred to as economatic life or extraordinary life, it is
a low-premium, participating, permanent life insurance policy.
◉ Indexed whole life insurance.
Answer: Includes contracts where the policyholder can share in a
percentage of the growth of an indexed investment.
◉ Adjustable life insurance.
Answer: Distinguished by combining flexibility and permanent
insurance into a single plan.
,◉ Universal life insurance.
Answer: Essentially a term policy with cash value (savings), flexible
premiums, and an adjustable death benefit.
◉ Universal Life Policy Surrender.
Answer: The policy owner may surrender the universal life policy
for its entire cash value at any time.
◉ Target Premium.
Answer: A suggested premium used in universal life policies.
◉ Universal Life Insurance Death Benefit Options.
Answer: Offers two options: Option A equals cash values plus
remaining pure insurance; Option B equals face amount plus cash
values.
◉ Indexed Universal Life Insurance.
Answer: Combines features of traditional life insurance with
potential earned interest based on equity index movement.
◉ Variable Life Insurance.
Answer: A type of life insurance where the death benefit and cash
value vary based on investment performance.
, ◉ Tax-Deferred Cash Value.
Answer: Deposited in a separate account and invested in securities.
◉ Fixed Premium.
Answer: A permanent insurance where the owner controls the
investment portion.
◉ Variable Universal Life.
Answer: A hybrid of universal life and variable whole life with
flexible premiums and investment control.
◉ Family Plan Policy.
Answer: Designed to cover all family members under one policy.
◉ Family Maintenance Policy.
Answer: Consists of both whole life and level term insurance,
providing income for a specific period after the insured's death.
◉ Joint Life Policy.
Answer: Covers two or more people and pays a benefit upon the first
death.
