LLQP - Chapter 4 - Universal Life questions with correct answers

What does it mean when a policy is minimally funded? Answer The policy holder is paying the minimum amount required to keep the policy in force. What would happen when a minimally funded policy is surrendered (one in which would pay the face value plus account value upon death)? Answer The policyholder would receive nothing. Because the policy is minimally funded, there is no cash value. (Normally a surrender charge would be deducted from the cash value, however the policyholder will not have to pay a surrender charge that is greater than the cash value). Name three pricing factors that are unbundled in a UL policy: Answer Mortality Costs, Investment Returns, Expenses Explain increasing the Face Amount in a UL Policy: Answer - If the policyholder needs to increase their face amount in the future they may do so on an age attained basis - Any increase in the face amount would also require evidence of Insurability (unless the policy includes a rider for guaranteed insurability benefit) Can a policyholder decrease their face amount? Answer Yes Pricing the insurance component (mortality cost deductions) are a reflection of what? Answer The NAAR (net amount at risk) and the mortality costing method used. What is NAAR? Answer The net am