HEALTH AND LIFE INSURANCE EXAM 2026 LIFE
INSURANCE PRODUCTS PRACTICE SET
ANSWERS FULL SOLUTION
◉ Universal life insurance policy.
Answer: Incorporates flexible premiums and an adjustable death
benefit. The investment gains from a Universal Life Policy usually go
toward the cash value. The policy owner can use the cash value to
manipulate the flexible aspects of a universal life insurance policy. A
customer who wants a policy that gives them the most options and
the most control would be looking for a Universal Life Policy.
Universal policies use gains to fund the cash value and give the
policy owner options for flexible premiums and adjustable death
benefits.
◉ Variable Life Insurance.
Answer: Life insurance in which the benefits are a function of the
returns being generated on the investments selected by the
policyholder.
◉ Equity index universal life insurance.
Answer: Combines most of the features, benefits, and security of
traditional life insurance with the potential of earned interest based
on the upward movement of an equity index.
,◉ Cash value.
Answer: The equity amount or "savings" accumulation in a whole
life policy.
◉ Endowment policy.
Answer: Is a contract providing for payment of the face amount at
the end of a fixed period, at a specified age of the insured, or at the
insured's death before the end of the stated period.
◉ Face amount plus cash value policy.
Answer: Contract that promises to pay at the insured's death the
face amount of the policy plus a sum equal to the policy's cash value.
◉ Juvenile Insurance.
Answer: Written on the lives of children who are within specified
age limits and generally under parental control.
◉ Non-medical life insurance.
Answer: Typically does not require a medical exam and tends to be
more expensive than medically underwritten policies. The insurer
will average out everyone's risk and charge accordingly. Although
insurers typically will not require a medical exam, they will still
inquire about the applicant's medical history and lifestyle.
,◉ Target premium.
Answer: Is a suggested premium used in Universal Life policies. It
does not guarantee there will be adequate funds to maintain the
policy to any time, especially to life. It may give an indication of what
will be needed (under conservative estimates), to maintain the
policy.
◉ Accidental death benefit rider.
Answer: Pays a multiple of the death proceeds if the cause of death is
a covered accidental event.
◉ Accelerated benefits rider.
Answer: Allows the insured to receive a portion of the death benefit
before death if the insured has a terminal illness and is expected to
die within 1-2 years. Whatever amount is withdrawn in an
accelerated death benefit will decrease the death benefit when death
occurs.
◉ Accumulate interest options.
Answer: Allows dividends to accumulate interest. Interest is the
ONLY thing you can be charged tax on.
◉ Automatic premium loan provision.
, Answer: An overdue premium is automatically borrowed from the
cash value after the grace period expires.
◉ Cash option.
Answer: The "cash" dividend option allows the policy owner to cash
out the dividends they receive.
◉ Cash surrender option.
Answer: A nonforfeiture option that allows whole life insurance
policy owners to receive a payout of their policy's cash values.
◉ Collateral assignment.
Answer: Assignment of part of the proceeds of an insurance policy to
a bank as collateral to settle the loan balance that may exist at the
insured's death.
◉ Consideration clause.
Answer: A clause in a Life policy specifying the premium due for the
insurance protection and the frequency of payment (also called
Mode). The more frequent the Mode of Payment, the higher the cost,
since most insurers charge service fees for budget payments. The
cheapest Mode is annual.
◉ Dependent riders.
INSURANCE PRODUCTS PRACTICE SET
ANSWERS FULL SOLUTION
◉ Universal life insurance policy.
Answer: Incorporates flexible premiums and an adjustable death
benefit. The investment gains from a Universal Life Policy usually go
toward the cash value. The policy owner can use the cash value to
manipulate the flexible aspects of a universal life insurance policy. A
customer who wants a policy that gives them the most options and
the most control would be looking for a Universal Life Policy.
Universal policies use gains to fund the cash value and give the
policy owner options for flexible premiums and adjustable death
benefits.
◉ Variable Life Insurance.
Answer: Life insurance in which the benefits are a function of the
returns being generated on the investments selected by the
policyholder.
◉ Equity index universal life insurance.
Answer: Combines most of the features, benefits, and security of
traditional life insurance with the potential of earned interest based
on the upward movement of an equity index.
,◉ Cash value.
Answer: The equity amount or "savings" accumulation in a whole
life policy.
◉ Endowment policy.
Answer: Is a contract providing for payment of the face amount at
the end of a fixed period, at a specified age of the insured, or at the
insured's death before the end of the stated period.
◉ Face amount plus cash value policy.
Answer: Contract that promises to pay at the insured's death the
face amount of the policy plus a sum equal to the policy's cash value.
◉ Juvenile Insurance.
Answer: Written on the lives of children who are within specified
age limits and generally under parental control.
◉ Non-medical life insurance.
Answer: Typically does not require a medical exam and tends to be
more expensive than medically underwritten policies. The insurer
will average out everyone's risk and charge accordingly. Although
insurers typically will not require a medical exam, they will still
inquire about the applicant's medical history and lifestyle.
,◉ Target premium.
Answer: Is a suggested premium used in Universal Life policies. It
does not guarantee there will be adequate funds to maintain the
policy to any time, especially to life. It may give an indication of what
will be needed (under conservative estimates), to maintain the
policy.
◉ Accidental death benefit rider.
Answer: Pays a multiple of the death proceeds if the cause of death is
a covered accidental event.
◉ Accelerated benefits rider.
Answer: Allows the insured to receive a portion of the death benefit
before death if the insured has a terminal illness and is expected to
die within 1-2 years. Whatever amount is withdrawn in an
accelerated death benefit will decrease the death benefit when death
occurs.
◉ Accumulate interest options.
Answer: Allows dividends to accumulate interest. Interest is the
ONLY thing you can be charged tax on.
◉ Automatic premium loan provision.
, Answer: An overdue premium is automatically borrowed from the
cash value after the grace period expires.
◉ Cash option.
Answer: The "cash" dividend option allows the policy owner to cash
out the dividends they receive.
◉ Cash surrender option.
Answer: A nonforfeiture option that allows whole life insurance
policy owners to receive a payout of their policy's cash values.
◉ Collateral assignment.
Answer: Assignment of part of the proceeds of an insurance policy to
a bank as collateral to settle the loan balance that may exist at the
insured's death.
◉ Consideration clause.
Answer: A clause in a Life policy specifying the premium due for the
insurance protection and the frequency of payment (also called
Mode). The more frequent the Mode of Payment, the higher the cost,
since most insurers charge service fees for budget payments. The
cheapest Mode is annual.
◉ Dependent riders.
