WebCE Exam Tutor| 400 questions| with complete solutions| 76 pages| with complete solutions

All of the following are eligible to purchase a group life insurance policy EXCEPT: the Wonderful Widget Company, which employs more than 200 people the State Electrical Workers Union the Retailers Multiple Employer Trust, formed by two retailers to purchase insurance for their employees Stan and his neighbors, who form their own group to buy group coverage at a lower cost than their individual coverages CORRECT ANSWERS: Stan and his neighbors are not eligible to purchase group life insurance because a group cannot be formed solely to obtain life insurance With respect to the difference between variable life insurance (VLI) and variable universal life insurance (VUL), which of the following statements is correct? Variable life policies require a fixed premium payable for the life of the policy while variable universal life permits premium flexibility. Only variable life policies allow the policyowner to put funds in investment subaccounts. Only variable universal life policies offer a minimum death benefit. Only variable universal life is a securities product. CORRECT ANSWERS: Variable life policies require a fixed premium payable for the life of the policy while variable universal life permits premium flexibility Jessica, age 25, buys a $100,00 life insurance policy. The initial premium is lower than straight whole life rates and increases each year for the first ten years of the policy period. After that, the premium levels off and remains at that amount for the life of the policy. What type of policy does Jessica own? indeterminate premium whole life single premium life graded premium whole life 20-pay life CORRECT ANSWERS: graded premium whole life Which statement about modified premium whole life insurance is NOT correct? It does not build cash value. It charges lower premiums in the early policy years. At the end of the initial period, the premium increases and stays at the new level for the life of the policy. It is good for people who want the guarantees of whole life insurance and lower early premiums. CORRECT ANSWERS: It does not build a cash value A life insurance policy matures or endows when its guaranteed cash value equals its face amount. With an endowment contract, when does the policy endow?