TEXAS LIFE AND HEALTH: TYPES OF
LIFE POLICIES EXAM QUESTIONS WITH
COMPLETE ANSWERS
The type of policy that can be changed from one that does not accumulate cash value
to the one that does, is a - Answer-Convertible Term Policy
An annuity owner is funding an annuity that will supplement her retirement. Because
she does not know what effect inflation may have on her retirement dollars, she would
like a return that will equal the performance of the Standard and Poor's 500 index. She
would likely purchase a(n) - Answer-Equity Indexed Annuity
Which two terms are associated directly with the way an annuity is funded? - Answer-
Single Payment or periodic payments
All of the following entities regulate variable life policies EXCEPT - Answer-The
Guaranty Association - variable life insurance is regulated by both the state and federal
government, as well as the Insurance Department, and the SEC.
All of the following are true regarding a decreasing term policy EXCEPT - Answer-The
payable premium amount steadily declines throughout the duration of the contract
A lucky individual won the state lottery, so the state will be sending him a check each
month for the next 25 years. What type of annuity products are they likely to use to
provide these benefits? - Answer-Immediate annuity - an annuity purchased with a
single lump sum payment, with a 25 year fixed period distribution will be most suitable
for this arrangement
Equity indexed annuities - Answer-seek higher returns
Why is the equity indexed annuity considered to be a fixed annuity? - Answer-It has a
guaranteed minimum interest rate - while equity indexed annuities earn higher interest
rates than fixed annuities, both types of annuities guarantee a specific minimum interest
rate.
Which of the following is NOT true regarding Equity Indexed Annuities? - Answer-They
earn lower interest rates than fixed annuities - equity indexed annuities invest on an
aggressive basis in order to yield higher returns. Like a fixed annuity, equity indexed
annuities have guaranteed minimum interest rates. the insurance company often keeps
a predetermined percentage of the return and pays the rest to the annuity owner. Equity
indexed annuities are less risky than variable annuities and earn higher interest rates
than fixed annuities.
LIFE POLICIES EXAM QUESTIONS WITH
COMPLETE ANSWERS
The type of policy that can be changed from one that does not accumulate cash value
to the one that does, is a - Answer-Convertible Term Policy
An annuity owner is funding an annuity that will supplement her retirement. Because
she does not know what effect inflation may have on her retirement dollars, she would
like a return that will equal the performance of the Standard and Poor's 500 index. She
would likely purchase a(n) - Answer-Equity Indexed Annuity
Which two terms are associated directly with the way an annuity is funded? - Answer-
Single Payment or periodic payments
All of the following entities regulate variable life policies EXCEPT - Answer-The
Guaranty Association - variable life insurance is regulated by both the state and federal
government, as well as the Insurance Department, and the SEC.
All of the following are true regarding a decreasing term policy EXCEPT - Answer-The
payable premium amount steadily declines throughout the duration of the contract
A lucky individual won the state lottery, so the state will be sending him a check each
month for the next 25 years. What type of annuity products are they likely to use to
provide these benefits? - Answer-Immediate annuity - an annuity purchased with a
single lump sum payment, with a 25 year fixed period distribution will be most suitable
for this arrangement
Equity indexed annuities - Answer-seek higher returns
Why is the equity indexed annuity considered to be a fixed annuity? - Answer-It has a
guaranteed minimum interest rate - while equity indexed annuities earn higher interest
rates than fixed annuities, both types of annuities guarantee a specific minimum interest
rate.
Which of the following is NOT true regarding Equity Indexed Annuities? - Answer-They
earn lower interest rates than fixed annuities - equity indexed annuities invest on an
aggressive basis in order to yield higher returns. Like a fixed annuity, equity indexed
annuities have guaranteed minimum interest rates. the insurance company often keeps
a predetermined percentage of the return and pays the rest to the annuity owner. Equity
indexed annuities are less risky than variable annuities and earn higher interest rates
than fixed annuities.
