Life & Health Insurance Actual Exam Colorado Questions and
Correct Answers GRADED A+
Type of Combination Plans & Life Insurance Policy Variations
-Covers 2+ on same policy
Traditional Whole Life
-Ordinary (Straight) Life
-Limited-Pay & Single-Premium Whole Life
-Adjustable Whole Life
Ordinary (Straight) Life
-Until 100 or Death, whichever comes first
-Permanent Protection
-Rates & benefits based on law of large numbers (Mortality Rate)
-Guaranteed, tax-deferred interest rate
-Premium level, company's risk goes down as cash value goes up
-Insurer keeps the cash value if death to offset risk
-Lowest net cost in long run
-Client has access to cash through cash surrender or policy loan
-Rates are per unit of protection (1,000 is 1 unit)---TEST
-Cash value is guaranteed
-Cash value will equal face amount at policy maturity
Limited-Pay & Single-Premium Whole Life
-Premium paying period is shorter
-Cash value still equals face amount at age 100
-20 pay life will be paid up in 20 years PL
-Life Paid up at age 65, will be paid up at 65 LP
-A single premium policy will have an immediate cash value (1-pay life)---TEST
Adjustable Whole Life----TEST
-Sold to clients with fluctuating incomes----TEST
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,-Combination of term and whole life----TEST
-Coverage may not be increased without physical exam---TEST
Interest/Market Sensitive Whole Life Products
-Universal Whole life
-Variable Whole life
-Variable/Universal Whole life
-Equity-Indexed Life
Universal Whole life
-Guaranteed minimum interest rates
-Extreme flexibility regarding premium PMTs----TEST
-Most flexible product
-Target premium based on projected earnings
-Option A UL has level death benefits
-Option B UL will pay beneficiary both face amount + cash value
Variable Whole life
-Cash value deposited into a separate account
-Requires FINRA series 6 or 7 to sell
-Used to be called NASD
-Regulated by SEC
-Regulated by FINRA (Financial Industry Regulatory Authority)
-NYSE license not required
-Minimum death benefit (face amount) is guaranteed---TEST
-Has fixed premium---TEST
Variable/Universal Whole life
-Requires Finra(series 6 or 7) licenses to sell
-Allows client to self-direct cash values into sub-account---TEST
-Flexible premium
Equity-Indexed Life
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, -cash value, where minimum death benefit is guaranteed as well as the minimum earning on the cash
value in the general account
-Securities license is not required
-Fixed Premium
Term Life
-Level Term
-Decreasing Term
-Increasing Term
General Features of Term Insurance
-Premium goes up every year
-May be converted to whole life at current attained age regardless of health
-May be renewable up to certain age without physical
Level Term
Both premium and face amount are level for period of time
Decreasing Term
-Face amount goes down but premium remains the same
-Usually convertible to whole life regardless of health
-Premium stays the same but cost increases as face amount decreases
Increasing Term
-Face amount goes up instead of down
-Allows beneficiary to receive the face amount + premiums or cash values
-Also known as Universal Life option B
Special features of Term Insurance
-Renewable/Convertible to whole up to certain date or age regardless of health
-Conversion based on current age
-May only convert to more expensive option
-Cannot convert to term
-Cannot convert to more coverage than you have
Return of Premium under Term
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Correct Answers GRADED A+
Type of Combination Plans & Life Insurance Policy Variations
-Covers 2+ on same policy
Traditional Whole Life
-Ordinary (Straight) Life
-Limited-Pay & Single-Premium Whole Life
-Adjustable Whole Life
Ordinary (Straight) Life
-Until 100 or Death, whichever comes first
-Permanent Protection
-Rates & benefits based on law of large numbers (Mortality Rate)
-Guaranteed, tax-deferred interest rate
-Premium level, company's risk goes down as cash value goes up
-Insurer keeps the cash value if death to offset risk
-Lowest net cost in long run
-Client has access to cash through cash surrender or policy loan
-Rates are per unit of protection (1,000 is 1 unit)---TEST
-Cash value is guaranteed
-Cash value will equal face amount at policy maturity
Limited-Pay & Single-Premium Whole Life
-Premium paying period is shorter
-Cash value still equals face amount at age 100
-20 pay life will be paid up in 20 years PL
-Life Paid up at age 65, will be paid up at 65 LP
-A single premium policy will have an immediate cash value (1-pay life)---TEST
Adjustable Whole Life----TEST
-Sold to clients with fluctuating incomes----TEST
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,-Combination of term and whole life----TEST
-Coverage may not be increased without physical exam---TEST
Interest/Market Sensitive Whole Life Products
-Universal Whole life
-Variable Whole life
-Variable/Universal Whole life
-Equity-Indexed Life
Universal Whole life
-Guaranteed minimum interest rates
-Extreme flexibility regarding premium PMTs----TEST
-Most flexible product
-Target premium based on projected earnings
-Option A UL has level death benefits
-Option B UL will pay beneficiary both face amount + cash value
Variable Whole life
-Cash value deposited into a separate account
-Requires FINRA series 6 or 7 to sell
-Used to be called NASD
-Regulated by SEC
-Regulated by FINRA (Financial Industry Regulatory Authority)
-NYSE license not required
-Minimum death benefit (face amount) is guaranteed---TEST
-Has fixed premium---TEST
Variable/Universal Whole life
-Requires Finra(series 6 or 7) licenses to sell
-Allows client to self-direct cash values into sub-account---TEST
-Flexible premium
Equity-Indexed Life
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, -cash value, where minimum death benefit is guaranteed as well as the minimum earning on the cash
value in the general account
-Securities license is not required
-Fixed Premium
Term Life
-Level Term
-Decreasing Term
-Increasing Term
General Features of Term Insurance
-Premium goes up every year
-May be converted to whole life at current attained age regardless of health
-May be renewable up to certain age without physical
Level Term
Both premium and face amount are level for period of time
Decreasing Term
-Face amount goes down but premium remains the same
-Usually convertible to whole life regardless of health
-Premium stays the same but cost increases as face amount decreases
Increasing Term
-Face amount goes up instead of down
-Allows beneficiary to receive the face amount + premiums or cash values
-Also known as Universal Life option B
Special features of Term Insurance
-Renewable/Convertible to whole up to certain date or age regardless of health
-Conversion based on current age
-May only convert to more expensive option
-Cannot convert to term
-Cannot convert to more coverage than you have
Return of Premium under Term
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