Life Insurance Policy Types Flashcards
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Read the first 7 Life Insurance Policy Types flashcards as text
Which of the following best describes a joint life (first-to-die) insurance policy?
Answer: Covers two insureds and pays upon the first death
A joint life (first-to-die) policy covers two insureds and pays the death benefit upon the death of the first to die, leaving the survivor without coverage.
An endowment policy matures when the insured:
Answer: Reaches a specified age or dies, whichever comes first
An endowment policy pays the face amount either at the end of the endowment period or upon the insured's death, whichever occurs first.
Modified premium whole life policies are characterized by:
Answer: Lower initial premiums that increase after a specified period
Modified premium whole life features reduced premiums during the initial period (often 3–5 years) that then increase to a higher level for the remainder of the policy.
Graded premium whole life is different from modified premium whole life in that graded premium policies have:
Answer: Premiums that gradually increase over several years before leveling off
Graded premium whole life features premiums that increase gradually over multiple years (not in a single jump) before leveling off at a permanent amount.
Which life insurance policy type is most commonly used to fund buy-sell agreements between business partners?
Answer: Whole life or universal life
Permanent policies like whole life or universal life are commonly used to fund buy-sell agreements because they provide both a death benefit and cash value accumulation.
A return of premium (ROP) term policy pays the beneficiary the death benefit and also:
Answer: Returns all premiums paid if the insured outlives the term
A return of premium term policy refunds all premiums paid to the policyowner if the insured is still alive at the end of the policy term.
Family income policies combine a whole life base with which type of rider to provide income after the insured's death?
Answer: Decreasing term rider
A family income policy combines a whole life base with a decreasing term rider that provides monthly income to the family for the remainder of a specified period following the insured's death.