TEXAS LIFE AND HEALTH: TYPES OF LIFE POLICIES EXAM

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TEXAS LIFE AND HEALTH: TYPES OF LIFE POLICIES EXAM

QUESTIONS

Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -37 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: Which of the following is NOT true regarding the annuitant?

Answer:

the annuitant cannot be the same person as the annuity owner

Question 2: Which statement is NOT true regarding a Straight Life Policy?

Answer:

Its premium steadily decreases over time, in response to its growing cash value. - Straightlife policies charge a level annual premium throughout the insured's lifetime and provide a level, guaranteed death benefit.Question 3: Which of the following determines the cash value of a variable life policy?

Answer:

The performance of the policy portfolio Question 4: 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

Question 5: Level term insurance provides a level death benefit and a level premium during the policy term. If that policy renews at the ned of a specified period of time, the policy premium will be

Answer:

Adjusted to te insured's age at the time of renewal

Question 6: 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.Question 7: When an annuity is written, whose life expectancy is taken into account?

Answer:

Annuitant - the annuitant recveives payments from an annuity and is the person whose life expectancy is considered when writing the contract. The annuitant and annuity owner are often the same person but dont have to be Question 8: An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?

Answer:

Limited-Pay Life - the premiums for coverage will be completely paid-up well before age 100, usually after a specified number of years.Question 9: The type of policy that can be changed from one that does not accumulate cash calue to the one that does, is a

Answer:

Convertible Term Policy

Question 10: An agent selling variable annuities must be registered with

Answer:

FINRA - because variable annuities are aconsidered to be securities, a person must be registered with the FINRA (formerly NASD) and hold a securities license in addition to a life agensts license in order to sell variable annuities.

Question 11: The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?

Answer:

The annuitant must be a natural person - owners of annuities can be individuals or entities like corporations and trusts, but the annuitant must be a natural person, whose life expectancy is taken into consideration for the annuity Question 12: A man purchased a $90,000 annuity with a single premium, and began receiving payments 2 months after that. What type of annuity is it?

Answer:

Immediate

Question 13: Fixed annuities provide all the following EXCEPT

Answer:

hedge against inflation - Question 14: An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?

Answer:

Decreasing term - face amount decreases as the amount of debt is reduced

Question 15: Which of the following best describes what the annuity period is?

Answer:

The period of time during which accumulated money is converted into income payments Question 16: Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Answer:

Limited pay whole life - premium payments will cease at her age 65, but coverage will continue to her death or age 100

Question 17: Which of the following products requires a securities license?

Answer:

Variable Annuity - is considered to be a security and is regulated by the Securities Exchange Commission (SEC) in addition to state insurance regulations. For that reason, a person must hold a securities license in addition to a life agents license in order to sell variable annuities

Question 18: All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT

Answer:

Upon conversion, the death benefit of the permanent policy will be reduced by 50%

Question 19: Who bears all of the investment risk in a fixed annuity?

Answer:

The insurance company - fixed annuities guarantee a minimum of interest to be credited to the purchase payment. Income payments do not vary from one payment to the next. The insurance company can afford to make guarantees because the omney of a fixed annuity is placed in the general account of the insurance company, which is part of its investment portfolio. the company makes conservative enough investments to insure a guaranteed rate to the annuity owners Question 20: Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business.What type of insurance would be the most affordable and still provide a death benefit should one of them die?

Answer:

Joint Life Question 21: 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 Question 22: If an annuitant dies before annuitization occurs, what will the beneficiary receive?

Answer:

Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount.Question 23: All of the following statements about equity index annuities are correct EXCEPT

Answer:

The annuitant receives a fixed amount of return