#1
Which of the following is a characteristic of term life insurance?
Builds cash value over time
Provides coverage for a specific period of time
Guarantees a death benefit payout regardless of age
Offers investment options
#2
What is the primary purpose of an annuity?
To provide a lump sum payment upon death
To offer guaranteed lifetime income
To provide health insurance coverage
To pay off mortgage debts
#3
What is the purpose of a rider in an insurance policy?
To decrease the policy's premiums
To extend coverage beyond the standard policy terms
To transfer ownership of the policy
To decrease the policy's face value
#4
What is the purpose of a death benefit in a life insurance policy?
To provide a lump sum payment upon policy surrender
To accumulate cash value over time
To offer tax-free income during retirement
To provide financial protection to beneficiaries upon the insured's death
#5
What is the purpose of the free look provision in an insurance policy?
To allow policyholders to review the policy and return it for a full refund if unsatisfied
To provide coverage for pre-existing medical conditions
To allow policyholders to change beneficiaries at any time
To offer additional coverage options at no extra cost
#6
What is the primary purpose of a beneficiary designation in a life insurance policy?
To determine the policy's cash value
To specify how the death benefit should be distributed
To increase the policy's premium
To transfer ownership of the policy
#7
Which type of life insurance policy typically has a cash value component?
Term life insurance
Whole life insurance
Variable life insurance
Universal life insurance
#8
What does the 'annuitization' of an annuity involve?
Converting the account balance into a series of periodic payments
Transferring ownership to a new beneficiary
Cancelling the annuity contract
Increasing the death benefit
#9
What is the death benefit payout based on in a universal life insurance policy?
Fixed amount determined at the policy's inception
Current market value of the policy's investments
Premiums paid into the policy
The insured's age at the time of death
#10
What distinguishes a deferred annuity from an immediate annuity?
Deferred annuities begin payments immediately upon purchase
Immediate annuities start payments at a future date
Deferred annuities offer higher payout rates
Immediate annuities have a longer accumulation phase
#11
What is a surrender charge in the context of life insurance or annuities?
A fee for canceling the policy or withdrawing funds early
An additional premium for high-risk individuals
A bonus paid to policyholders upon reaching a certain age
An investment fee charged by the insurance company
#12
Which of the following is true regarding the taxation of life insurance death benefits?
Death benefits are always taxable to the beneficiary
Death benefits are tax-free to the beneficiary in most cases
Death benefits are taxed at a flat rate of 10%
Death benefits are tax-deductible for the insured
#13
Which of the following is a characteristic of a fixed annuity?
Provides a variable rate of return based on market performance
Offers a guaranteed minimum interest rate
Does not have any fees or charges
Has no limitations on withdrawal amounts
#14
Which feature of a variable annuity provides the potential for higher returns?
Guaranteed minimum death benefit
Fixed interest rate
Investment subaccounts
Fixed withdrawal period
#15
Which type of annuity offers the potential for higher returns but also comes with greater risk?
Fixed annuity
Immediate annuity
Deferred annuity
Variable annuity
#16
What is the primary purpose of a living benefits rider in a life insurance policy?
To increase the death benefit
To provide additional coverage for specific medical conditions
To accelerate the death benefit payout in the event of terminal illness
To extend the policy term beyond the standard duration
#17
Which of the following is a characteristic of a single premium immediate annuity (SPIA)?
Offers periodic premium payments over the policy term
Allows policyholders to withdraw funds at any time without penalty
Requires a lump sum payment with immediate income payments starting thereafter
Provides guaranteed minimum interest rates
#18
What is the purpose of a guaranteed minimum death benefit in a variable universal life insurance policy?
To ensure the policyholder receives a minimum return on investment
To protect the policy's cash value from market fluctuations
To provide a minimum payout to beneficiaries regardless of market performance
To guarantee a fixed premium rate throughout the policy term