Nevada Life & Health Insurance Exam. 248 Questions and
Correct Answers, With Complete Solution, Updated 2024,
100% Pass.
term insurance
temporary protection because it only provides coverage for a specific period of time
face amount
death benefit
3 basic types of term coverage
level, increasing, decreasing
- based on how the face amount changes during the policy term
What is the premium in term insurance?
regardless of type of term insurance purchased, premium is level throughout the term of policy
level term insurance
death benefit does not change throughout the life of the policy
annually renewable term
premium increases annually according to the attained age, guaranteed to be renewable each year
decreasing term
level premium and death benefit that decreases each year over duration of the policy term
increasing term
level premium and death benefit that increases each year over the duration of the policy term
return of premium life insurance
an increasing term policy that pays an additional death beneficiary equal to the amount of the premiums
paid
- return of premium is paid if the death occurs within a specified period of time or if the insured outlives
the policy term
renewable provision
allows the policyowner the right to renew coverage at the expiration date without evidence of
insurability
,convertible provision
provides the policyowner the right to convert the policy to a permanent insurance policy without
evidence of insurability
permanent life insurance
general term used to refer to various forms of life insurance policies that build cash value and remain in
effect for the entire life of the insured (or until age 100) as long as premium is paid
nonforteiture value
aka cash value, does not usually accumulate until the third policy year and it grows tax deferred
key characteristics of whole life insurance
- level premium
- death benefit
- cash value
- living benefits
3 basic forms of whole life insurance
1. straight (ordinary) whole life
2. limited-pay whole life
3. single premium whole life
straight life
basic whole life policy; policy owner pays the premium from the lime the policy is issued until insured's
death or age 100
- has lowest annual premium
limited-pay whole life
designed so that premiums for coverage will be completely paid-up well before age 100
- cash value builds up faster
single premium whole life
designed to provide a level death benefit to the insured's age 100 for a one-time, lump-sum payment
- generate immediate cash value
adjustable life
can assume the form of either term insurance or permanent insurance; insured typically determines how
much coverage is needed and the affordable amount of premium
adjustable life cash value
, only develops when the premiums paid are more than the cost of the policy
universal life (flexible premium adjustable life)
policyowner has the flexibility to increase/decrease amount of premium paid into policy; policyowner
may skip paying a premium and policy will not lapse as long as there is sufficient cash value at the time
to cover monthly deductions for cost of insurance
universal life premium types
1. minimum premium: amount needed to keep policy in force for year
2. target premium: recommended amount to keep policy in force for lifetime
2 death benefit options for universal life
1. Option A
2. Option B
Option A (Level Death Benefit option)
death benefit remains level while cash value gradually increases, lowing the "pure insurance" with
insurer in later years
- death benefit increases near the end in order to maintain gap between cash value and death benefit in
life insurance policy
Option B (Increasing Death Benefit option)
death benefit includes annual increase in cash value so that death benefit gradually increases each year
by amount that cash value increases
- pure insurance remains level for life
variable whole life
level, fixed premium, investment-based product; cash value of policy is not guaranteed and fluctuates
with performance of the portfolio in which premiums have been invested by insurer
variable universal life
combination of universal life and variable life; provides policy owner with flexible premiums and
adjustable death benefit, policyowner decides where cash value will be invested (not guaranteed)
interest-sensitive whole life
whole life policy that provides a guaranteed death benefit to age 100 and for a minimum guaranteed
rate of interest
indexed whole life
cash value is dependent upon the performance of the equity index although there is a guaranteed
minimum interest rate
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