Types of Policies
A 20-year term policy permits conversion only during its first 12 years. Which statement correctly describes the feature?
Answer and explanation
Answer: C. A convertible term policy may set a conversion window that is shorter than the full term. During that window, conversion to permanent life insurance can occur without proving good health; it is not an annuity conversion and does not remain open indefinitely.Source: New York State Department of Financial Services — Consumer Life Insurance FAQ — What is convertible term life insurance?
More types of policies questions
- A term insured dies during the coverage period, and the insurer pays the death benefit. Under the usual return of premium condition, what result follows at the end of that term?
- A term policyowner exercises a renewal provision after the original term ends. What premium change should the owner generally expect?
- A universal life policy’s cash value is no longer sufficient to cover current insurance costs, and the owner makes no additional payment. What is the principal policy risk?
- A variable universal life owner pays only minimal premiums while the selected separate-account options lose value. Monthly cost-of-insurance and expense deductions continue. What is the main near-term risk if the owner makes no change?
- A variable universal life policy keeps the same stated premium plan and mortality charge schedule, but the owner's selected stock subaccount falls sharply. Which policy element is directly changed first by that investment performance and can later affect whether charges can be paid?
- A variable whole life owner reallocates policy value among available stock and bond choices. Which account description should the producer use?
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