Types of Policies
A client asks why return-of-premium term costs more than ordinary level term for the same face amount and period. What is the correct explanation?
Answer and explanation
Answer: D. Return-of-premium term promises to refund the premiums paid if the insured survives the term. That living benefit must be funded in addition to the mortality cost, which is why its premium exceeds plain level term.Source: NAIC Life Insurance Buyer's Guide — Term insurance: return of premium feature and its cost
More types of policies questions
- A one-year renewable term policy states that renewal rights end at age 70. The insured renews at age 69 and reaches 70 during that term. What should the producer explain?
- A parent needs a large fixed death benefit for the next 20 years and places no value on building cash value. Which product most directly fits?
- A policyowner surrenders a 20-year return-of-premium term policy in year 5 and expects the full end-of-term refund. What is the best response?
- A policyowner’s income varies and the owner wants to adjust premium timing within policy limits while keeping permanent coverage. Which product feature most directly addresses that need?
- A prospect wants permanent insurance with adjustable policy elements and cash value allocated to insurer-managed separate-account investments. Which product is the best fit?
- A prospect wants permanent life insurance, wants to choose among stock and bond investment options, and accepts possible cash-value loss. Which product best fits?
590 Texas questions like this one.
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