Life Insurance Policies
A producer illustrates a fixed indexed life policy using the best index period of the last twenty years. What is the objection?
Answer and explanation
Answer: C. Selecting the most favourable historical period creates a misleading impression of future crediting, since caps, participation rates and spreads may change and the index may not repeat. The objection is to the misrepresentation rather than to the length of the period or to other disclosures.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, indexed life disclosure
More life insurance policies questions
- A twenty year level premium term policy reaches its twentieth anniversary and the insured wants to keep the cover. What usually happens to the premium?
- A universal life owner wants to vary the timing and amount of premium payments. Which condition remains essential?
- 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?
- An annual renewable term policy keeps the same death benefit for each one-year term. What normally happens to its premium from year to year?
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