Types of Policies
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?
Answer and explanation
Answer: A. Universal life remains active only while available value and payments are sufficient to cover policy costs, so inadequate value can cause lapse. None of the other choices is an automatic consequence of insufficient cash value.Source: NAIC — Life Insurance — Universal Life Insurance
More types of policies questions
- To what external benchmark is the interest crediting rate of an equity-indexed life insurance policy tied?
- Two business owners need one life policy to provide funds when the first of them dies. Which policy trigger is required?
- Two business partners purchase a joint life policy to fund a buy-sell agreement. Partner A dies. What happens to the policy after the death benefit is paid?
- Under a fixed indexed annuity’s basic index-crediting structure, what interest is added for an index term with a negative result?
- Under IRC § 7702 corridor rules, what must an insurer do if cash value growth in a universal life policy threatens to breach the statutory life insurance definition ratio?
- What benchmark rate is used in variable annuity payout calculations to determine whether monthly annuity payment amounts increase or decrease?
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