Types of Policies
What does consumer guidance say about how cash values build in different policies?
Answer and explanation
Answer: B. The NAIC Life Insurance Buyer's Guide notes that in some cash value policies the values are low in the early years and build later, while in other policies the values build up gradually, and that most term policies have no cash value at all. It also advises asking for an illustration showing future values.Source: NAIC — Life Insurance Buyer's Guide — Buyer's Guide page 6, Cash value build-up
More types of policies questions
- A buyer wants to fund a deferred annuity with one lump-sum purchase payment and make no later premiums. Which funding form fits?
- 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?
- A client rejects separate-account market risk and also does not want required premiums later recalculated under a current-assumption design. The client wants whole life with required fixed premiums, but with extra credited interest, when available, improving values or helping future premiums. Which design best fits?
- A client wants flexible premiums and an adjustable death benefit, but also wants to place policy value in equity and bond portfolios and accepts that those values can rise or fall with market performance. Which explanation best distinguishes the product from non-variable universal life?
- A client wants permanent life insurance but wants all required premiums completed within 20 years. Which policy best matches that goal?
- A consumer compares traditional whole life with a current-assumption whole life contract. The insurer says premiums may later be reevaluated based on current mortality, expense, and investment experience, while minimum cash value and a nonfluctuating death benefit remain guaranteed. Which conclusion is best?
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