Types of Policies
What external measure is commonly used to determine interest credits in indexed universal life?
Answer and explanation
Answer: C. Indexed universal life links credited interest to an external investment index, such as the S&P 500 or a bond index. Beneficiary characteristics, payment frequency, and claim count are not the stated external crediting measure.Source: NAIC — Life Insurance — Universal Life Insurance > indexed universal life insurance
More types of policies questions
- A return-of-premium term policy reaches the end of its stated term and the insured is alive. What does the policy pay and what happens to coverage?
- A term insured becomes uninsurable but wants permanent cash-value coverage during the policy’s conversion period. Which feature can meet that objective?
- 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?
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