Types of Policies
Which description best distinguishes indexed universal life from variable universal life?
Answer and explanation
Answer: B. Indexed universal life links credited interest to an external index while providing a guaranteed minimum interest rate. The owner does not directly own the index, the policy is a cash-value life product, and index-crediting formulas need not deliver the index’s full return.Source: NAIC — Life Insurance — Universal Life Insurance > indexed universal life insurance
More types of policies questions
- An individual purchases a life insurance policy that provides coverage for exactly one year. At the end of the year, the policyowner can renew the coverage without proving insurability, but the premium will increase based on their attained age. What type of policy is this?
- An insured buys convertible term at age 30 and converts it to permanent insurance at age 40. Which age generally determines the new premium?
- An insured develops a health condition halfway through a 20-year level term policy. What happens to the fixed death benefit and premium specified for that term?
- An insured outlives a return-of-premium term policy, and no death benefit was paid. What feature may then apply according to the contract?
- An insured’s health deteriorates during a renewable term policy. At the end of the term, which feature is most valuable?
- An insured's health worsens before a renewable term policy expires. The renewal right is still available. Which outcome best reflects that feature?
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