What accurately portrays an adjustable life insurance policy?
Asked by: Josiah Rau | Last update: February 11, 2022Score: 4.2/5 (32 votes)
Which statement concerning adjustable life insurance is accurate? The face amount and premiums can be changed simultaneously by the policyowner- Adjustable life insurance combines features of both term and whole life coverage.
What is an adjustable life policy?
Adjustable life insurance is a form of permanent life insurance. Unlike a term policy, adjustable life insurance remains in effect for the rest of your life, as long as premiums are paid. However, policyholders are typically able to adjust their premium payments, cash value amount and even their death benefit.
What type of life insurance is adjustable life?
Adjustable life insurance is a hybrid of term life and whole life insurance that allows policyholders the option to adjust policy features, including the period of protection, face amount, premiums, and length of the premium payment period.
Which is an accurate description of the premium in a graded premium?
Which is an accurate description of the premium in a graded premium life insurance policy? Annual increase in premium for a stated number of year then level off for the remainder of the contract. Face amount decrease over the policy period.
What does an adjustable life policy allows the policy owner to do?
Adjustable life insurance policies allow policyowner's to raise or lower the premium and face amount, and change the coverage period and premium-paying period. ... The cash value of a universal life policy is tied to current interest rates and can vary, but it has a guaranteed minimum rate.
The Worst type of Life Insurance! Flexible Premium Adjustable Life Insurance | Universal Life
Can you cash out an adjustable life insurance policy?
You can also use the adjustable life insurance policy's cash value to pay a part or the entirety of premiums, making your payments flexible over time. ... An adjustable life insurance policy's cash value can be used as: Surrender value: You can cancel a life insurance policy and give it back to the insurer.
How often can adjustments be made to adjustable life insurance?
The insurer also correspondingly adjusts the premium payment plan upwards. In other policies, the insured has the option to periodically (e.g., every three years) increase the face amount by the change in the CPI since the last adjustment period.
What describes a level term policy?
What is level term life insurance? Level term life insurance is a type of term life insurance, which covers you for a specific period of time, typically 10 to 30 years. ... “Level term” simply means that your premiums, or payments, and death benefit stay the same throughout the entire policy.
What test defines an MEC?
The seven-pay test helps the IRS determine whether your life insurance policy will be converted into an MEC. It compares the total premiums you paid in the first seven years of the policy with what you'd need to pay it in full. If your payments exceed what's needed, your policy becomes recognized as an MEC.
What is the face amount of a 50000 graded death benefit life insurance policy?
At what point are death proceeds paid in a joint life insurance policy? Which statement regarding universal life insurance is correct? What is the face amount of $50,000 graded death benefit life insurance policy when the policy is issued? Under $50,000 initially, but increases over time.
What kind of special needs would a policyowner require with an adjustable life insurance policy?
What kind of special need would a policyowner require with an Adjustable Life insurance policy? As financial needs and objectives change, the policyowner can make adjustments to the premium and/or face amount. does not guarantee a return on investment accounts.
How does adjustable CompLife work?
Adjustable Complife is a combination of participating, permanent, whole-life insurance and term insurance. The whole-life portion pays annual dividends, which are used to purchase additional permanent insurance to replace the term insurance.
Which of these can be altered by the policyowner in an adjustable life insurance policy?
One of the changes a policyowner can make in an adjustable life insurance policy is the amount of premium paid. ... Adjustable life allows the policy owner to adjust the policy's face amount, premium, and type/length of coverage without having to complete a new application.
What is a group life insurance policy?
Group life insurance is a specific type of life insurance typically offered by a large organization to its members. Large companies often offer this coverage to their employees as part of its benefits package.
What is a disadvantage to a credit life insurance policy?
Credit life insurance also lacks flexibility for the death payout. A payout goes directly to the lender. Since your family doesn't receive the money, they don't have the option to use the funds for other purposes that might be more urgent.
How does a flexible premium adjustable life policy work?
As the name implies, flexible premium, or adjustable life insurance allows the customer to choose higher or lower premiums at numerous points throughout the policy's life. These plans also come with a flexible cash value component. You can opt for higher premiums and use them to increase the policy's cash value.
What makes a policy a MEC?
A modified endowment contract (MEC) is the term given to a life insurance policy whose funding has exceeded federal tax law limits. The policy must fail to meet the Technical and Miscellaneous Revenue Act of 1988 (TAMRA) seven-pay test.
What happens when a policy becomes a MEC?
When a permanent life insurance policy becomes an MEC, you can no longer make tax-free withdrawals from the cash value. Before age 59 ½ you'll pay taxes and a 10% fee to access your money. After age 59 ½ you'll still pay taxes, but with no additional penalty.
Which statement concerning an adjustable life insurance policy is false?
Which statement concerning an adjustable life insurance policy is FALSE? Initial premium is lower than for an equivalent amount of term insurance -Correct. The initial cost of whole life insurance is actually HIGHER than an equivalent amount of term insurance.
What is the underlying concept of level premiums?
What is the underlying concept regarding level premiums? The early years are charged more than what is needed. A level premium indicates. the premium is fixed for the entire duration of the contract.
What is the underlying concept regarding level premiums?
What is the underlying concept regarding level premiums? The early years are charges more than what is needed. You just studied 32 terms!
Which of the following is characteristic of level term insurance?
All of the following are characteristics of term insurance, EXCEPT: Term policies do not accrue cash value. They only provide death protection. Premiums increase as the policy is renewed, and the death benefit is only paid out if the insured dies during the policy term.
Which type of life insurance policy generates immediate cash value?
The only life insurance policies that have an immediate cash value are single premium paid up policies.
Which of the following is not a group typically recognized as eligible for group insurance?
Which of the following is NOT an eligible group to obtain group life insurance? Group life insurance is limited to employer groups, multiple employer trusts, labor unions, group credit life insurance, and association plans.
What is considered a limited pay life policy?
Limited pay life insurance is a type of whole life insurance that allows you to prepay for the entire cost of your coverage for a set number of years. ... You may pay for your premiums monthly, quarterly, semi-annually, or annually if you select to do so in a restricted time period—typically 10, 15, or 20 years.