Free Types of Life Insurance Policies Study Guide
Colorado Life, Accident & Health exam — Types of Life Insurance Policies.
The national guide explains the policy types: term (level, decreasing, renewable, convertible), whole life, universal, variable and indexed products, endowments, joint and survivorship life, and modified endowment contracts. This page adds two Colorado items: the license needed to sell variable products, and the required provisions for group life insurance in C.R.S. 10-7-201 and 10-7-202.
The national concepts in brief
- Term insurance covers a stated period and usually builds no cash value. Decreasing term fits an amortizing debt like a mortgage.
- Whole life has level premiums and a guaranteed, growing cash value.
- Universal life lets the owner adjust premiums and the death benefit. Variable life puts the cash value in separate accounts, so the owner bears the investment risk.
- First-to-die joint life pays at the first death. Survivorship (second-to-die) life pays at the second death and is often used for estate liquidity.
- Funding a policy beyond the federal 7-pay limit makes it a modified endowment contract, which changes how distributions are taxed.
Variable products in Colorado
- Selling variable life or variable annuities requires the Variable Life and Variable Annuity Products line of authority. That line requires an active Life license, and the applicant must be registered with FINRA, verified through the CRD number (C.R.S. 10-2-407(1)(c)).
Colorado group life provisions (C.R.S. 10-7-202)
| Provision | Colorado rule |
|---|---|
| Eligible groups | The group must exist for purposes other than buying insurance, or be a trust set up by employers or unions (10-7-201(1)(a)) |
| Dependents | Group life may be extended to insure dependents (10-7-201(2)) |
| Grace period | 31 days for every premium after the first (202(1)(a)) |
| Incontestability | An insured's statement can't be used after coverage has been in force two years during that person's lifetime. Any statement used must be in a written instrument the person signed (202(1)(b)) |
| Facility of payment | At its option, the insurer may pay up to $5,000 to someone equitably entitled because of funeral or last-illness expenses (202(1)(f)) |
| Conversion | Apply and pay the first premium within 31 days after coverage ends. The new policy may be any form except term, in an amount up to the coverage lost, at the insurer's customary rate for the person's attained age (202(1)(h)) |
| Conversion when the plan ends | For people insured at least five years, the group policy may cap the converted amount at $2,000 less any other group coverage obtained within 31 days (202(1)(i)) |
| Death during conversion period | The convertible amount is paid as a group claim, whether or not the person applied (202(1)(j)) |
- Group life policies and their proceeds are exempt from attachment and garnishment for the debts of the employee or beneficiary (10-7-205).
Exam traps
- The group conversion window is 31 days, and the converted policy can't be term.
- If the insured dies during the 31-day conversion period, the convertible amount is paid even if no conversion application was made.
- Variable sales require Life + Variable authority + FINRA registration.
Practice Types of Life Insurance Policies questions All Life, Accident & Health topics
Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.
