AD Banker Comprehensive Practice Exam

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Enhance your exam readiness with the AD Banker Comprehensive Exam guide. Includes flashcards and multiple-choice questions with explanations.

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Which statement about the estate builder policy is NOT correct when it is gifted to the child at age 21?

Donald has enjoyed protection against the problems of premature death
The premium will continue to be based on his original age of 5
The face value of Donald's policy has increased by 5 times
Donald must change the beneficiaries immediately

The correct answer is: Donald must change the beneficiaries immediately

The statement regarding the estate builder policy that is not correct when it is gifted to the child at age 21 is that Donald must change the beneficiaries immediately. Upon reaching age 21, Donald, having received the policy as a gift, has the right to adjust the policy details, including the beneficiaries. However, there is no regulatory requirement or urgency that mandates he must change the beneficiaries immediately. He can choose to maintain the existing beneficiaries or make changes at his discretion. On the other hand, the other statements accurately reflect the characteristics of estate builder policies. For instance, the policy provides protection against premature death, which is one of its primary purposes. The premiums being based on the original age of 5 ensures that Donald benefits from the lower cost of insurance at that young age, even as he grows older. Additionally, estate builder policies typically allow the face value to increase significantly over time, often by five times or more, as they accumulate cash value and provide a higher death benefit as the insured ages.