Exam 8: Insuring Your Life

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -Alice is 40 years old and earns $35,000 annually.The multiple earnings approach to determine the amount of life insurance needed shows that she should have 6.5 times her earnings.How much insurance should Alice have? (Show all work. )

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -The [policy owner | insurance company] makes the investment decisions with variable life insurance.

Mike purchased a whole life policy with a face value of $1,000,000 and dies several years later.At the time of his death,Mike has: paid a total of $12,000 in premiums;accumulated $25,000 in cash value;received a total of $5,000 in policy dividends;and has a $10,000 policy loan outstanding.If Mike's beneficiaries elect to receive a lump-sum distribution of death benefits,how much will it be?

Whole life insurance is designed to provide

In determining available resources to offset economic needs,you would generally not consider

Life insurance designed to pay the balance on a mortgage is an example of a good use decreasing term policy.

Cash value is an important component of whole life,universal life,and variable life but is never a component of term insurance.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -Deciding which people will be insured by an insurance company is a function of the [agent | underwriter].

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -Group insurance is most likely to be [term | whole life].

The probability of a loss occurring can be reduced by

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -Annual premiums would be lower with [continuous | limited payment] whole life insurance.

All types of life insurance offer a cash surrender value.

Henry must make set premium payments on his insurance policy until he dies,and if he cancels the policy he will receive the cash value.His plan is a ____ life policy.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -The cash value would build more quickly with a [continuous | limited payment] whole life policy.

INSTRUCTIONS: Choose the word or phrase in [ ] which will correctly complete the statement.Select A for the first item,B for the second item,and C if neither item will correctly complete the statement. -An insured can borrow from the [cash | face] value of her life insurance policy.

Life insurance needs change dramatically over one's lifetime.

Unbundling in universal life insurance means that the cost of the insurance and savings elements are identified separately for the policy owner to see.

The three major categories of life insurance are term,straight life,and limited payment.

If the objective of your life insurance program is to get the greatest death protection now for your insurance dollars,you should choose ____ insurance.

Term insurance is generally the most economical form of life insurance for young families.