Question 1

Life insurance is critical to protect a family's financial situation in the event that a breadwinner dies.

Accepted Answer

A) True 
 B)False  True

Question 2

The income method of determining how much life insurance coverage you need is

Accepted Answer

A)  based on future family expenses. 
B)  based on the age of your children. 
C)  based on the amount of your 401(k) retirement plan. 
D)  a good starting point. 
A)  based on future family expenses. 
B)  based on the age of your children. 
C)  based on the amount of your 401(k) retirement plan. 
D)  a good starting point. D

Question 3

Universal life insurance is similar to whole life, but allows the policyholder more choices of how the savings portion of the premiums is invested.

Accepted Answer

A) True 
 B)False  True

Question 4

Life insurance that provides insurance coverage for a specified term and also includes a savings option is called ________ insurance.

Accepted Answer

The answer of Life insurance that provides insurance coverage for...

Question 5

All of the following are limitations of the budget method of estimating life insurance needs, except

Accepted Answer

A)  it does not consider your family circumstances. 
B)  inflation may cause you to underestimate your needs. 
C)  someone in your household could experience an unanticipated illness. 
D)  your income may not rise over time as expected. 
A)  it does not consider your family circumstances. 
B)  inflation may cause you to underestimate your needs. 
C)  someone in your household could experience an unanticipated illness. 
D)  your income may not rise over time as expected.

Question 6

The services that insurance companies provide should not be a factor in selecting a life insurance company.

Accepted Answer

A) True 
 B)False

Question 7

An employer provides all employees with term life insurance equal to their annual income. Using the income method with a factor of 5, how much additional life insurance will an employee earning $75,000 per year need?

Accepted Answer

A)  $375,000 
B)  $300,000 
C)  $75,000 
D)  $50,000 
A)  $375,000 
B)  $300,000 
C)  $75,000 
D)  $50,000

Question 8

The easiest method of estimating your life insurance needs is the

Accepted Answer

A)  life cycle approach. 
B)  budget approach. 
C)  financial approach. 
D)  income approach. 
A)  life cycle approach. 
B)  budget approach. 
C)  financial approach. 
D)  income approach.

Question 9

Whole life insurance has a ________ premium and has ________ cash value build-up over the life of the policy.

Accepted Answer

A)  fixed; no 
B)  variable; a 
C)  fixed; a 
D)  variable; no 
A)  fixed; no 
B)  variable; a 
C)  fixed; a 
D)  variable; no

Question 10

Whole life insurance is also referred to as

Accepted Answer

A)  endowment life insurance. 
B)  universal life insurance. 
C)  group life insurance. 
D)  permanent insurance. 
A)  endowment life insurance. 
B)  universal life insurance. 
C)  group life insurance. 
D)  permanent insurance.

Question 11

When choosing a life insurance company, you should consider all of the following criteria, except

Accepted Answer

A)  the financial condition of the company. 
B)  the cost of the policy. 
C)  the types of policies offered. 
D)  the length of the application. 
A)  the financial condition of the company. 
B)  the cost of the policy. 
C)  the types of policies offered. 
D)  the length of the application.

Question 12

Since a key purpose of life insurance is to provide for dependents in the event of a main earner's death, it is logical that the amount of insurance purchased should be

Accepted Answer

A)  a significant amount of money. 
B)  a multiple of the insured's annual earnings. 
C)  $50,000. 
D)  as little as possible since insurance is expensive. 
A)  a significant amount of money. 
B)  a multiple of the insured's annual earnings. 
C)  $50,000. 
D)  as little as possible since insurance is expensive.

Question 13

A limited payment option on a whole life policy pays a smaller share of the policy face value to beneficiaries during the first five years of the policy.

Accepted Answer

A) True 
 B)False

Question 14

A life insurance premium is ________ related to your age.

Accepted Answer

A)  somewhat 
B)  occasionally 
C)  directly 
D)  inversely 
A)  somewhat 
B)  occasionally 
C)  directly 
D)  inversely

Question 15

Use the following two columns of items to answer the matching questions below:
-variable life insurance
A)cash value and benefits to the beneficiary
B)combination of term insurance and a savings plan
C)premiums constant with reduced benefits
D)term insurance with a variable investment portion

Accepted Answer

The answer of Use the following two columns of items...

Question 16

If you buy a term insurance policy with a conversion option, this means that you

Accepted Answer

A)  will get most of your premiums back if you terminate the policy before its expiration. 
B)  can convert the policy to a larger term policy after one year. 
C)  can convert your term policy to a whole life policy during the conversion period. 
D)  will be able to change the term of your policy and automatically extend it. 
A)  will get most of your premiums back if you terminate the policy before its expiration. 
B)  can convert the policy to a larger term policy after one year. 
C)  can convert your term policy to a whole life policy during the conversion period. 
D)  will be able to change the term of your policy and automatically extend it.

Question 17

Using the income method, if Jenny has an annual income of $50,000, debt of $20,000, and a factor of 10, then she should purchase ________ of life insurance.

Accepted Answer

A)  $100,000 
B)  $200,000 
C)  $300,000 
D)  $500,000 
A)  $100,000 
B)  $200,000 
C)  $300,000 
D)  $500,000

Question 18

Which of the following types of insurance is intended to provide a limited choice of investments and an insurance component in the event of death?

Accepted Answer

A)  Whole life 
B)  Universal life 
C)  Term insurance 
D)  Mortgage life 
A)  Whole life 
B)  Universal life 
C)  Term insurance 
D)  Mortgage life

Question 19

The problem with the cash value build-up of a whole life insurance policy is that the money can only be used to pay off the policy or buy additional insurance.

Accepted Answer

A) True 
 B)False

Question 20

A universal life policy gives policyholders the right to select their ________ which is a right that whole life policyholders do not have.

Accepted Answer

A)  term 
B)  investments 
C)  savings 
D)  amount 
A)  term 
B)  investments 
C)  savings 
D)  amount

Exam 13: Life Insurance

Life insurance is critical to protect a family's financial situation in the event that a breadwinner dies.

The income method of determining how much life insurance coverage you need is

Universal life insurance is similar to whole life, but allows the policyholder more choices of how the savings portion of the premiums is invested.

Life insurance that provides insurance coverage for a specified term and also includes a savings option is called ________ insurance.

All of the following are limitations of the budget method of estimating life insurance needs, except

The services that insurance companies provide should not be a factor in selecting a life insurance company.

An employer provides all employees with term life insurance equal to their annual income. Using the income method with a factor of 5, how much additional life insurance will an employee earning $75,000 per year need?

The easiest method of estimating your life insurance needs is the

Whole life insurance has a ________ premium and has ________ cash value build-up over the life of the policy.

Whole life insurance is also referred to as

When choosing a life insurance company, you should consider all of the following criteria, except

Since a key purpose of life insurance is to provide for dependents in the event of a main earner's death, it is logical that the amount of insurance purchased should be

A limited payment option on a whole life policy pays a smaller share of the policy face value to beneficiaries during the first five years of the policy.

A life insurance premium is ________ related to your age.

Use the following two columns of items to answer the matching questions below: -variable life insurance A)cash value and benefits to the beneficiary B)combination of term insurance and a savings plan C)premiums constant with reduced benefits D)term insurance with a variable investment portion

If you buy a term insurance policy with a conversion option, this means that you

Using the income method, if Jenny has an annual income of $50,000, debt of $20,000, and a factor of 10, then she should purchase ________ of life insurance.

Which of the following types of insurance is intended to provide a limited choice of investments and an insurance component in the event of death?

The problem with the cash value build-up of a whole life insurance policy is that the money can only be used to pay off the policy or buy additional insurance.

A universal life policy gives policyholders the right to select their ________ which is a right that whole life policyholders do not have.

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

Whole life insurance has a premium and has cash value build-up over the life of the policy.