Question 1

Which of the following will not affect the premiums on a term life insurance policy?

Accepted Answer

A)  Age of the policyholder 
B)  Percentage earned on savings portion of premium 
C)  Gender of the policyholder 
D)  Family medical history of the policyholder 
A)  Age of the policyholder 
B)  Percentage earned on savings portion of premium 
C)  Gender of the policyholder 
D)  Family medical history of the policyholder

Question 2

The most accurate method of determining life insurance needs is

Accepted Answer

A)  the income method. 
B)  the budget method. 
C)  subtracting your annual income from $1 million. 
D)  having enough insurance to provide $50,000 per year for 20 years. 
A)  the income method. 
B)  the budget method. 
C)  subtracting your annual income from $1 million. 
D)  having enough insurance to provide $50,000 per year for 20 years.

Question 3

Use the following two columns of items to answer the matching questions below:
-What are three types of settlement options?
A)a single payment to the beneficiary
B)alternative ways a beneficiary can receive benefits
C)Lump-sum, installment payments, and interest payments.

Accepted Answer

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

Question 4

Rather than purchasing mortgage life insurance, individuals can achieve the same goal and possibly save money by purchasing sufficient ________ to pay off the mortgage.

Accepted Answer

A)  whole life insurance 
B)  universal life insurance 
C)  term insurance 
D)  The type of insurance depends on the age of the house. 
A)  whole life insurance 
B)  universal life insurance 
C)  term insurance 
D)  The type of insurance depends on the age of the house.

Question 5

Whole life policies can be structured to provide a higher level of death benefits to beneficiaries in the early years of the policies or for the policies to be paid off in a certain time period, for example, 20 years.

Accepted Answer

A) True 
 B)False

Question 6

Sam figures it will take $250,000 invested at 6% to provide suitable income to his family for 12 years. He would also like to have $40,000 set aside to educate his two children. Sam's current savings is $20,000. How much life insurance does he need using the budget method?

Accepted Answer

A)  $190,000 
B)  $250,000 
C)  $270,000 
D)  $310,000 
A)  $190,000 
B)  $250,000 
C)  $270,000 
D)  $310,000

Question 7

A lump-sum insurance settlement would be most appropriate for

Accepted Answer

A)  a surviving spouse with small children. 
B)  parents living in a nursing home. 
C)  a disciplined beneficiary. 
D)  a former spouse. 
A)  a surviving spouse with small children. 
B)  parents living in a nursing home. 
C)  a disciplined beneficiary. 
D)  a former spouse.

Question 8

Which of the following best explains why approximately one-third of households in the United States do not have life insurance?

Accepted Answer

A)  People like to focus on more enjoyable events. 
B)  There is no immediate financial benefit. 
C)  People don't want to make the periodic payments. 
D)  All of these are correct. 
A)  People like to focus on more enjoyable events. 
B)  There is no immediate financial benefit. 
C)  People don't want to make the periodic payments. 
D)  All of these are correct.

Question 9

Which of the following is not a settlement option for life insurance?

Accepted Answer

A)  Lump-sum settlement 
B)  Deferred-value settlement 
C)  Installment payments settlement 
D)  Interest payments settlement 
A)  Lump-sum settlement 
B)  Deferred-value settlement 
C)  Installment payments settlement 
D)  Interest payments settlement

Question 10

If a policyholder with a universal life insurance policy skips a payment, then the insurance company

Accepted Answer

A)  terminates the policy. 
B)  refunds the amount paid and terminates the policy. 
C)  uses an amount from savings to pay the premium. 
D)  increases the premium. 
A)  terminates the policy. 
B)  refunds the amount paid and terminates the policy. 
C)  uses an amount from savings to pay the premium. 
D)  increases the premium.

Question 11

For which type of insurance policy is choosing an insurance company with a high rating the most important?

Accepted Answer

A)  Disability insurance 
B)  Automobile insurance 
C)  Homeowner's insurance 
D)  Life insurance 
A)  Disability insurance 
B)  Automobile insurance 
C)  Homeowner's insurance 
D)  Life insurance

Question 12

Which of the following will increase your need for life insurance?

Accepted Answer

A)  Your spouse graduates from college. 
B)  You receive a large inheritance. 
C)  Your only child graduates from college. 
D)  You get married and plan to have children. 
A)  Your spouse graduates from college. 
B)  You receive a large inheritance. 
C)  Your only child graduates from college. 
D)  You get married and plan to have children.

Question 13

The cheapest form of life insurance that provides coverage for a specified time period is ________.

Accepted Answer

The answer of The cheapest form of life insurance that...

Question 14

Disadvantages of term insurance are that it increases in cost when you renew it and that it has no value when it matures or you discontinue your policy.

Accepted Answer

A) True 
 B)False

Question 15

A person's need for life insurance varies quite a bit over his or her lifetime.

Accepted Answer

A) True 
 B)False

Question 16

Name four factors that are utilized in the budget method of calculating life insurance.

Accepted Answer

Annual living expenses, specia

Question 17

Which of the following is a reason to buy life insurance?

Accepted Answer

A)  Build your net worth. 
B)  Insure you against liability your entire life. 
C)  Provide a college fund for your children in the event of your early death. 
D)  Provide a college fund for your children in the event you become completely disabled. 
A)  Build your net worth. 
B)  Insure you against liability your entire life. 
C)  Provide a college fund for your children in the event of your early death. 
D)  Provide a college fund for your children in the event you become completely disabled.

Question 18

A lump sum settlement option is usually the best choice, even if a beneficiary is not very good at managing large sums of money.

Accepted Answer

A) True 
 B)False

Question 19

The ________ in a life insurance policy allows the beneficiary to receive the proceeds in different ways.

Accepted Answer

The answer of The ________ in a life insurance policy...

Question 20

Which of the following factors does not affect your life insurance premiums?

Accepted Answer

A)  Your gender 
B)  Your health 
C)  The cash value of the policy 
D)  Your level of education 
A)  Your gender 
B)  Your health 
C)  The cash value of the policy 
D)  Your level of education

Exam 13: Life Insurance

Which of the following will not affect the premiums on a term life insurance policy?

The most accurate method of determining life insurance needs is

Use the following two columns of items to answer the matching questions below: -What are three types of settlement options? A)a single payment to the beneficiary B)alternative ways a beneficiary can receive benefits C)Lump-sum, installment payments, and interest payments.

Rather than purchasing mortgage life insurance, individuals can achieve the same goal and possibly save money by purchasing sufficient ________ to pay off the mortgage.

Whole life policies can be structured to provide a higher level of death benefits to beneficiaries in the early years of the policies or for the policies to be paid off in a certain time period, for example, 20 years.

Sam figures it will take $250,000 invested at 6% to provide suitable income to his family for 12 years. He would also like to have $40,000 set aside to educate his two children. Sam's current savings is $20,000. How much life insurance does he need using the budget method?

A lump-sum insurance settlement would be most appropriate for

Which of the following best explains why approximately one-third of households in the United States do not have life insurance?

Which of the following is not a settlement option for life insurance?

If a policyholder with a universal life insurance policy skips a payment, then the insurance company

For which type of insurance policy is choosing an insurance company with a high rating the most important?

Which of the following will increase your need for life insurance?

The cheapest form of life insurance that provides coverage for a specified time period is ________.

Disadvantages of term insurance are that it increases in cost when you renew it and that it has no value when it matures or you discontinue your policy.

A person's need for life insurance varies quite a bit over his or her lifetime.

Name four factors that are utilized in the budget method of calculating life insurance.

Which of the following is a reason to buy life insurance?

A lump sum settlement option is usually the best choice, even if a beneficiary is not very good at managing large sums of money.

The ________ in a life insurance policy allows the beneficiary to receive the proceeds in different ways.

Which of the following factors does not affect your life insurance premiums?

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

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