Question 1

The preferred technique for determining how much life insurance coverage is needed for an individual is:

Accepted Answer

A) computing the human life value. 
B) using the probability of death each year, prevailing interest rates, and assumed inflation rates to find the discounted present value of a future income stream. 
C) assessing the family's total economic needs and subtracting the financial resources available to meet those needs. 
D) estimating the sum of money which, when paid in installments, will produce the same income as the person would have earned after deducting assumed amounts for taxes and personal maintenance expenses. 
E) using the multiple-of-earnings method adjusted for occupation. 
A) computing the human life value. 
B) using the probability of death each year, prevailing interest rates, and assumed inflation rates to find the discounted present value of a future income stream. 
C) assessing the family's total economic needs and subtracting the financial resources available to meet those needs. 
D) estimating the sum of money which, when paid in installments, will produce the same income as the person would have earned after deducting assumed amounts for taxes and personal maintenance expenses. 
E) using the multiple-of-earnings method adjusted for occupation.

Question 2

While using the needs analysis approach to determine how much life insurance to purchase, you should:

Accepted Answer

A) add available resources to your family's total economic needs. 
B) multiply your gross annual earnings by the size of your family. 
C) purchase the equivalent of your current annual income. 
D) divide your gross annual earnings by the size of your family. 
E) deduct available resources from your family's total economic needs. 
A) add available resources to your family's total economic needs. 
B) multiply your gross annual earnings by the size of your family. 
C) purchase the equivalent of your current annual income. 
D) divide your gross annual earnings by the size of your family. 
E) deduct available resources from your family's total economic needs.

Question 3

The need for life insurance increases with children.

Accepted Answer

A) True 
 B)False

Question 4

Insurance agents are legally required to disclose their commissions in an insurance policy.

Accepted Answer

A) True 
 B)False

Question 5

You want to pay premiums for 20 years and have your insurance premium obligations finished at that time. However, you feel you will need life insurance for the rest of your life. You should choose a _____ insurance.

Accepted Answer

A) continuous premium whole life 
B) limited payment whole life 
C) single premium whole life 
D) renewable premium whole life 
E) convertible whole life 
A) continuous premium whole life 
B) limited payment whole life 
C) single premium whole life 
D) renewable premium whole life 
E) convertible whole life

Question 6

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 _____ policy.

Accepted Answer

A) term life 
B) continuous whole life 
C) limited payment whole life 
D) viatical life 
E) group life insurance 
A) term life 
B) continuous whole life 
C) limited payment whole life 
D) viatical life 
E) group life insurance

Question 7

The purchase of insurance is a common form of _____ by the insured.

Accepted Answer

A) loss prevention 
B) risk transfer 
C) risk assumption 
D) risk avoidance 
E) loss control 
A) loss prevention 
B) risk transfer 
C) risk assumption 
D) risk avoidance 
E) loss control

Question 8

Term life insurance is characterized by:

Accepted Answer

A) level annual premiums throughout one's life. 
B) lower initial premiums than other types of insurance. 
C) permanent coverage for young applicants. 
D) non-convertibility. 
E) cash value accumulation. 
A) level annual premiums throughout one's life. 
B) lower initial premiums than other types of insurance. 
C) permanent coverage for young applicants. 
D) non-convertibility. 
E) cash value accumulation.

Question 9

A life insurance policy with a small face amount where the premium may be collected weekly by agents is termed:

Accepted Answer

A) credit life insurance. 
B) mortgage life insurance. 
C) industrial life insurance. 
D) special-purpose insurance. 
E) group life insurance. 
A) credit life insurance. 
B) mortgage life insurance. 
C) industrial life insurance. 
D) special-purpose insurance. 
E) group life insurance.

Question 10

_____ is the choice to accept and bear the risk of loss.

Accepted Answer

A) Loss assumption 
B) Risk assumption 
C) Risk avoidance 
D) Loss avoidance 
E) Risk sharing 
A) Loss assumption 
B) Risk assumption 
C) Risk avoidance 
D) Loss avoidance 
E) Risk sharing

Question 11

While performing needs analysis, when determining the available resources to offset the economic needs, you would generally ignore:

Accepted Answer

A) Social Security survivor's benefits . 
B) the children's educational qualifications. 
C) the earning potential of the surviving spouse. 
D) proceeds from assets that can be liquidated comfortably. 
E) the employer-provided group life insurance. 
A) Social Security survivor's benefits . 
B) the children's educational qualifications. 
C) the earning potential of the surviving spouse. 
D) proceeds from assets that can be liquidated comfortably. 
E) the employer-provided group life insurance.

Question 12

The underwriting function of insurance companies is designed to ensure that premiums are based on:

Accepted Answer

A) income levels. 
B) savings for the insured. 
C) the value of gains. 
D) the chance of losses. 
E) expense levels. 
A) income levels. 
B) savings for the insured. 
C) the value of gains. 
D) the chance of losses. 
E) expense levels.

Question 13

Which of the following leads to the payment of a higher insurance premium by the potential insured?

Accepted Answer

A) Job promotion of the potential insured 
B) High-paying career of the potential insured 
C) Obesity of the potential insured 
D) Childbirth in the family of the potential insured 
E) Wedding of the potential insured 
A) Job promotion of the potential insured 
B) High-paying career of the potential insured 
C) Obesity of the potential insured 
D) Childbirth in the family of the potential insured 
E) Wedding of the potential insured

Question 14

A grace period permits a policyholder to retain full death protection even though the premium has not been paid for:

Accepted Answer

A) 12 months. 
B) 6 months. 
C) 3 months. 
D) 50 days. 
E) 31 days. 
A) 12 months. 
B) 6 months. 
C) 3 months. 
D) 50 days. 
E) 31 days.

Question 15

Which of the following types of insurance policies provides temporary coverage for a set period?

Accepted Answer

A) Universal life insurance policy 
B) Whole life insurance policy 
C) Variable life insurance policy 
D) Term life insurance policy 
E) Extended life insurance policy 
A) Universal life insurance policy 
B) Whole life insurance policy 
C) Variable life insurance policy 
D) Term life insurance policy 
E) Extended life insurance policy

Question 16

Jonathan estimates that financial resources worth $2,000,000 will be necessary to protect his family after his death. What amount of insurance, as per the needs analysis method, should Jonathan purchase if he has current financial resources worth $1,000,000?

Accepted Answer

A) $1,000,000 
B) $2,000,000 
C) $2,500,000 
D) $1,500,000 
E) $500,000 
A) $1,000,000 
B) $2,000,000 
C) $2,500,000 
D) $1,500,000 
E) $500,000

Question 17

Marilyn Simms died with a $200,000 life insurance policy. Her husband, Jack, is the primary beneficiary, and their children, Mimi (age 24)and Ann (age 30), are the contingent beneficiaries. All three survive Marilyn. How will the policy proceeds be distributed?

Accepted Answer

A) $200,000 to Jack 
B) $100,000 each to Mimi and Ann 
C) $100,000 to Jack and $50,000 each to Mimi and Ann 
D) $66,666 each to Jack, Mimi, and Ann 
E) $150,000 to Jack and $25,000 each to Mimi and Ann 
A) $200,000 to Jack 
B) $100,000 each to Mimi and Ann 
C) $100,000 to Jack and $50,000 each to Mimi and Ann 
D) $66,666 each to Jack, Mimi, and Ann 
E) $150,000 to Jack and $25,000 each to Mimi and Ann

Question 18

Families faced with the loss of a principal wage earner receive Social Security benefits:

Accepted Answer

A) that are deducted from the insurance proceeds, for the purpose of tax calculation. 
B) that will pay any additional taxes on the benefit amount. 
C) from the government that are intended to provide basic, minimum support. 
D) that amount to 5 to 10 times the current income of the principal wage earner. 
E) that will repay all the financial obligations of the principal wage earner. 
A) that are deducted from the insurance proceeds, for the purpose of tax calculation. 
B) that will pay any additional taxes on the benefit amount. 
C) from the government that are intended to provide basic, minimum support. 
D) that amount to 5 to 10 times the current income of the principal wage earner. 
E) that will repay all the financial obligations of the principal wage earner.

Question 19

If a term life insurance is convertible, the policy can be:

Accepted Answer

A) transferred to the life of another person. 
B) exchanged for cash. 
C) changed to health or disability protection. 
D) changed to a comparable whole life policy. 
E) revised as needed by the insurer. 
A) transferred to the life of another person. 
B) exchanged for cash. 
C) changed to health or disability protection. 
D) changed to a comparable whole life policy. 
E) revised as needed by the insurer.

Question 20

The probability of a loss occurring can be reduced by:

Accepted Answer

A) risk observance. 
B) loss prevention. 
C) risk assumption. 
D) loss retention. 
E) insurance. 
A) risk observance. 
B) loss prevention. 
C) risk assumption. 
D) loss retention. 
E) insurance.

The preferred technique for determining how much life insurance coverage is needed for an individual is:

While using the needs analysis approach to determine how much life insurance to purchase, you should:

The need for life insurance increases with children.

Insurance agents are legally required to disclose their commissions in an insurance policy.

You want to pay premiums for 20 years and have your insurance premium obligations finished at that time. However, you feel you will need life insurance for the rest of your life. You should choose a _____ insurance.

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 _____ policy.

The purchase of insurance is a common form of _____ by the insured.

Term life insurance is characterized by:

A life insurance policy with a small face amount where the premium may be collected weekly by agents is termed:

_____ is the choice to accept and bear the risk of loss.

While performing needs analysis, when determining the available resources to offset the economic needs, you would generally ignore:

The underwriting function of insurance companies is designed to ensure that premiums are based on:

Which of the following leads to the payment of a higher insurance premium by the potential insured?

A grace period permits a policyholder to retain full death protection even though the premium has not been paid for:

Which of the following types of insurance policies provides temporary coverage for a set period?

Jonathan estimates that financial resources worth $2,000,000 will be necessary to protect his family after his death. What amount of insurance, as per the needs analysis method, should Jonathan purchase if he has current financial resources worth $1,000,000?

Marilyn Simms died with a $200,000 life insurance policy. Her husband, Jack, is the primary beneficiary, and their children, Mimi (age 24)and Ann (age 30), are the contingent beneficiaries. All three survive Marilyn. How will the policy proceeds be distributed?

Families faced with the loss of a principal wage earner receive Social Security benefits:

If a term life insurance is convertible, the policy can be:

The probability of a loss occurring can be reduced by:

Understanding the Financial Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, Etfs, and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 8: Insuring Your Life

The preferred technique for determining how much life insurance coverage is needed for an individual is:

While using the needs analysis approach to determine how much life insurance to purchase, you should:

The need for life insurance increases with children.

Insurance agents are legally required to disclose their commissions in an insurance policy.

You want to pay premiums for 20 years and have your insurance premium obligations finished at that time. However, you feel you will need life insurance for the rest of your life. You should choose a _____ insurance.

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 _____ policy.

The purchase of insurance is a common form of _____ by the insured.

Term life insurance is characterized by:

A life insurance policy with a small face amount where the premium may be collected weekly by agents is termed:

_____ is the choice to accept and bear the risk of loss.

While performing needs analysis, when determining the available resources to offset the economic needs, you would generally ignore:

The underwriting function of insurance companies is designed to ensure that premiums are based on:

Which of the following leads to the payment of a higher insurance premium by the potential insured?

A grace period permits a policyholder to retain full death protection even though the premium has not been paid for:

Which of the following types of insurance policies provides temporary coverage for a set period?

Jonathan estimates that financial resources worth $2,000,000 will be necessary to protect his family after his death. What amount of insurance, as per the needs analysis method, should Jonathan purchase if he has current financial resources worth $1,000,000?

Marilyn Simms died with a $200,000 life insurance policy. Her husband, Jack, is the primary beneficiary, and their children, Mimi (age 24)and Ann (age 30), are the contingent beneficiaries. All three survive Marilyn. How will the policy proceeds be distributed?

Families faced with the loss of a principal wage earner receive Social Security benefits:

If a term life insurance is convertible, the policy can be:

The probability of a loss occurring can be reduced by:

Understanding the Financial Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, Etfs, and Real Estate

Planning for Retirement

Preserving Your Estate

Filters