Question 1

Which of the following policy features typically cost extra?

Accepted Answer

A) Nonforfeiture values 
B) Waiver of premium 
C) Guaranteed insurability 
D) Both waiver of premium and guaranteed insurability 
A) Nonforfeiture values 
B) Waiver of premium 
C) Guaranteed insurability 
D) Both waiver of premium and guaranteed insurability

Question 2

A 10-year term life policy will cost ____ a 5-year renewable term policy during the early years of the 10-year period,other factors being equal.

Accepted Answer

A) more than 
B) less than 
C) the same as 
D) Not enough information is given to answer the question. 
A) more than 
B) less than 
C) the same as 
D) Not enough information is given to answer the question.

Question 3

Lucas had a life insurance policy on his own life for $200,000 with a cash value of $24,000.The $1,687 premium was due annually on June 1.However,Lucas was in the hospital from May 16 through June 3,and the life insurance premiums were not paid.Lucas's brother realized that the premium had not been paid and sent the funds to the insurance company on June 11.Lucas died on June 24.Which of the following statements is true?

Accepted Answer

A) Lucas's beneficiary will receive nothing from this policy. 
B) Lucas's beneficiary will receive only the $24,000 cash value from this policy. 
C) Lucas's beneficiary will receive $200,000. 
D) Lucas's beneficiary will receive $224,000. 
A) Lucas's beneficiary will receive nothing from this policy. 
B) Lucas's beneficiary will receive only the $24,000 cash value from this policy. 
C) Lucas's beneficiary will receive $200,000. 
D) Lucas's beneficiary will receive $224,000.

Question 4

Cash-value accumulations in life insurance are taxed as they are earned.

Accepted Answer

A) True 
 B)False

Question 5

Antonio and Trina are a young couple with two small children, Jason (age four) and Claudia (age two). Trina is an account executive for a brokerage firm while Antonio has taken a couple years off from his profession as a civil engineer to work on an MBA degree. Right now Antonio and Trina's budget is very tight, as they are accustomed to living on two incomes, but Trina's employer has just circulated employer benefit information, so Antonio and Trina believe this is a good time to evaluate their life insurance needs. They have listed the financial information they believe is relevant.
  
-Using a 7-year multiple-of-earnings approach,how much additional life insurance is needed on Trina's life?

Accepted Answer

A) $625,000 
B) $575,000 
C) $350,000 
D) $300,000 
A) $625,000 
B) $575,000 
C) $350,000 
D) $300,000

Question 6

Life insurance proceeds are nontaxable to the beneficiary.

Accepted Answer

A) True 
 B)False

Question 7

Millie wants a life insurance policy that forces her to save,but she would also like to have her savings go into a mutual fund that tracks a large group of stocks.Which type of policy should Millie select?

Accepted Answer

A) Variable life 
B) Interest-sensitive life 
C) Whole life 
D) Index-universal life 
A) Variable life 
B) Interest-sensitive life 
C) Whole life 
D) Index-universal life

Question 8

Credit term life insurance is a ____ policy with ____ named as beneficiary.

Accepted Answer

A) cash-value; your spouse 
B) level term; the creditor 
C) decreasing term; the creditor 
D) group term; your employer 
A) cash-value; your spouse 
B) level term; the creditor 
C) decreasing term; the creditor 
D) group term; your employer

Question 9

The largest final expense for most families would be

Accepted Answer

A) food and lodging for mourners. 
B) travel expenses during a long illness. 
C) estate taxes. 
D) funeral and burial expenses. 
A) food and lodging for mourners. 
B) travel expenses during a long illness. 
C) estate taxes. 
D) funeral and burial expenses.

Question 10

Cash-value buildup is relatively slow in ____ life policies.

Accepted Answer

A) limited-pay 
B) endowment 
C) universal 
D) modified 
A) limited-pay 
B) endowment 
C) universal 
D) modified

Question 11

The rate of return on cash-value life insurance has historically ____ what can be achieved by a diversified portfolio of stock and bond mutual funds.

Accepted Answer

A) lagged well behind 
B) remained higher than 
C) been even with 
D) fluctuated above and below 
A) lagged well behind 
B) remained higher than 
C) been even with 
D) fluctuated above and below

Question 12

The multiple-of-earnings approach addresses only the ____ needs in life insurance needs evaluation.

Accepted Answer

A) final-expense 
B) readjustment-period 
C) debt-repayment 
D) income-replacement 
A) final-expense 
B) readjustment-period 
C) debt-repayment 
D) income-replacement

Question 13

The needs-based approach is not as accurate as the multiple-of-earnings approach.

Accepted Answer

A) True 
 B)False

Question 14

A disadvantage of first-to-die life insurance policies is that the survivor will have no coverage after the death of the first person.

Accepted Answer

A) True 
 B)False

Question 15

If one converts his or her convertible term life insurance policy and wants the cash-value to build up in the policy beginning with the date of the conversion which of the following is (are) true?

Accepted Answer

A) The premium will be based on his or her age at the time of the conversion. 
B) The premium amount will be based on his or her age when the original policy was written. 
C) Evidence of insurability will be required. 
D) All of these. 
A) The premium will be based on his or her age at the time of the conversion. 
B) The premium amount will be based on his or her age when the original policy was written. 
C) Evidence of insurability will be required. 
D) All of these.

Question 16

If Bethany works at a job where her income fluctuates from month to month and is concerned about not being able to pay her cash-value life insurance premium some months,she should consider a policy with

Accepted Answer

A) a waiver of premium. 
B) cash dividends. 
C) automatic premium loan provision. 
D) a guaranteed insurability option. 
A) a waiver of premium. 
B) cash dividends. 
C) automatic premium loan provision. 
D) a guaranteed insurability option.

Question 17

A typical life insurance agent would use a premium quote service to help you find a low-cost life insurance policy.

Accepted Answer

A) True 
 B)False

Question 18

The time limit specified on a suicide clause is generally five years.

Accepted Answer

A) True 
 B)False

Question 19

Variable life insurance is also called flexible-premium variable life insurance.

Accepted Answer

A) True 
 B)False

Question 20

Cash-value life insurance policies generally provide a policy illustration that charts the projected growth in the cash value for given rates of return.​

Accepted Answer

A) True 
 B)False

Which of the following policy features typically cost extra?

A 10-year term life policy will cost ____ a 5-year renewable term policy during the early years of the 10-year period,other factors being equal.

Cash-value accumulations in life insurance are taxed as they are earned.

Life insurance proceeds are nontaxable to the beneficiary.

Millie wants a life insurance policy that forces her to save,but she would also like to have her savings go into a mutual fund that tracks a large group of stocks.Which type of policy should Millie select?

Credit term life insurance is a policy with named as beneficiary.

The largest final expense for most families would be

Cash-value buildup is relatively slow in ____ life policies.

The rate of return on cash-value life insurance has historically ____ what can be achieved by a diversified portfolio of stock and bond mutual funds.

The multiple-of-earnings approach addresses only the ____ needs in life insurance needs evaluation.

The needs-based approach is not as accurate as the multiple-of-earnings approach.

A disadvantage of first-to-die life insurance policies is that the survivor will have no coverage after the death of the first person.

If one converts his or her convertible term life insurance policy and wants the cash-value to build up in the policy beginning with the date of the conversion which of the following is (are) true?

If Bethany works at a job where her income fluctuates from month to month and is concerned about not being able to pay her cash-value life insurance premium some months,she should consider a policy with

A typical life insurance agent would use a premium quote service to help you find a low-cost life insurance policy.

The time limit specified on a suicide clause is generally five years.

Variable life insurance is also called flexible-premium variable life insurance.

Cash-value life insurance policies generally provide a policy illustration that charts the projected growth in the cash value for given rates of return.

Understanding Personal Finance

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Financial Statements,tools,and Budgets

Managing Income Taxes

Managing Checking and Savings Accounts

Building and Maintaining Good Credit

Credit Cards and Consumer Loans

Vehicles and Other Major Purchases

Obtaining Affordable Housing

Managing Property and Liability Risk

Managing Health Expenses

Investment Fundamentals

Investing in Stocks and Bonds

Mutual Funds and Exchange Traded Funds

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Exam 12: Life Insurance Planning

Which of the following policy features typically cost extra?

A 10-year term life policy will cost ____ a 5-year renewable term policy during the early years of the 10-year period,other factors being equal.

Cash-value accumulations in life insurance are taxed as they are earned.

Life insurance proceeds are nontaxable to the beneficiary.

Millie wants a life insurance policy that forces her to save,but she would also like to have her savings go into a mutual fund that tracks a large group of stocks.Which type of policy should Millie select?

Credit term life insurance is a ____ policy with ____ named as beneficiary.

The largest final expense for most families would be

Cash-value buildup is relatively slow in ____ life policies.

The rate of return on cash-value life insurance has historically ____ what can be achieved by a diversified portfolio of stock and bond mutual funds.

The multiple-of-earnings approach addresses only the ____ needs in life insurance needs evaluation.

The needs-based approach is not as accurate as the multiple-of-earnings approach.

A disadvantage of first-to-die life insurance policies is that the survivor will have no coverage after the death of the first person.

If one converts his or her convertible term life insurance policy and wants the cash-value to build up in the policy beginning with the date of the conversion which of the following is (are) true?

If Bethany works at a job where her income fluctuates from month to month and is concerned about not being able to pay her cash-value life insurance premium some months,she should consider a policy with

A typical life insurance agent would use a premium quote service to help you find a low-cost life insurance policy.

The time limit specified on a suicide clause is generally five years.

Variable life insurance is also called flexible-premium variable life insurance.

Cash-value life insurance policies generally provide a policy illustration that charts the projected growth in the cash value for given rates of return.​

Understanding Personal Finance

Career Planning

Financial Statements,tools,and Budgets

Managing Income Taxes

Managing Checking and Savings Accounts

Building and Maintaining Good Credit

Credit Cards and Consumer Loans

Vehicles and Other Major Purchases

Obtaining Affordable Housing

Managing Property and Liability Risk

Managing Health Expenses

Investment Fundamentals

Investing in Stocks and Bonds

Mutual Funds and Exchange Traded Funds

Real Estate and High-Risk Investments

Retirement and Estate Planning

Filters

Credit term life insurance is a policy with named as beneficiary.

Cash-value life insurance policies generally provide a policy illustration that charts the projected growth in the cash value for given rates of return.