Exam 11: Life Insurance

Which of the following statements about the needs approach for estimating the amount of life insurance to purchase is (are) true? I.It involves an analysis of various family needs which must be met if a family breadwinner dies. II.Its use is appropriate only if a person currently has no life insurance protection.

Under the needs approach, when is the dependency period of a surviving spouse assumed to end?

Which of the following statements about endowment insurance policies is (are) true? I. The face amount is paid if the insured dies during the policy period or at the end of the policy period if the insured is still alive. II. The use of endowment insurance has increased in recent years because of its favorable tax treatment.

Ann is considering the purchase of a life insurance policy with these characteristics: flexible premium payments, the insurance and savings components are separate, the interest rate credited to the cash value is tied to a changing market interest rate but a minimum interest rate is guaranteed, and a monthly administrative fee is charged. Ann is considering buying

Jessica is an agent for LMN Life Insurance Company. She met with Brad, who was interested in purchasing life insurance. Jessica explained the various uses of life insurance, including income for Brad's wife during the 1- or 2-year period following Brad's death. This period is known as the

Most family heads need substantial amounts of life insurance. However, with limited income, money spent on life insurance reduces the amount of discretionary income available for other high-priority needs. What an insured person gives up when he or she purchases life insurance instead of using the premium dollars for other purposes is called the

Gwen purchased an interesting life insurance policy. A minimum interest rate is guaranteed on the cash value, but additional interest may be credited based on the investment performance of a group of common stocks. There is also a cap on the additional interest credited to the policy. Based on this information, what type of life insurance did Gwen purchase?

Which of the following types of families is likely to have the least need for a large amount of life insurance?

What is the length of the readjustment period which is considered when the needs approach is used to determine the amount of life insurance to own?

Which of the following statements about limited-payment life insurance is true?

Which of the following statements about universal life insurance is (are) true? I.The current interest rate credited to the cash value at the time the policy is issued remains fixed for the life of the policy. II.A monthly deduction is made from the policy's cash value for the cost of insurance protection.

Which of the following statements about life insurance cash values is (are) true? I.Cash values are a result of the level premium method of purchasing life insurance. II.The cash value of a policy must always exceed the policy's legal reserve.

Which of the following statements about home service life insurance, which evolved over time from a type of life insurance called industrial life insurance, is true?

Which of the following is a noneconomic cost associated with premature death?

Carl would like to purchase life insurance. He would also like to invest in a mutual fund. An agent told Carl about a form of life insurance in which Carl could select where the saving component is invested. This form of life insurance has fixed premiums and the cash value is not guaranteed. This type of life insurance is called

Which statement is true concerning the economic problem of premature death in the United States? I.The economic impact of premature death of the breadwinner varies for different types of families. II.Increased life expectancy has increased the economic problem of premature death over time.

A legal reserve in life insurance is a result of

All of the following statements about universal life insurance are true EXCEPT

Which of the following statements about savings bank life insurance is true?

Bill is attempting to determine how much life insurance to purchase. He has two dependent children and his wife does not work outside of the home. An advisor suggested that Bill should consider Social Security benefits when doing his life insurance planning. One concern in this regard is the period after Social Security benefits to a widow terminate until they resume again. This period is called the