Question 1

Which is a correct statement about life insurance?

Accepted Answer

A)  People are less apt to actively seek life insurance than health insurance. 
B)  Private sources are the only available sources for life insurance. 
C)  Life insurance is extremely important if you are single and living alone. 
D)  There is only one type of life insurance. 
E)  Consumer awareness of life insurance has changed considerably over the years. 
A)  People are less apt to actively seek life insurance than health insurance. 
B)  Private sources are the only available sources for life insurance. 
C)  Life insurance is extremely important if you are single and living alone. 
D)  There is only one type of life insurance. 
E)  Consumer awareness of life insurance has changed considerably over the years.

Question 2

The coverage of term insurance ends at the conclusion of the term, but you can continue it if you have a renewability option.

Accepted Answer

A) True 
 B)False

Question 3

Term insurance is protection for a specified period of time, usually:

Accepted Answer

A)  1 year 
B)  5 years 
C)  10 years 
D)  20 years 
E)  Term insurance is offered in all of the intervals listed. 
A)  1 year 
B)  5 years 
C)  10 years 
D)  20 years 
E)  Term insurance is offered in all of the intervals listed.

Question 4

Typical examples of uses of life insurance proceeds include:

Accepted Answer

A)  paying off a home mortgage. 
B)  funding an endowment. 
C)  making charitable bequests. 
D)  paying estate taxes. 
E)  All of these. 
A)  paying off a home mortgage. 
B)  funding an endowment. 
C)  making charitable bequests. 
D)  paying estate taxes. 
E)  All of these.

Question 5

The premium for the whole life policy increases with your age.

Accepted Answer

A) True 
 B)False

Question 6

One important feature of a term life policy is its cash value.

Accepted Answer

A) True 
 B)False

Question 7

Universal life, variable life, and adjustable life are types of term life insurance.

Accepted Answer

A) True 
 B)False

Question 8

Who is likely to have the least need for life insurance?

Accepted Answer

A)  Married couple, only one spouse working, with three small children 
B)  Single person living with parents 
C)  Married couple with solid jobs and no dependents 
D)  Married working couple with one child 
E)  Single person about to be married 
A)  Married couple, only one spouse working, with three small children 
B)  Single person living with parents 
C)  Married couple with solid jobs and no dependents 
D)  Married working couple with one child 
E)  Single person about to be married

Question 9

Permanent insurance can be limited payment, variable, adjustable, or universal life insurance.

Accepted Answer

A) True 
 B)False

Question 10

A two-earner couple likely will have:

Accepted Answer

A)  the greatest need for life insurance. 
B)  no need for life insurance. 
C)  a moderate need for life insurance, especially if they have a mortgage. 
D)  the greatest need for an annuity. 
E)  the exact same life insurance needs as all other two-earner couples. 
A)  the greatest need for life insurance. 
B)  no need for life insurance. 
C)  a moderate need for life insurance, especially if they have a mortgage. 
D)  the greatest need for an annuity. 
E)  the exact same life insurance needs as all other two-earner couples.

Question 11

Taylor Jones has a life insurance policy that returns every cent she pays in premiums if she outlives the term of the policy. She knows this policy costs 30 to 50 percent more than a traditional policy but thinks it is worth it. What type of term life insurance does Taylor have?

Accepted Answer

A)  Straight 
B)  Renewable 
C)  Convertible 
D)  Decreasing 
E)  Return-of-premium 
A)  Straight 
B)  Renewable 
C)  Convertible 
D)  Decreasing 
E)  Return-of-premium

Question 12

When compared with Universal Life policies and Whole Life policies, which of the following is typically an advantage of a Term Life policy?

Accepted Answer

A)  Cash value accumulation 
B)  You can take a loan against the policy 
C)  Takes advantage of current interest rates 
D)  Low outlay 
E)  Generally fixed premium amount 
A)  Cash value accumulation 
B)  You can take a loan against the policy 
C)  Takes advantage of current interest rates 
D)  Low outlay 
E)  Generally fixed premium amount

Question 13

Insurance experts have estimated that extra costs of up to ___________ a year may be required to replace the services of a homemaker in a family with small children.

Accepted Answer

A)  $3,000 
B)  $6,000 
C)  $10,000 
D)  $12,000 
E)  $15,000 
A)  $3,000 
B)  $6,000 
C)  $10,000 
D)  $12,000 
E)  $15,000

Question 14

Which statement is correct regarding stock life insurance companies?

Accepted Answer

A)  A stock company sells participating policies. 
B)  A stock company always charges higher premiums than mutual companies. 
C)  A policyholder participates in the profit or loss of the company. 
D)  A stock company generally sells nonparticipating (non par) policies. 
E)  A stock company is owned by policyholders. 
A)  A stock company sells participating policies. 
B)  A stock company always charges higher premiums than mutual companies. 
C)  A policyholder participates in the profit or loss of the company. 
D)  A stock company generally sells nonparticipating (non par) policies. 
E)  A stock company is owned by policyholders.

Question 15

The total debts of you and your spouse include the following: mortgage, $180,000; auto loan, $10,000; credit card balance, $2,000; and other debts of $6,000. Further, you estimate that your funeral will cost $4,000. Your spouse expects to continue to work after your death. What is your life insurance need using the DINK method?

Accepted Answer

A)  $103,000 
B)  $106,000 
C)  $226,000 
D)  $202,000 
E)  $99,000 
A)  $103,000 
B)  $106,000 
C)  $226,000 
D)  $202,000 
E)  $99,000

Question 16

Using the "nonworking" spouse method, what should be the life insurance need for a family whose youngest child is 10 years old?

Accepted Answer

A)  $30,000 
B)  $50,000 
C)  $80,000 
D)  $100,000 
E)  $180,000 
A)  $30,000 
B)  $50,000 
C)  $80,000 
D)  $100,000 
E)  $180,000

Question 17

Your life insurance policy is valuable only if it:

Accepted Answer

A)  meets your objectives. 
B)  makes you rich. 
C)  makes your beneficiaries rich. 
D)  serves as collateral for a loan. 
E)  pays you at least 7.5 percent interest. 
A)  meets your objectives. 
B)  makes you rich. 
C)  makes your beneficiaries rich. 
D)  serves as collateral for a loan. 
E)  pays you at least 7.5 percent interest.

Question 18

The DINK method of determining life insurance need is best suited for:

Accepted Answer

A)  singles. 
B)  single parent households. 
C)  non-working spouses. 
D)  working spouses with no dependents. 
E)  senior citizens. 
A)  singles. 
B)  single parent households. 
C)  non-working spouses. 
D)  working spouses with no dependents. 
E)  senior citizens.

Question 19

Which of the following are common uses of life insurance proceeds?

Accepted Answer

A)  Education of children 
B)  Make charitable bequests after death 
C)  Pay off the mortgage on a home 
D)  Uncovered medical expenses and funeral costs 
E)  All of these are common uses. 
A)  Education of children 
B)  Make charitable bequests after death 
C)  Pay off the mortgage on a home 
D)  Uncovered medical expenses and funeral costs 
E)  All of these are common uses.

Question 20

Francesca Brown has a life insurance policy that provides her with protection for the next five years. However, she can get five more years of protection at the end of this term without having to have a medical examination because she will be less than 70 years old at that time. Her premiums will rise during each five-year period. What type of term life insurance does Francesca likely have?

Accepted Answer

A)  Straight 
B)  Renewable 
C)  Convertible 
D)  Decreasing 
E)  Accelerated 
A)  Straight 
B)  Renewable 
C)  Convertible 
D)  Decreasing 
E)  Accelerated

Which is a correct statement about life insurance?

The coverage of term insurance ends at the conclusion of the term, but you can continue it if you have a renewability option.

Term insurance is protection for a specified period of time, usually:

Typical examples of uses of life insurance proceeds include:

The premium for the whole life policy increases with your age.

One important feature of a term life policy is its cash value.

Universal life, variable life, and adjustable life are types of term life insurance.

Who is likely to have the least need for life insurance?

Permanent insurance can be limited payment, variable, adjustable, or universal life insurance.

A two-earner couple likely will have:

Taylor Jones has a life insurance policy that returns every cent she pays in premiums if she outlives the term of the policy. She knows this policy costs 30 to 50 percent more than a traditional policy but thinks it is worth it. What type of term life insurance does Taylor have?

When compared with Universal Life policies and Whole Life policies, which of the following is typically an advantage of a Term Life policy?

Insurance experts have estimated that extra costs of up to ___________ a year may be required to replace the services of a homemaker in a family with small children.

Which statement is correct regarding stock life insurance companies?

Using the "nonworking" spouse method, what should be the life insurance need for a family whose youngest child is 10 years old?

Your life insurance policy is valuable only if it:

The DINK method of determining life insurance need is best suited for:

Which of the following are common uses of life insurance proceeds?

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: The Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health, Disability, and Long-Term Care Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

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Exam 12: Life Insurance

Which is a correct statement about life insurance?

The coverage of term insurance ends at the conclusion of the term, but you can continue it if you have a renewability option.

Term insurance is protection for a specified period of time, usually:

Typical examples of uses of life insurance proceeds include:

The premium for the whole life policy increases with your age.

One important feature of a term life policy is its cash value.

Universal life, variable life, and adjustable life are types of term life insurance.

Who is likely to have the least need for life insurance?

Permanent insurance can be limited payment, variable, adjustable, or universal life insurance.

A two-earner couple likely will have:

Taylor Jones has a life insurance policy that returns every cent she pays in premiums if she outlives the term of the policy. She knows this policy costs 30 to 50 percent more than a traditional policy but thinks it is worth it. What type of term life insurance does Taylor have?

When compared with Universal Life policies and Whole Life policies, which of the following is typically an advantage of a Term Life policy?

Insurance experts have estimated that extra costs of up to ___________ a year may be required to replace the services of a homemaker in a family with small children.

Which statement is correct regarding stock life insurance companies?

Using the "nonworking" spouse method, what should be the life insurance need for a family whose youngest child is 10 years old?

Your life insurance policy is valuable only if it:

The DINK method of determining life insurance need is best suited for:

Which of the following are common uses of life insurance proceeds?

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Planning Your Tax Strategy

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: The Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health, Disability, and Long-Term Care Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

Filters