Question 1

Another name for permanent life insurance is

Accepted Answer

A)  Whole life. 
B)  Renewable term. 
C)  Convertible term. 
D)  Decreasing term. 
E)  Credit life. 
A)  Whole life. 
B)  Renewable term. 
C)  Convertible term. 
D)  Decreasing term. 
E)  Credit life. A

Question 2

Compare whole life insurance with term insurance and explain why one is like buying a house and the other is like renting an apartment.

Accepted Answer

Term insurance is coverage for a specific period of time,like renting an apartment.At the end of the apartment lease,you would need to sign another lease.At the end of the term insurance period,you would need to purchase another policy if you still wanted the coverage.
Whole life insurance is like buying a house because it allows you to accumulate cash value (like equity in a house)and at death you have a benefit (like the value of the home).

Question 3

If you switch life insurance policies,you will automatically still be insurable.

Accepted Answer

A) True 
 B)False  False

Question 4

Competition among companies with comparable policies can affect the price a company charges for life insurance.

Accepted Answer

A) True 
 B)False

Question 5

The beneficiaries of someone who dies by suicide will never be eligible to receive any benefits from his or her life insurance policy.

Accepted Answer

A) True 
 B)False

Question 6

Describe two of the methods used to determine the amount of life insurance needed.

Accepted Answer

Four methods were discussed in the text:

Question 7

The settlement option in which the company acts as trustee and pays interest to the beneficiary is called

Accepted Answer

A)  Lump-sum payment. 
B)  Limited installment payment. 
C)  Final life payment. 
D)  Life income option. 
E)  Proceeds left with the company. 
A)  Lump-sum payment. 
B)  Limited installment payment. 
C)  Final life payment. 
D)  Life income option. 
E)  Proceeds left with the company.

Question 8

Which of the following statements is correct?

Accepted Answer

A)  A deferred annuity allows an individual to receive payments from an annuity immediately. 
B)  A deferred annuity allows an individual to receive payments from a life insurance policy immediately. 
C)  A life insurance policy allows an individual to receive payments from an annuity at once. 
D)  A deferred annuity allows an individual to receive payments from a life insurance policy at some future date. 
E)  An immediate annuity allows an individual to receive payments from an annuity beginning at once. 
A)  A deferred annuity allows an individual to receive payments from an annuity immediately. 
B)  A deferred annuity allows an individual to receive payments from a life insurance policy immediately. 
C)  A life insurance policy allows an individual to receive payments from an annuity at once. 
D)  A deferred annuity allows an individual to receive payments from a life insurance policy at some future date. 
E)  An immediate annuity allows an individual to receive payments from an annuity beginning at once.

Question 9

Tim and Tammy are updating their financial plan and are concerned that they might not have enough life insurance coverage for their family,which includes two children,ages 4 and 10.They have determined that their annual income is $70,000 and their net worth is now $150,000.What is the amount of life insurance they should carry using the easy method?

Accepted Answer

A)  $140,000 
B)  $343,000 
C)  $490,000 
D)  $700,000 
E)  $750,000 
A)  $140,000 
B)  $343,000 
C)  $490,000 
D)  $700,000 
E)  $750,000

Question 10

If you change your mind about your insurance policy,you have 60 days to return it to receive a refund of your premium.

Accepted Answer

A) True 
 B)False

Question 11

Of the following,which one is the most positive feature of whole life insurance?

Accepted Answer

A)  You must pay interest on any loans. 
B)  You pay premiums each year for the rest of your life. 
C)  It is more expensive than term insurance. 
D)  It builds cash value. 
E)  It is permanent life insurance. 
A)  You must pay interest on any loans. 
B)  You pay premiums each year for the rest of your life. 
C)  It is more expensive than term insurance. 
D)  It builds cash value. 
E)  It is permanent life insurance.

Question 12

People buy life insurance for many reasons.List three of these reasons.

Accepted Answer

Answers from students may include the fo

Question 13

What is the difference between an immediate annuity and a deferred annuity?

Accepted Answer

An immediate annuity has payme

Question 14

A limited payment policy is a whole life policy that requires premiums to be paid for a certain length of time,usually 20 or 30 years.

Accepted Answer

A) True 
 B)False

Question 15

Bill is worried about being able to pay his premium if he is totally and permanently disabled before age 60.Which of the following riders should he consider?

Accepted Answer

A)  Waiver of premium disability benefit 
B)  Accidental death benefit 
C)  Guaranteed insurability option 
D)  Cost-of-living protection 
E)  Accelerated benefits 
A)  Waiver of premium disability benefit 
B)  Accidental death benefit 
C)  Guaranteed insurability option 
D)  Cost-of-living protection 
E)  Accelerated benefits

Question 16

Wendy purchased a life insurance policy years ago and listed her husband as her beneficiary.Since then,they had three children,she was divorced,and remarried.However,she never updated her list of beneficiaries for her life insurance policy.What will happen to her benefits?
 Why?

Accepted Answer

Since she never updated her be

Question 17

Another name for temporary life insurance is

Accepted Answer

A)  Whole life. 
B)  Straight life. 
C)  Ordinary life. 
D)  Term. 
E)  Cash value life. 
A)  Whole life. 
B)  Straight life. 
C)  Ordinary life. 
D)  Term. 
E)  Cash value life.

Question 18

What is the most important part of an insurance agent's job?

Accepted Answer

A)  Sell you the highest level of coverage available. 
B)  Collect premiums for the insurance contract. 
C)  Tell you why her product is better than the competitor's. 
D)  Help you select the proper kind of protection within your financial boundaries. 
E)  Convince you to buy the policy that will pay her the highest commission. 
A)  Sell you the highest level of coverage available. 
B)  Collect premiums for the insurance contract. 
C)  Tell you why her product is better than the competitor's. 
D)  Help you select the proper kind of protection within your financial boundaries. 
E)  Convince you to buy the policy that will pay her the highest commission.

Question 19

Fred bought life insurance when he was 47,although he told the insurance company that he was 42.He has since died.Which of the following provisions will affect the amount of money his beneficiaries will receive?

Accepted Answer

A)  Incontestability clause 
B)  Misstatement of age provision 
C)  Naming a beneficiary 
D)  Policy reinstatement 
E)  The grace period 
A)  Incontestability clause 
B)  Misstatement of age provision 
C)  Naming a beneficiary 
D)  Policy reinstatement 
E)  The grace period

Question 20

Another name for straight term is renewable return-of-premium term.

Accepted Answer

A) True 
 B)False

Another name for permanent life insurance is

Compare whole life insurance with term insurance and explain why one is like buying a house and the other is like renting an apartment.

If you switch life insurance policies,you will automatically still be insurable.

Competition among companies with comparable policies can affect the price a company charges for life insurance.

The beneficiaries of someone who dies by suicide will never be eligible to receive any benefits from his or her life insurance policy.

Describe two of the methods used to determine the amount of life insurance needed.

The settlement option in which the company acts as trustee and pays interest to the beneficiary is called

Which of the following statements is correct?

If you change your mind about your insurance policy,you have 60 days to return it to receive a refund of your premium.

Of the following,which one is the most positive feature of whole life insurance?

People buy life insurance for many reasons.List three of these reasons.

What is the difference between an immediate annuity and a deferred annuity?

A limited payment policy is a whole life policy that requires premiums to be paid for a certain length of time,usually 20 or 30 years.

Bill is worried about being able to pay his premium if he is totally and permanently disabled before age 60.Which of the following riders should he consider?

Wendy purchased a life insurance policy years ago and listed her husband as her beneficiary.Since then,they had three children,she was divorced,and remarried.However,she never updated her list of beneficiaries for her life insurance policy.What will happen to her benefits? Why?

Another name for temporary life insurance is

What is the most important part of an insurance agent's job?

Fred bought life insurance when he was 47,although he told the insurance company that he was 42.He has since died.Which of the following provisions will affect the amount of money his beneficiaries will receive?

Another name for straight term is renewable return-of-premium term.

Personal Financial Planning in Action

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Savings Plans and Payment Account

Consumer Credit: Advantages, Dis-Advantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Income Insurance

Investing Basics and Evaluating Bonds

Investing in Stocks

Investing in Mutual Funds

Starting Early: Retirement and Estate Planning

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Exam 10: Financial Planning With Life Insurance

Another name for permanent life insurance is

Compare whole life insurance with term insurance and explain why one is like buying a house and the other is like renting an apartment.

If you switch life insurance policies,you will automatically still be insurable.

Competition among companies with comparable policies can affect the price a company charges for life insurance.

The beneficiaries of someone who dies by suicide will never be eligible to receive any benefits from his or her life insurance policy.

Describe two of the methods used to determine the amount of life insurance needed.

The settlement option in which the company acts as trustee and pays interest to the beneficiary is called

Which of the following statements is correct?

If you change your mind about your insurance policy,you have 60 days to return it to receive a refund of your premium.

Of the following,which one is the most positive feature of whole life insurance?

People buy life insurance for many reasons.List three of these reasons.

What is the difference between an immediate annuity and a deferred annuity?

A limited payment policy is a whole life policy that requires premiums to be paid for a certain length of time,usually 20 or 30 years.

Bill is worried about being able to pay his premium if he is totally and permanently disabled before age 60.Which of the following riders should he consider?

Wendy purchased a life insurance policy years ago and listed her husband as her beneficiary.Since then,they had three children,she was divorced,and remarried.However,she never updated her list of beneficiaries for her life insurance policy.What will happen to her benefits? Why?

Another name for temporary life insurance is

What is the most important part of an insurance agent's job?

Fred bought life insurance when he was 47,although he told the insurance company that he was 42.He has since died.Which of the following provisions will affect the amount of money his beneficiaries will receive?

Another name for straight term is renewable return-of-premium term.

Personal Financial Planning in Action

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Savings Plans and Payment Account

Consumer Credit: Advantages, Dis-Advantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Income Insurance

Investing Basics and Evaluating Bonds

Investing in Stocks

Investing in Mutual Funds

Starting Early: Retirement and Estate Planning

Filters