Question 1

If you have a conversion term policy,

Accepted Answer

A)  Your premium will not increase when you renew it. 
B)  You can convert your policy from permanent to term at any time. 
C)  You can convert your term policy to a permanent policy. 
D)  Your policy will have the same premium as other term policies. 
E)  Your benefit to your beneficiary will be less as time passes. 
A)  Your premium will not increase when you renew it. 
B)  You can convert your policy from permanent to term at any time. 
C)  You can convert your term policy to a permanent policy. 
D)  Your policy will have the same premium as other term policies. 
E)  Your benefit to your beneficiary will be less as time passes.

Question 2

Which of the following annuities is purchased with a lump-sum payment and allows an individual to receive income payments beginning now?

Accepted Answer

A)  Term insurance 
B)  Deferred annuity 
C)  Whole life insurance 
D)  Immediate annuity 
E)  Universal life insurance 
A)  Term insurance 
B)  Deferred annuity 
C)  Whole life insurance 
D)  Immediate annuity 
E)  Universal life insurance

Question 3

Most people buy life insurance to

Accepted Answer

A)  Pay off a loan on an automobile. 
B)  Protect the people who depend on the insured from financial losses caused by his or her death. 
C)  Pay for a vacation. 
D)  Spend money. 
E)  Pay taxes. 
A)  Pay off a loan on an automobile. 
B)  Protect the people who depend on the insured from financial losses caused by his or her death. 
C)  Pay for a vacation. 
D)  Spend money. 
E)  Pay taxes.

Question 4

Stephanie is the wage earner in a "typical family" with $40,000 gross annual income. Use the easy method to determine how much insurance she should carry.

Accepted Answer

A)  $40,000 
B)  $196,000 
C)  $280,000 
D)  $400,000 
E)  $430,000 
A)  $40,000 
B)  $196,000 
C)  $280,000 
D)  $400,000 
E)  $430,000

Question 5

The settlement option that pays the life insurance proceeds to the beneficiary for as long as she or he lives 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 6

The sooner a person is likely to die, the lower the premiums he or she will pay.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Fred bought life insurance five years ago. He forgot to tell them that he had a heart condition, and, as a result of that condition, he recently died. Which of the following provisions prevents the life insurance company from refusing to pay his beneficiaries because of his original fraudulent misrepresentation?

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 9

Frank, age 38, was killed in a car accident. Which of the following riders provided an additional benefit for his heirs?

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 10

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 "nonworking" spouse 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 11

The lower the interest-adjusted index, the lower the cost of a life insurance policy.

Accepted Answer

A) True 
 B)False

Question 12

After you purchase a life insurance contract, you have a "free look" period that lasts

Accepted Answer

A)  3 days. 
B)  5 days. 
C)  10 days. 
D)  30 days. 
E)  60 days. 
A)  3 days. 
B)  5 days. 
C)  10 days. 
D)  30 days. 
E)  60 days.

Question 13

Marianne and Roger are in good health and have reasonably secure careers. Each earns $45,000 annually. They own a home with a $125,000 mortgage; they owe $25,000 for their car loans and have $22,000 in student loans. If one should die, they think that funeral expenses would be $12,000. What is their total insurance need using the DINK method?

Accepted Answer

A)  $12,000 
B)  $86,000 
C)  $98,000 
D)  $172,000 
E)  $217,000 
A)  $12,000 
B)  $86,000 
C)  $98,000 
D)  $172,000 
E)  $217,000

Question 14

An administrative fee of $150 per year may be deducted to cover recordkeeping and other administrative expenses related to a variable annuity.

Accepted Answer

A) True 
 B)False

Question 15

If you want to purchase term insurance, you will receive all of the following except

Accepted Answer

A)  Protection against loss of life for only a specified term. 
B)  Cash value. 
C)  Temporary insurance. 
D)  A benefit during the period it covers, such as 1, 5, 10, or 20 years. 
E)  A policy whose coverage continues if you stop paying premiums. 
A)  Protection against loss of life for only a specified term. 
B)  Cash value. 
C)  Temporary insurance. 
D)  A benefit during the period it covers, such as 1, 5, 10, or 20 years. 
E)  A policy whose coverage continues if you stop paying premiums.

Question 16

This life insurance is used to pay off certain debts, such as auto loans, in the event that you die before the debts are paid in full. Which of the following is not the best buy for the amount of protection offered for an individual?

Accepted Answer

A)  Group life 
B)  Term 
C)  Credit life 
D)  Endowment life 
E)  Adjustable life 
A)  Group life 
B)  Term 
C)  Credit life 
D)  Endowment life 
E)  Adjustable life

Question 17

The "nonworking" spouse method of estimating life insurance includes factors such as Social Security and liquid assets.

Accepted Answer

A) True 
 B)False

Question 18

Megan wants to purchase a type of whole life insurance policy that will allow part of her premium to be invested in stock, bonds, or money market funds. Which of the following policies should she buy?

Accepted Answer

A)  Adjustable life 
B)  Group life 
C)  Limited life 
D)  Universal life 
E)  Variable life 
A)  Adjustable life 
B)  Group life 
C)  Limited life 
D)  Universal life 
E)  Variable life

Question 19

Annuities are more attractive for people who expect to live only a short time.

Accepted Answer

A) True 
 B)False

Question 20

The policy loan provision means that

Accepted Answer

A)  An individual can take out a loan on his or her term policy. 
B)  The death benefit will be increased by the amount of an outstanding policy loan. 
C)  The policy owner can borrow any amount up to the cash value of the policy. 
D)  The beneficiary can borrow any amount up to the total benefit. 
E)  No interest will accumulate for any loans related to life insurance. 
A)  An individual can take out a loan on his or her term policy. 
B)  The death benefit will be increased by the amount of an outstanding policy loan. 
C)  The policy owner can borrow any amount up to the cash value of the policy. 
D)  The beneficiary can borrow any amount up to the total benefit. 
E)  No interest will accumulate for any loans related to life insurance.

If you have a conversion term policy,

Which of the following annuities is purchased with a lump-sum payment and allows an individual to receive income payments beginning now?

Most people buy life insurance to

Stephanie is the wage earner in a "typical family" with $40,000 gross annual income. Use the easy method to determine how much insurance she should carry.

The settlement option that pays the life insurance proceeds to the beneficiary for as long as she or he lives is called

The sooner a person is likely to die, the lower the premiums he or she will pay.

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

Frank, age 38, was killed in a car accident. Which of the following riders provided an additional benefit for his heirs?

The lower the interest-adjusted index, the lower the cost of a life insurance policy.

After you purchase a life insurance contract, you have a "free look" period that lasts

An administrative fee of $150 per year may be deducted to cover recordkeeping and other administrative expenses related to a variable annuity.

If you want to purchase term insurance, you will receive all of the following except

This life insurance is used to pay off certain debts, such as auto loans, in the event that you die before the debts are paid in full. Which of the following is not the best buy for the amount of protection offered for an individual?

The "nonworking" spouse method of estimating life insurance includes factors such as Social Security and liquid assets.

Megan wants to purchase a type of whole life insurance policy that will allow part of her premium to be invested in stock, bonds, or money market funds. Which of the following policies should she buy?

Annuities are more attractive for people who expect to live only a short time.

The policy loan provision means that

Personal Financial Planning in Action

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Saving Plans and Payment Accounts

Consumer Credit: Advantages, Disadvantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Insurance

Investing Fundamentals and 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

If you have a conversion term policy,

Which of the following annuities is purchased with a lump-sum payment and allows an individual to receive income payments beginning now?

Most people buy life insurance to

Stephanie is the wage earner in a "typical family" with $40,000 gross annual income. Use the easy method to determine how much insurance she should carry.

The settlement option that pays the life insurance proceeds to the beneficiary for as long as she or he lives is called

The sooner a person is likely to die, the lower the premiums he or she will pay.

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

Frank, age 38, was killed in a car accident. Which of the following riders provided an additional benefit for his heirs?

The lower the interest-adjusted index, the lower the cost of a life insurance policy.

After you purchase a life insurance contract, you have a "free look" period that lasts

An administrative fee of $150 per year may be deducted to cover recordkeeping and other administrative expenses related to a variable annuity.

If you want to purchase term insurance, you will receive all of the following except

This life insurance is used to pay off certain debts, such as auto loans, in the event that you die before the debts are paid in full. Which of the following is not the best buy for the amount of protection offered for an individual?

The "nonworking" spouse method of estimating life insurance includes factors such as Social Security and liquid assets.

Megan wants to purchase a type of whole life insurance policy that will allow part of her premium to be invested in stock, bonds, or money market funds. Which of the following policies should she buy?

Annuities are more attractive for people who expect to live only a short time.

The policy loan provision means that

Personal Financial Planning in Action

Money Management Skills

Taxes in Your Financial Plan

Financial Services: Saving Plans and Payment Accounts

Consumer Credit: Advantages, Disadvantages, Sources, and Costs

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Selecting and Financing Housing

Home and Automobile Insurance

Health and Disability Insurance

Investing Fundamentals and Bonds

Investing in Stocks

Investing in Mutual Funds

Starting Early: Retirement and Estate Planning

Filters