Question 1

Which of the following is NOT a feature of whole life insurance?

Accepted Answer

A)  It accumulates cash value. 
B)  It provides both a death benefit and a savings component. 
C)  The policy will return all premiums if you survive to the end of the policy. 
D)  You can borrow from your cash value but must pay interest on the loan. 
E)  The policy requires that you pay a specified premium each year for the rest of your life. 
A)  It accumulates cash value. 
B)  It provides both a death benefit and a savings component. 
C)  The policy will return all premiums if you survive to the end of the policy. 
D)  You can borrow from your cash value but must pay interest on the loan. 
E)  The policy requires that you pay a specified premium each year for the rest of your life.

Question 2

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 income 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 income payments from an annuity beginning at once.

Question 3

In 2014 life expectancy has risen, and a male who is 25 years old can expect to live an additional 50 years.

Accepted Answer

A) True 
 B)False

Question 4

The most widely used settlement option for a life insurance program is the lump-sum payment.

Accepted Answer

A) True 
 B)False

Question 5

Of the 868 life insurance companies in the United States, about ___ are stock companies.

Accepted Answer

A)  5% 
B)  25% 
C)  50% 
D)  75% 
E)  95% 
A)  5% 
B)  25% 
C)  50% 
D)  75% 
E)  95%

Question 6

Another name for permanent life insurance is

Accepted Answer

A)  Whole life. 
B)  Renewable term. 
C)  Conversion term. 
D)  Decreasing term. 
E)  Return-of-Premium term. 
A)  Whole life. 
B)  Renewable term. 
C)  Conversion term. 
D)  Decreasing term. 
E)  Return-of-Premium term.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a charge you will pay when you purchase a variable annuity?

Accepted Answer

A)  Surrender charge. 
B)  Mortality and expense risk charge. 
C)  Administrative fee. 
D)  Fund expense. 
E)  All of these. 
A)  Surrender charge. 
B)  Mortality and expense risk charge. 
C)  Administrative fee. 
D)  Fund expense. 
E)  All of these.

Question 9

When you buy life insurance, you are making a contract with the company issuing the policy where you agree to pay a premium periodically and the company agrees to pay a death benefit.

Accepted Answer

A) True 
 B)False

Question 10

Judy and James have a 4-year-old child. They plan to purchase life insurance using this formula: Current income × 7 × 70%. Which method are they using to determine their life insurance needs?

Accepted Answer

A)  Easy method 
B)  Dual income, no kids method 
C)  Formal calculation method 
D)  Nonworking spouse method 
E)  Family need method 
A)  Easy method 
B)  Dual income, no kids method 
C)  Formal calculation method 
D)  Nonworking spouse method 
E)  Family need method

Question 11

An interest-adjusted index is a method of evaluating the cost of life insurance by taking into account the time value of money.

Accepted Answer

A) True 
 B)False

Question 12

The earnings from an investment in an annuity is taxed the same as earnings from an investment in a certificate of deposit.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is NOT temporary insurance?

Accepted Answer

A)  Whole life 
B)  Renewable term 
C)  Conversion term 
D)  Decreasing term 
E)  Multiyear level term 
A)  Whole life 
B)  Renewable term 
C)  Conversion term 
D)  Decreasing term 
E)  Multiyear level term

Question 14

A young employee is buying individual life insurance and is worried about the impact inflation will have on his life insurance coverage. 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 15

Pam just started working at XYZ Widget Company and finally wants to get insurance coverage through her employer. She does not want to take a medical exam to get coverage, because she has some underlying health conditions and is concerned that she might not qualify for a policy. Which of the following life insurance policies should she apply for?

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 16

Which of the following allows an individual to receive a fixed amount of income over a certain period of time, or over his or her life?

Accepted Answer

A)  Fixed annuity 
B)  Term insurance 
C)  Whole insurance 
D)  Variable annuity 
E)  401(k) 
A)  Fixed annuity 
B)  Term insurance 
C)  Whole insurance 
D)  Variable annuity 
E)  401(k)

Question 17

Mildred was diagnosed with terminal cancer and knows that she doesn't have long to live. Which of the following riders would allow her to receive cash now?

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 18

A primary reason for buying an annuities is for

Accepted Answer

A)  Savings plans. 
B)  Certificates of deposit. 
C)  Individual retirement accounts (IRAs). 
D)  Term life insurance plans. 
E)  Whole life insurance plans. 
A)  Savings plans. 
B)  Certificates of deposit. 
C)  Individual retirement accounts (IRAs). 
D)  Term life insurance plans. 
E)  Whole life insurance plans.

Question 19

Which of the following provisions requires the policyholder to again qualify as an acceptable risk and pay overdue premiums with interest in order to put a lapsed policy back in force?

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

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

Which of the following is NOT a feature of whole life insurance?

Which of the following statements is correct?

In 2014 life expectancy has risen, and a male who is 25 years old can expect to live an additional 50 years.

The most widely used settlement option for a life insurance program is the lump-sum payment.

Of the 868 life insurance companies in the United States, about ___ are stock companies.

Another name for permanent life insurance is

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

Which of the following is a charge you will pay when you purchase a variable annuity?

When you buy life insurance, you are making a contract with the company issuing the policy where you agree to pay a premium periodically and the company agrees to pay a death benefit.

Judy and James have a 4-year-old child. They plan to purchase life insurance using this formula: Current income × 7 × 70%. Which method are they using to determine their life insurance needs?

An interest-adjusted index is a method of evaluating the cost of life insurance by taking into account the time value of money.

The earnings from an investment in an annuity is taxed the same as earnings from an investment in a certificate of deposit.

Which of the following is NOT temporary insurance?

A young employee is buying individual life insurance and is worried about the impact inflation will have on his life insurance coverage. Which of the following riders should he consider?

Which of the following allows an individual to receive a fixed amount of income over a certain period of time, or over his or her life?

Mildred was diagnosed with terminal cancer and knows that she doesn't have long to live. Which of the following riders would allow her to receive cash now?

A primary reason for buying an annuities is for

Which of the following provisions requires the policyholder to again qualify as an acceptable risk and pay overdue premiums with interest in order to put a lapsed policy back in force?

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?

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

Which of the following is NOT a feature of whole life insurance?

Which of the following statements is correct?

In 2014 life expectancy has risen, and a male who is 25 years old can expect to live an additional 50 years.

The most widely used settlement option for a life insurance program is the lump-sum payment.

Of the 868 life insurance companies in the United States, about ___ are stock companies.

Another name for permanent life insurance is

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

Which of the following is a charge you will pay when you purchase a variable annuity?

When you buy life insurance, you are making a contract with the company issuing the policy where you agree to pay a premium periodically and the company agrees to pay a death benefit.

Judy and James have a 4-year-old child. They plan to purchase life insurance using this formula: Current income × 7 × 70%. Which method are they using to determine their life insurance needs?

An interest-adjusted index is a method of evaluating the cost of life insurance by taking into account the time value of money.

The earnings from an investment in an annuity is taxed the same as earnings from an investment in a certificate of deposit.

Which of the following is NOT temporary insurance?

A young employee is buying individual life insurance and is worried about the impact inflation will have on his life insurance coverage. Which of the following riders should he consider?

Which of the following allows an individual to receive a fixed amount of income over a certain period of time, or over his or her life?

Mildred was diagnosed with terminal cancer and knows that she doesn't have long to live. Which of the following riders would allow her to receive cash now?

A primary reason for buying an annuities is for

Which of the following provisions requires the policyholder to again qualify as an acceptable risk and pay overdue premiums with interest in order to put a lapsed policy back in force?

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?

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