Question 1

Decreasing term insurance pays less to the beneficiary as time passes.

Accepted Answer

A) True 
 B)False

Question 2

Purchasing a life insurance policy is a basic and inexpensive purchase.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is NOT a factor that affects the price a company charges for a life insurance policy?

Accepted Answer

A)  The company's cost of doing business. 
B)  The return on its investments. 
C)  The mortality rate it expects among its policyholders. 
D)  The policy features. 
E)  All of these affect the price. 
A)  The company's cost of doing business. 
B)  The return on its investments. 
C)  The mortality rate it expects among its policyholders. 
D)  The policy features. 
E)  All of these affect the price.

Question 4

Of the following, which one is the most positive feature of whole life insurance for a person who wants a more structured way to save?

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 5

If you have a multiyear level term policy,

Accepted Answer

A)  You can convert your policy to a permanent type at the end of the term. 
B)  You policy will continue for one year. 
C)  Your premium will be the same for the duration of your policy. 
D)  Your premium will not increase when you renew it. 
E)  All of the above are correct. 
A)  You can convert your policy to a permanent type at the end of the term. 
B)  You policy will continue for one year. 
C)  Your premium will be the same for the duration of your policy. 
D)  Your premium will not increase when you renew it. 
E)  All of the above are correct.

Question 6

Which of the following is NOT important when buying life insurance?

Accepted Answer

A)  Buying from a financially strong company 
B)  Buying from professionally qualified representatives 
C)  The reputations of local agencies 
D)  Working with a representative who will help you select the proper kind of protection within your financial boundaries 
E)  Asking family or friends for recommendations to choose an insurance company 
A)  Buying from a financially strong company 
B)  Buying from professionally qualified representatives 
C)  The reputations of local agencies 
D)  Working with a representative who will help you select the proper kind of protection within your financial boundaries 
E)  Asking family or friends for recommendations to choose an insurance company

Question 7

Life insurance is a wise purchase for all individuals.

Accepted Answer

A) True 
 B)False

Question 8

A limited payment policy is a type of 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 9

Amy bought a life insurance policy and named Ben as her beneficiary. She has since died. Who will receive the benefits from her policy?

Accepted Answer

A)  Ben. 
B)  Ben's beneficiaries. 
C)  Her contingent beneficiaries. 
D)  Her parents. 
E)  None of these. 
A)  Ben. 
B)  Ben's beneficiaries. 
C)  Her contingent beneficiaries. 
D)  Her parents. 
E)  None of these.

Question 10

Which of the following households most likely has the greatest need for life insurance?

Accepted Answer

A)  Single adult living alone. 
B)  Adult child living with parents. 
C)  Retired couple with a pension. 
D)  Household with children. 
E)  Independently wealthy adult. 
A)  Single adult living alone. 
B)  Adult child living with parents. 
C)  Retired couple with a pension. 
D)  Household with children. 
E)  Independently wealthy adult.

Question 11

Life insurance benefits may be used to pay off a home mortgage or other debts at the time of death.

Accepted Answer

A) True 
 B)False

Question 12

Georgia was supposed to pay her premium by the 15th of the month. Which of the following provisions allows her to keep her coverage if she is a couple of weeks late with paying her premium (without penalty)?

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 13

If you have misplaced a life insurance policy, your state's insurance commission may be able to help you locate it.

Accepted Answer

A) True 
 B)False

Question 14

Holly and Matt want to use the "nonworking" spouse method to determine the amount of life insurance coverage they need. If their youngest child is 5 years old, how much do they need?

Accepted Answer

A)  $13,000 
B)  $18,000 
C)  $50,000 
D)  $130,000 
E)  $180,000 
A)  $13,000 
B)  $18,000 
C)  $50,000 
D)  $130,000 
E)  $180,000

Question 15

This term life insurance policy will guarantee that you will pay the same premium for the duration of your policy.

Accepted Answer

A)  Renewable term 
B)  Multiyear level term 
C)  Decreasing term 
D)  Limited payment 
E)  Conversion term 
A)  Renewable term 
B)  Multiyear level term 
C)  Decreasing term 
D)  Limited payment 
E)  Conversion term

Question 16

You want to purchase a life insurance policy that pays a policy dividend. What kind of policy would you want to purchase?

Accepted Answer

A)  Dividend policy 
B)  Nonparticipating policy 
C)  Mutual policy 
D)  Participating policy 
E)  Stock policy 
A)  Dividend policy 
B)  Nonparticipating policy 
C)  Mutual policy 
D)  Participating policy 
E)  Stock policy

Question 17

Jeff and Erica have two children. They plan to purchase life insurance using this formula: (18 - Youngest child's age) × $10,000. 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 18

Which of the following statements is incorrect?

Accepted Answer

A)  A deferred annuity allows an individual to receive payments from an annuity at some future date. 
B)  An immediate annuity allows an individual to receive income payments from an annuity beginning at once. 
C)  A life insurance policy allows the beneficiary to receive proceeds at some future date. 
D)  An annuity is more advisable for people in poor health than for those who are likely to live longer than average. 
E)  An annuity is a financial contract written by an insurance company that provides you with regular income. 
A)  A deferred annuity allows an individual to receive payments from an annuity at some future date. 
B)  An immediate annuity allows an individual to receive income payments from an annuity beginning at once. 
C)  A life insurance policy allows the beneficiary to receive proceeds at some future date. 
D)  An annuity is more advisable for people in poor health than for those who are likely to live longer than average. 
E)  An annuity is a financial contract written by an insurance company that provides you with regular income.

Question 19

Which of the following allows an individual to receive an amount of income that will change based on the income received from stocks or other investments over a certain period of time, or over his or her life?

Accepted Answer

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

Question 20

Mutual life insurance companies specialize in the sale of nonparticipating policies.

Accepted Answer

A) True 
 B)False

Decreasing term insurance pays less to the beneficiary as time passes.

Purchasing a life insurance policy is a basic and inexpensive purchase.

Which of the following is NOT a factor that affects the price a company charges for a life insurance policy?

Of the following, which one is the most positive feature of whole life insurance for a person who wants a more structured way to save?

If you have a multiyear level term policy,

Which of the following is NOT important when buying life insurance?

Life insurance is a wise purchase for all individuals.

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

Amy bought a life insurance policy and named Ben as her beneficiary. She has since died. Who will receive the benefits from her policy?

Which of the following households most likely has the greatest need for life insurance?

Life insurance benefits may be used to pay off a home mortgage or other debts at the time of death.

Georgia was supposed to pay her premium by the 15^th of the month. Which of the following provisions allows her to keep her coverage if she is a couple of weeks late with paying her premium (without penalty)?

If you have misplaced a life insurance policy, your state's insurance commission may be able to help you locate it.

Holly and Matt want to use the "nonworking" spouse method to determine the amount of life insurance coverage they need. If their youngest child is 5 years old, how much do they need?

This term life insurance policy will guarantee that you will pay the same premium for the duration of your policy.

You want to purchase a life insurance policy that pays a policy dividend. What kind of policy would you want to purchase?

Jeff and Erica have two children. They plan to purchase life insurance using this formula: (18 - Youngest child's age) × $10,000. Which method are they using to determine their life insurance needs?

Which of the following statements is incorrect?

Which of the following allows an individual to receive an amount of income that will change based on the income received from stocks or other investments over a certain period of time, or over his or her life?

Mutual life insurance companies specialize in the sale of nonparticipating policies.

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

Exam 10: Financial Planning With Life Insurance

Decreasing term insurance pays less to the beneficiary as time passes.

Purchasing a life insurance policy is a basic and inexpensive purchase.

Which of the following is NOT a factor that affects the price a company charges for a life insurance policy?

Of the following, which one is the most positive feature of whole life insurance for a person who wants a more structured way to save?

If you have a multiyear level term policy,

Which of the following is NOT important when buying life insurance?

Life insurance is a wise purchase for all individuals.

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

Amy bought a life insurance policy and named Ben as her beneficiary. She has since died. Who will receive the benefits from her policy?

Which of the following households most likely has the greatest need for life insurance?

Life insurance benefits may be used to pay off a home mortgage or other debts at the time of death.

Georgia was supposed to pay her premium by the 15th of the month. Which of the following provisions allows her to keep her coverage if she is a couple of weeks late with paying her premium (without penalty)?

If you have misplaced a life insurance policy, your state's insurance commission may be able to help you locate it.

Holly and Matt want to use the "nonworking" spouse method to determine the amount of life insurance coverage they need. If their youngest child is 5 years old, how much do they need?

This term life insurance policy will guarantee that you will pay the same premium for the duration of your policy.

You want to purchase a life insurance policy that pays a policy dividend. What kind of policy would you want to purchase?

Jeff and Erica have two children. They plan to purchase life insurance using this formula: (18 - Youngest child's age) × $10,000. Which method are they using to determine their life insurance needs?

Which of the following statements is incorrect?

Which of the following allows an individual to receive an amount of income that will change based on the income received from stocks or other investments over a certain period of time, or over his or her life?

Mutual life insurance companies specialize in the sale of nonparticipating policies.

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

Georgia was supposed to pay her premium by the 15^th of the month. Which of the following provisions allows her to keep her coverage if she is a couple of weeks late with paying her premium (without penalty)?