Question 1

If you buy a term insurance policy with a conversion option,this means that you

Accepted Answer

A)  will get most of your premiums back if you terminate the policy before its expiration. 
B)  can convert the policy to a larger term policy after one year. 
C)  can convert your term policy to a whole life policy during the conversion period. 
D)  will be able to change the term of your policy and automatically extend it. 
A)  will get most of your premiums back if you terminate the policy before its expiration. 
B)  can convert the policy to a larger term policy after one year. 
C)  can convert your term policy to a whole life policy during the conversion period. 
D)  will be able to change the term of your policy and automatically extend it.

Question 2

A disadvantage of whole life policies is that

Accepted Answer

A)  the premiums are not predictable. 
B)  they are much more expensive than term policies. 
C)  the face value of the policy can change over time. 
D)  the cash value is frozen and not available to policyholders. 
A)  the premiums are not predictable. 
B)  they are much more expensive than term policies. 
C)  the face value of the policy can change over time. 
D)  the cash value is frozen and not available to policyholders.

Question 3

If you choose to receive your benefit in the form of equal payments for a certain number of years instead of a lump sum,you elected to receive a(n)

Accepted Answer

A)  installment payments settlement. 
B)  interest payments settlement. 
C)  lump-sum settlement. 
D)  limited settlement. 
A)  installment payments settlement. 
B)  interest payments settlement. 
C)  lump-sum settlement. 
D)  limited settlement.

Question 4

A disadvantage of variable life policies is that the cash value may actually decrease in value if stocks or other investments decline.

Accepted Answer

A) True 
 B)False

Question 5

Term insurance will provide most of a young family's life insurance coverage due to its affordable cost.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is false concerning term life insurance?

Accepted Answer

A)  The premiums increase as you renew the policy. 
B)  It will expire and be of no value if not renewed. 
C)  It has a cash value or savings feature as long as you keep the policy active. 
D)  It provides the same amount of cash to a beneficiary as whole life policies. 
A)  The premiums increase as you renew the policy. 
B)  It will expire and be of no value if not renewed. 
C)  It has a cash value or savings feature as long as you keep the policy active. 
D)  It provides the same amount of cash to a beneficiary as whole life policies.

Question 7

The cheapest form of life insurance that provides coverage for a specified time period is ________.

Accepted Answer

The answer of The cheapest form of life insurance that...

Question 8

All of the following are limitations of the budget method of estimating life insurance needs,except

Accepted Answer

A)  it does not consider your family circumstances. 
B)  inflation may cause you to underestimate your needs. 
C)  someone in your household could experience an unanticipated illness. 
D)  your income may not rise over time as expected. 
A)  it does not consider your family circumstances. 
B)  inflation may cause you to underestimate your needs. 
C)  someone in your household could experience an unanticipated illness. 
D)  your income may not rise over time as expected.

Question 9

Which of the following is not a type of life insurance covered in the text?

Accepted Answer

A)  Term 
B)  Dependent life 
C)  Whole life 
D)  Universal life 
A)  Term 
B)  Dependent life 
C)  Whole life 
D)  Universal life

Question 10

Whole life policies are the least expensive way to meet your life insurance needs.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following will increase your need for life insurance?

Accepted Answer

A)  Your spouse graduates from college 
B)  You receive a large inheritance 
C)  Your only child graduates from college 
D)  You get married 
A)  Your spouse graduates from college 
B)  You receive a large inheritance 
C)  Your only child graduates from college 
D)  You get married

Question 12

Life insurance premiums are based on all of the following except

Accepted Answer

A)  the amount of coverage you desire. 
B)  your age when you take out the policy. 
C)  your health habits. 
D)  the age of your children when the policy is taken out. 
A)  the amount of coverage you desire. 
B)  your age when you take out the policy. 
C)  your health habits. 
D)  the age of your children when the policy is taken out.

Question 13

How much insurance would be needed in order to provide for a family for 20 years if the pretax income necessary to cover living expenses is $50,000 and the money can be invested at 6%?

Accepted Answer

A)  $573,500 
B)  $1,000,000 
C)  $833,333 
D)  $2,100,000 
A)  $573,500 
B)  $1,000,000 
C)  $833,333 
D)  $2,100,000

Question 14

Use the following two columns of items to answer the matching questions below:
-whole life insurance

Accepted Answer

A) cash value and benefits to the beneficiary 
B) combination of term insurance and a savings plan 
C) premiums constant with reduced benefits 
D) term insurance with a variable investment portion 
A) cash value and benefits to the beneficiary 
B) combination of term insurance and a savings plan 
C) premiums constant with reduced benefits 
D) term insurance with a variable investment portion

Question 15

Universal life insurance is similar to whole life,but allows the policyholder more choices of how the savings portion of the premiums is invested.

Accepted Answer

A) True 
 B)False

Question 16

Life insurance may be obtained through all of the following except

Accepted Answer

A)  financial institutions. 
B)  private insurance companies. 
C)  the federal government. 
D)  your employer. 
A)  financial institutions. 
B)  private insurance companies. 
C)  the federal government. 
D)  your employer.

Question 17

Life insurance that provides insurance over a specified term and allows policyholders to invest residual funds in various types of investments is known as

Accepted Answer

A)  whole life insurance. 
B)  term life insurance. 
C)  universal life insurance. 
D)  variable life insurance. 
A)  whole life insurance. 
B)  term life insurance. 
C)  universal life insurance. 
D)  variable life insurance.

Question 18

The only reason a person would buy life insurance is to eliminate or substantially reduce the financial consequences of that person's death by providing income to his or her dependents.

Accepted Answer

A) True 
 B)False

Question 19

Life insurance affects everything except your

Accepted Answer

A)  liquidity. 
B)  net worth. 
C)  life expectancy. 
D)  peace of mind. 
A)  liquidity. 
B)  net worth. 
C)  life expectancy. 
D)  peace of mind.

Question 20

The least expensive form of life insurance is

Accepted Answer

A)  term. 
B)  whole life. 
C)  universal life. 
D)  variable life. 
A)  term. 
B)  whole life. 
C)  universal life. 
D)  variable life.

Exam 13: Life Insurance

If you buy a term insurance policy with a conversion option,this means that you

A disadvantage of whole life policies is that

If you choose to receive your benefit in the form of equal payments for a certain number of years instead of a lump sum,you elected to receive a(n)

A disadvantage of variable life policies is that the cash value may actually decrease in value if stocks or other investments decline.

Term insurance will provide most of a young family's life insurance coverage due to its affordable cost.

Which of the following statements is false concerning term life insurance?

The cheapest form of life insurance that provides coverage for a specified time period is ________.

All of the following are limitations of the budget method of estimating life insurance needs,except

Which of the following is not a type of life insurance covered in the text?

Whole life policies are the least expensive way to meet your life insurance needs.

Which of the following will increase your need for life insurance?

Life insurance premiums are based on all of the following except

How much insurance would be needed in order to provide for a family for 20 years if the pretax income necessary to cover living expenses is $50,000 and the money can be invested at 6%?

Use the following two columns of items to answer the matching questions below: -whole life insurance

Universal life insurance is similar to whole life,but allows the policyholder more choices of how the savings portion of the premiums is invested.

Life insurance may be obtained through all of the following except

Life insurance that provides insurance over a specified term and allows policyholders to invest residual funds in various types of investments is known as

The only reason a person would buy life insurance is to eliminate or substantially reduce the financial consequences of that person's death by providing income to his or her dependents.

Life insurance affects everything except your

The least expensive form of life insurance is

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