Question 1

Which of the following is NOT a type of permanent life insurance?

Accepted Answer

A)   Whole life
B)   Variable life
C)   Universal life
D)   Adjustable life
E)   Decreasing term E

Question 2

Molly is thinking about buying a type of whole life insurance policy, but she is not sure about how much she will need in the next few years. She may need to change her coverage as her needs change. Which of the following policies would meet her needs?

Accepted Answer

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

Question 3

Jeanne wants to purchase a life insurance policy with guaranteed premiums. What kind of policy would she want to purchase?

Accepted Answer

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

Question 4

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

Question 5

All of the following are major rating agencies for insurance except

Accepted Answer

A)   A.M. Best.
B)   Dun & Bradstreet.
C)   Moody's.
D)   Standard & Poor's.
E)   Weiss Research.

Question 6

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

Question 7

Life expectancy for men is longer than that for women.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is NOT a type of permanent insurance?

Accepted Answer

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

Question 9

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.

Question 10

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.

Question 11

The settlement option that pays the life insurance proceeds in equal periodic installments for a specified number of years after your death 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.

Question 12

Wendy has had a life insurance policy for five years with her spouse listed as the person who receives the benefit if she dies. She was recently divorced. Which of the following provisions should she take action on?

Accepted Answer

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

Question 13

Polly wants the opportunity to change the amount she pays for her annual premium through the life of her insurance policy without changing her coverage. Which of the following types of whole life policies would meet her needs?

Accepted Answer

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

Question 14

According to the suicide clause, 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 15

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

Accepted Answer

A) True 
 B)False

Question 16

Francisco and Maria have three children and want to complete a detailed worksheet to determine the amount of life insurance they need to purchase. They will consider factors such as Social Security and liquid assets. 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

Question 17

The Tax Reform Act of 1986

Accepted Answer

A)   Preserved the tax advantage of annuities but curtailed deductions for IRAs.
B)   Allowed whole life insurance policies to be sold.
C)   Identified annuities to be the same as certificates of deposit.
D)   Allowed annuities to be purchased for individual retirement accounts.
E)   Made all annuities tax free.

Question 18

A person who is named to receive the proceeds from a life insurance policy is a(n)

Accepted Answer

A)   Contract.
B)   Beneficiary.
C)   Policyholder.
D)   Insurer.
E)   Child.

Question 19

Donald and Charlene are married and do not have any children. They plan to ensure that the other will not be unduly burdened by debts in case one of them dies. Each plans to continue to work after the other one dies. 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 needs method

Question 20

Bonnie is most concerned about being able to buy additional insurance without undergoing medical exams. Which of the following riders should she 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

Exam 10: Financial Planning With Life Insurance

Which of the following is NOT a type of permanent life insurance?

Molly is thinking about buying a type of whole life insurance policy, but she is not sure about how much she will need in the next few years. She may need to change her coverage as her needs change. Which of the following policies would meet her needs?

Jeanne wants to purchase a life insurance policy with guaranteed premiums. What kind of policy would she want to purchase?

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?

All of the following are major rating agencies for insurance except

Life expectancy for men is longer than that for women.

Which of the following is NOT a type of permanent insurance?

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

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

The settlement option that pays the life insurance proceeds in equal periodic installments for a specified number of years after your death is called

Wendy has had a life insurance policy for five years with her spouse listed as the person who receives the benefit if she dies. She was recently divorced. Which of the following provisions should she take action on?

Polly wants the opportunity to change the amount she pays for her annual premium through the life of her insurance policy without changing her coverage. Which of the following types of whole life policies would meet her needs?

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

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

Francisco and Maria have three children and want to complete a detailed worksheet to determine the amount of life insurance they need to purchase. They will consider factors such as Social Security and liquid assets. Which method are they using to determine their life insurance needs?

The Tax Reform Act of 1986

A person who is named to receive the proceeds from a life insurance policy is a(n)

Donald and Charlene are married and do not have any children. They plan to ensure that the other will not be unduly burdened by debts in case one of them dies. Each plans to continue to work after the other one dies. Which method are they using to determine their life insurance needs?

Bonnie is most concerned about being able to buy additional insurance without undergoing medical exams. Which of the following riders should she consider?