Question 1

Which statement is false regarding switching policies?

Accepted Answer

A)  An author noted that half of those who buy whole or universal life drop them within 10 years.
B)  The insurance industry is regulated by state insurance commissioners.
C)  Your need for life insurance coverage will change over time.
D)  A new life insurance policy will cost more as you get older.
E)  You will always be insurable if you switch policies.F) A) and E)
G) A) and D)

Question 2

The cash values of a ________ life insurance policy fluctuate according to the yields earned by a separate fund,which can be a stock fund,a money market fund,or a bond fund.

Accepted Answer

A)  modified
B)  variable
C)  adjustable
D)  ordinary
E)  temporaryF) B) and D)
G) A) and B)

Question 3

The premium for a whole life policy increases with your age.

Accepted Answer

A) True 
 B)False

Question 4

Universal life,variable life,and adjustable life are types of term life insurance.

Accepted Answer

A) True 
 B)False

Question 5

Which type of life insurance policy continues to grow in popularity,because the policyholder pays the same premium amount for the life of the policy?

Accepted Answer

A)  Whole life
B)  Multiyear term life
C)  Decreasing term
D)  Return-of-premium term
E)  Convertible termF) All of the above
G) A) and C)

Question 6

Credit life insurance is used to repay a personal debt should the borrower die before doing so.

Accepted Answer

A) True 
 B)False

Question 7

An important provision in every life insurance policy is the right to name your beneficiary.

Accepted Answer

A) True 
 B)False

Question 8

The method of determining life insurance requirements that considers factors such as Social Security and your liquid assets is called the:

Accepted Answer

A)  easy method.
B)  single-income method.
C)  DINK method.
D)  "nonworking" spouse method.
E)  "family need" method.F) A) and C)
G) C) and E)

Question 9

One of the ten golden rules when buying life insurance is to:

Accepted Answer

A)  buy from an unlicensed company.
B)  buy more life insurance than you need.
C)  select an agent who is competent and trustworthy.
D)  ask about higher premium rates for nonsmokers.
E)  not worry about reading and understanding your policy.F) A) and D)
G) C) and D)

Question 10

Permanent insurance can be limited payment,variable,adjustable,or universal life insurance.

Accepted Answer

A) True 
 B)False

Question 11

How much insurance one should carry is an important question for every person who owns or intends to buy life insurance.

Accepted Answer

A) True 
 B)False

Question 12

Some experts claim that credit life insurance policies are:

Accepted Answer

A)  the nation's biggest rip-off.
B)  the best buys.
C)  useful for creditors and debtors alike.
D)  less expensive than term life insurance.
E)  an excellent investment.F) A) and B)
G) A) and C)

Question 13

Using the Multiple of Income Method to estimate insurance needs,what amount of insurance is needed if your current income is $50,000?

Accepted Answer

A)  $50,000
B)  $100,000-$200,000
C)  $250,000-$500,000
D)  $500,000-$900,000
E)  over $1,000,000F) A) and C)
G) A) and E)

Question 14

A plan that insures a large number of persons under the terms of a single policy without requiring medical examinations is called a ________ life insurance policy.

Accepted Answer

A)  individual
B)  whole
C)  large number
D)  permanent
E)  groupF) A) and B)
G) B) and E)

Question 15

Because the premium payment period for a limited payment policy is shorter than that of a whole life policy,the annual premium is higher.

Accepted Answer

A) True 
 B)False

Question 16

When comparing Universal Life policies with Whole Life policies,which of the following is typically an advantage of a Universal Life policy?

Accepted Answer

A)  Cash value accumulates
B)  You can access cash value only through a policy loan
C)  The policy will lapse if a specific premium is not paid each year
D)  You have control over your outlay
E)  Your premium cannot be changedF) B) and D)
G) A) and C)

Question 17

Group life and credit life insurance are generally permanent forms of insurance.

Accepted Answer

A) True 
 B)False

Question 18

Industrial life insurance is the most popular form of insurance today.

Accepted Answer

A) True 
 B)False

Question 19

Life insurance proceeds may be used to provide a retirement income.

Accepted Answer

A) True 
 B)False

Question 20

The cost-of-living protection rider is designed to help prevent inflation from eroding the purchasing power of the protection your policy provides.

Accepted Answer

A) True 
 B)False

Exam 12: Life Insurance

The cost-of-living protection rider is designed to help prevent inflation from eroding the purchasing power of the protection your policy provides.

Correct AnswerverifiedShow Answer

When comparing Universal Life policies with Whole Life policies,which of the following is typically an advantage of a Universal Life policy?

Correct AnswerverifiedShow Answer

Using the Multiple of Income Method to estimate insurance needs,what amount of insurance is needed if your current income is $50,000?

Correct AnswerverifiedShow Answer

Group life and credit life insurance are generally permanent forms of insurance.

Correct AnswerverifiedShow Answer

The premium for a whole life policy increases with your age.

Correct AnswerverifiedShow Answer

Which type of life insurance policy continues to grow in popularity,because the policyholder pays the same premium amount for the life of the policy?

Correct AnswerverifiedShow Answer

Universal life,variable life,and adjustable life are types of term life insurance.

Correct AnswerverifiedShow Answer

Industrial life insurance is the most popular form of insurance today.

Correct AnswerverifiedShow Answer

One of the ten golden rules when buying life insurance is to:

Correct AnswerverifiedShow Answer

The cash values of a ________ life insurance policy fluctuate according to the yields earned by a separate fund,which can be a stock fund,a money market fund,or a bond fund.

Correct AnswerverifiedShow Answer

An important provision in every life insurance policy is the right to name your beneficiary.

Correct AnswerverifiedShow Answer

Life insurance proceeds may be used to provide a retirement income.

Correct AnswerverifiedShow Answer

How much insurance one should carry is an important question for every person who owns or intends to buy life insurance.

Correct AnswerverifiedShow Answer

The method of determining life insurance requirements that considers factors such as Social Security and your liquid assets is called the:

Correct AnswerverifiedShow Answer

A plan that insures a large number of persons under the terms of a single policy without requiring medical examinations is called a ________ life insurance policy.

Correct AnswerverifiedShow Answer

Permanent insurance can be limited payment,variable,adjustable,or universal life insurance.

Correct AnswerverifiedShow Answer

Which statement is false regarding switching policies?

Correct AnswerverifiedShow Answer

Because the premium payment period for a limited payment policy is shorter than that of a whole life policy,the annual premium is higher.

Correct AnswerverifiedShow Answer

Some experts claim that credit life insurance policies are:

Correct AnswerverifiedShow Answer

Credit life insurance is used to repay a personal debt should the borrower die before doing so.

Correct AnswerverifiedShow Answer

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