Question 1

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.F) B) and D)
G) None of the above

Question 2

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 policyF) A) and B)
G) C) and D)

Question 3

The policy loan provision means that

Accepted Answer

A)   An individual can take out a loan on his or her term policy.
B)   The death benefit will be increased by the amount of an outstanding policy loan.
C)   The policy owner can borrow any amount up to the cash value of the policy.
D)   The beneficiary can borrow any amount up to the total benefit.
E)   No interest will accumulate for any loans related to life insurance.F) B) and D)
G) C) and D)

Question 4

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 benefitsF) A) and E)
G) A) and B)

Question 5

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?

Accepted Answer

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

Question 6

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 must pay interest on any outstanding policy loans.
E)   The policy requires that you pay a specified premium each year for the rest of your life.F) A) and C)
G) A) and B)

Question 7

If you have a renewable term policy,

Accepted Answer

A)   You may not purchase insurance once your term ends.
B)   Your premium may increase if you continue it for another term because you will be older.
C)   Your premium will not increase because your policy is renewable.
D)   You can convert your policy to a permanent type at the end of the term.
E)   None of these is correct.F) B) and E)
G) All of the above

Question 8

A person who is named to receive the benefits from an insurance policy is a(n)

Accepted Answer

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

Question 9

Francisco and Maria have three children and want to complete a detailed worksheet to determine the amount of life insurance they need to purchase.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 methodF) B) and C)
G) A) and B)

Question 10

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 11

An administrative fee of $150 per year may be deducted to cover recordkeeping and other administrative expenses related to a variable annuity.

Accepted Answer

A) True 
 B)False

Question 12

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)   $180,000F) A) and D)
G) A) and C)

Question 13

If you have a conversion term policy,

Accepted Answer

A)   Your premium will not increase when you renew it.
B)   You can convert your policy from permanent to term at any time.
C)   You can convert your term policy to a permanent policy.
D)   Your policy will have the same premium as other term policies.
E)   Your premium will be higher than a whole life policy premium.F) B) and C)
G) A) and C)

Question 14

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 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 insurance company will calculate the annual amounts to pay each person for an annuity.F) A) and C)
G) A) and B)

Question 15

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)   Ignoring 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 companyF) A) and D)
G) None of the above

Question 16

The sooner a person is likely to die,the lower the premiums he or she will pay.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Most people buy life insurance to

Accepted Answer

A)   Pay off a mortgage.
B)   Protect the people who depend on the insured from financial losses caused by his or her death.
C)   Pay for a vacation.
D)   Spend money.
E)   Pay taxes.F) B) and C)
G) A) and B)

Question 19

Which of the following products allows an individual to receive payments beginning now?

Accepted Answer

A)   Term insurance
B)   Deferred annuity
C)   Whole life insurance
D)   Immediate annuity
E)   Universal life insuranceF) A) and B)
G) None of the above

Question 20

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) F) All of the above
G) C) and D)

Exam 10: Financial Planning With Life Insurance

If you have a conversion term policy,

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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?

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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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

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

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The policy loan provision means that

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

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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?

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Most people buy life insurance to

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If you have a renewable term policy,

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The sooner a person is likely to die,the lower the premiums he or she will pay.

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Which of the following statements is incorrect?

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A person who is named to receive the benefits from an insurance policy is a(n)

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Which of the following products allows an individual to receive payments beginning now?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

An administrative fee of $150 per year may be deducted to cover recordkeeping and other administrative expenses related to a variable annuity.

Correct AnswerverifiedShow Answer

Francisco and Maria have three children and want to complete a detailed worksheet to determine the amount of life insurance they need to purchase.Which method are they using to determine their life insurance needs?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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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?

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