Question 1

A term insurance policy pays a benefit only if you die during the period that the policy covers.

Accepted Answer

A) True 
 B)False

Question 2

Which method of determining life insurance requirements is designed specifically for a working couple with no dependents?

Accepted Answer

A)   hard method
B)   easy method
C)   "nonworking" spouse method
D)   thorough method
E)   DINK methodF) All of the above
G) A) and D)

Question 3

A contract stating that the annuitant will receive a constant amount of income over a certain period or for life is called a:

Accepted Answer

A)   flexible annuity.
B)   fixed annuity.
C)   variable annuity.
D)   ERISA annuity.
E)   participating annuity.F) All of the above
G) A) and D)

Question 4

Your annual income is $35,000. What is your life insurance need based on the easy method?

Accepted Answer

A)   $35,000
B)   $110,500
C)   $171,500
D)   $191,500
E)   over $200,000F) D) and E)
G) C) and E)

Question 5

Some experts claim that credit life insurance policies are:

Accepted Answer

A)   a huge 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 D)
G) A) and B)

Question 6

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 E)
G) D) and E)

Question 7

What percent of all applicants who apply for life insurance are found to be insurable?

Accepted Answer

A)   58
B)   68
C)   78
D)   88
E)   98F) D) and E)
G) B) and E)

Question 8

Stock life insurance companies are owned by their policyholders.

Accepted Answer

A) True 
 B)False

Question 9

A primary reason for buying an annuity is to give you retirement income for the rest of your life.

Accepted Answer

A) True 
 B)False

Question 10

The prices of life insurance policies:

Accepted Answer

A)   vary considerably from policy to policy.
B)   are relatively the same for all policies.
C)   are higher for females than males.
D)   have remained constant over time.
E)   are set by the government here in the United States.F) None of the above
G) B) and E)

Question 11

Decreasing term life insurance is no longer available.

Accepted Answer

A) True 
 B)False

Question 12

Term insurance is protection for a specified period of time, usually 1, 5, 10, or 20 years.

Accepted Answer

A) True 
 B)False

Question 13

Usually, there is no time limit on reinstatement of a lapsed life insurance policy.

Accepted Answer

A) True 
 B)False

Question 14

The grace period normally allows ____________ days to elapse, during which time the premium may be paid on an insurance policy.

Accepted Answer

A)   11 to 15
B)   16 to 21
C)   20 to 25
D)   28 to 31
E)   35 to 40F) B) and D)
G) D) and E)

Question 15

Households with small children most often have the greatest need for life insurance.

Accepted Answer

A) True 
 B)False

Question 16

The insurance industry rule of thumb that a typical family will need 70% of salary for seven years in order to adjust for the financial consequences of a salary earner's death is known as which of the following estimation methods?

Accepted Answer

A)   Nonworking spouse
B)   Easy method
C)   DINK method
D)   Family need
E)   Soccer momF) A) and C)
G) None of the above

Question 17

Catherine Carey has made the choice to stay home and raise her three kids while her husband works. She wants to determine her insurance need. What method was specifically designed for someone in her situation?

Accepted Answer

A)   Easy method
B)   DINK method
C)   Nonworking spouse method
D)   Family need method
E)   Soccer mom methodF) C) and D)
G) A) and D)

Question 18

How many different types of basic life insurance are there?

Accepted Answer

A)   1
B)   2
C)   3
D)   4
E)   5F) A) and B)
G) A) and C)

Question 19

The financial strength of an insurance company may be a major factor in holding down premium costs for consumers.

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 12: Life Insurance

What percent of all applicants who apply for life insurance are found to be insurable?

Correct AnswerverifiedShow Answer

A term insurance policy pays a benefit only if you die during the period that the policy covers.

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

Which method of determining life insurance requirements is designed specifically for a working couple with no dependents?

Correct AnswerverifiedShow Answer

A primary reason for buying an annuity is to give you retirement income for the rest of your life.

Correct AnswerverifiedShow Answer

Decreasing term life insurance is no longer available.

Correct AnswerverifiedShow Answer

The financial strength of an insurance company may be a major factor in holding down premium costs for consumers.

Correct AnswerverifiedShow Answer

The prices of life insurance policies:

Correct AnswerverifiedShow Answer

Your annual income is $35,000. What is your life insurance need based on the easy method?

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

How many different types of basic life insurance are there?

Correct AnswerverifiedShow Answer

Term insurance is protection for a specified period of time, usually 1, 5, 10, or 20 years.

Correct AnswerverifiedShow Answer

Usually, there is no time limit on reinstatement of a lapsed life insurance policy.

Correct AnswerverifiedShow Answer

Some experts claim that credit life insurance policies are:

Correct AnswerverifiedShow Answer

Households with small children most often have the greatest need for life insurance.

Correct AnswerverifiedShow Answer

The grace period normally allows ____________ days to elapse, during which time the premium may be paid on an insurance policy.

Correct AnswerverifiedShow Answer

The insurance industry rule of thumb that a typical family will need 70% of salary for seven years in order to adjust for the financial consequences of a salary earner's death is known as which of the following estimation methods?

Correct AnswerverifiedShow Answer

Stock life insurance companies are owned by their policyholders.

Correct AnswerverifiedShow Answer

A contract stating that the annuitant will receive a constant amount of income over a certain period or for life is called a:

Correct AnswerverifiedShow Answer

Catherine Carey has made the choice to stay home and raise her three kids while her husband works. She wants to determine her insurance need. What method was specifically designed for someone in her situation?

Correct AnswerverifiedShow Answer

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