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Exam 12: Life Insurance

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Question 31

Multiple Choice

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Individuals and families purchase life insurance primarily to:

A) pay liability claims resulting from accidents.
B) protect someone who depends on them from financial losses caused by their death.
C) fund lavish retirement vacations.
D) keep up with people with a similar financial situation.
E) make early retirement possible.

F) A) and B)
G) A) and C)

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Question 32

True/False

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Many people choose to supplement their retirement income by withdrawing some of the investment portion as an annuity to provide regular income.

A) True
B) False

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Question 33

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

Which is a correct statement about life insurance?

John Camey has a life insurance policy that is tied to a separate stock fund.The cash value of his insurance policy depends on the yields earned in this fund and is not guaranteed.What type of life insurance does John likely have?

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

Lori Simpson is thinking about purchasing some life insurance.She goes to a company where the policyholders are essentially the owners of the company.What type of life insurance company has she visited?

Renee Warning has a life insurance policy where the payments to beneficiaries get smaller as time passes.What type of term life insurance does Renee likely have?

The total debts of you and your spouse include the following: mortgage,$180,000; auto loan,$10,000; credit card balance,$2,000; and personal debts of $6,000.Further,you estimate that your funeral will cost $4,000.Your spouse expects to continue to work after your death.What is your life insurance need using the DINK method?

Cash-value policies may make sense for people who:

The guaranteed insurability option is desirable if you anticipate the need for additional life insurance in the future.

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

If you have convertible term insurance,you can exchange it for a whole life policy without a medical examination and at a higher premium.

Lisa Smith has her age listed on her driver's license as being three years younger than it actually is.This is also how old she tells her insurance company she is.Her insurance company has discovered she lied about her age.What provision of her life insurance contract states that her benefits will be what her premium would have bought if she had been truthful about her age?

Term insurance is protection for a specified period of time,usually:

The lump-sum payment settlement option is the least used option.

Two basic types of life insurance are temporary and permanent insurance.

Term life insurance premiums decrease as you get older.

Jeff Willis has five kids and more debt than the average family.What method would probably be the best method for him to use to calculate his insurance needs?

If your insurance agent does not give you an interest-adjusted index upon request,then your best bet is to: