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Exam 12: Life Insurance

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Question 81

Multiple Choice

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Russell Lowe has a life insurance policy that allows him to change his premium without changing his coverage.He can also access his cash value with a policy loan or a withdrawal.What type of insurance does Russell likely have?

A) Ordinary whole life
B) Limited payment life
C) Variable life
D) Adjustable life
E) Universal life

F) C) and E)
G) C) and D)

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Question 82

Multiple Choice

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Richard Beck has a life insurance policy which he has altered to include an accidental death benefit payable to his son and daughter.This alteration has most likely been done by attaching a ____ to the policy.

A) accelerated benefits clause
B) policy dividend
C) guaranteed insurability clause
D) second-to-die rider
E) double indemnity provision

F) A) and C)
G) C) and E)

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Question 83

True/False

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

Insurance experts have estimated that extra costs of up to ___________ a year may be required to replace the services of a homemaker in a family with small children.

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

The policy loan provision permits you to borrow any amount up to the cash value of the policy.

The amount of your whole life insurance premium for each $1,000 of coverage depends primarily on the age at which you purchase the insurance.

Which statement is false?

Most people buy life insurance to protect someone who depends on them from financial losses caused by their death.

Life insurance proceeds may be used to:

When choosing life insurance,you should consider:

Explain how a guaranteed insurability option works and why it is beneficial.

Which type of life insurance policy combines term insurance and investment elements?

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

Term insurance is a basic,"no frills" form of life insurance and is the best value for most consumers.

A settlement option that provides for payment of the life insurance proceeds in equal periodic installments for a specified number of years after your death is called a:

Suppose your annual premium for a $30,000,20-year limited-payment policy is $675 over the 20-year period.The cash value of your policy at the end of the 20 years is $10,500.Assume that you could have invested the annual premium in a mutual fund yielding 7 percent annually.What is the net cost of your insurance for the 20-year period? Use a factor of 40.995 for your time value of money calculation.

Life insurance is one of the most important and expensive purchases you may ever make.

Frank Keating has a life insurance policy that can be exchanged for a whole life policy without a medical examination.Once it has been exchanged,the premiums will increase.What type of term life insurance does Frank likely have?

Which type of insurance is sometimes called temporary life insurance?