4.4 Term insurance
Brian, a 45-year old general contractor, wants financial protection for his family while $300,000 of his assets are tied up in a building project for the next five years. Which of the following types of life insurance policies would give him that protection at the lowest cost?
5 year level term
Gerald, a 40-year-old building contractor, wants financial protection for his family while $150,000 of his assets are tied up in a building project for about five years. Which of the following types of life insurance policies would give him that protection at the lowest cost?
5-year level term
Of the following, which statement best describes a 10-year renewable term life insurance policy?
A 10-year renewable term is a policy with a fixed face amount and a premium that increases at each 10-year renewal period.
Madge took out a $100,000, 10-year convertible term policy at age 30, and at age 36 decides to convert the policy to permanent insurance of the same amount on an original-age basis. All of the following statements pertaining to this situation are correct EXCEPT:
Conversion will be contingent upon her evidence of insurability
Malia purchases a $50,000 5-year level term policy. Which of the following statements about Malia's coverage is NOT correct?
If Malia dies after the specified 5 years, only the policy's cash value will be paid.
Which of the following statements pertaining to the conversion privilege in group insurance policies is NOT correct?
Insureds who resign or are terminated have 365 days in which to convert their coverage to individual policies
Juan owns a 5-year $50,000 term life insurance policy, and Maria owns a $50,000 whole life insurance policy. Which of the following statements is CORRECT?"
Juan's policy, but not Maria's, may have an option to convert
Which of the following statements about a 1-year renewable term policy is CORRECT?
it renews with an increase in premium based on the insured's age
David has a $300,000 nonrenewable 5-year term policy. The premium he pays for this policy would be
less than for a $300,000, 5-year renewable term policy
Michelle has a term insurance policy in which the amount of protection remains constant during the term period. Which kind of term insurance does Michelle have?
level term
Nora, age 25, just started working and would like to purchase life insurance to ensure that her spouse and child are protected if she dies prematurely. She has very limited funds but would eventually like to have permanent protection. Nora should consider purchasing
level term life insurance
When he was 45, Frank purchased a $40,000 5-year level term policy. When he died at age 52, his beneficiary Received
nothing
Which of the following life insurance policies with the same face value would have the highest premium if issued to the same person?
10-year renewable and convertible level term
Ken, the insured, purchased a $40,000 5-year level term policy and a $100,000 whole life insurance policy when he was 49. When he died at age 56, his beneficiary received
$100,000
Sophia has a $250,000 10-year convertible term policy and would like to convert it to a permanent policy. Her agent provides her with the following information. Which statement is NOT correct?
She may convert to the permanent policy for up to 12 months following the term policy's expiration
Which of the following statements pertaining to term insurance is CORRECT?
Term insurance provides protection for only a temporary period
Leo purchases a $50,000 5-year level term policy. Which of the following statements about Leo's coverage is CORRECT?
The policy provides a straight, level $50,000 of coverage for 5 years
Amanda took out a $250,000 home mortgage when she purchased her house five years ago. What type of life insurance policy would be the best choice to insure the remaining balance on her home mortgage?
decreasing term
Joe buys his first home after obtaining a 30-year mortgage from his bank. He is considering the purchase of life insurance to ensure that the mortgage will be paid in the event of his death, in which case he will leave the house to his wife and children. What should his life insurance agent recommend as the best life insurance protection for Joe in this situation?
decreasing term
In contrast to traditional whole life insurance policies, with variable life insurance products
provides pure insurance protection only
Of the following, which best describes a need that decreasing term insurance is often used to meet
providing funds to pay off an outstanding loan at a reasonable premium
"Willa purchases a 5-year $50,000 level term policy with an option to renew. Which of the following statements about the policy's renewability is CORRECT?
the premium for the renewal period will be higher than the initial period
Decreasing term insurance could be recommended for all of the following EXCEPT
to build a retirement fund
Roland is 45 years old and married. He has a 19-year-old son who is in his first year of studies at a local university. He also has an 8-year-old daughter. A decreasing term policy could be recommended for Roland for which of the following reasons?
to guarantee that his son's college tuition will be covered
