Insurance ch 11 Quiz

Which of the following about the use of ordinary life insurance is true?

I only Its use is appropriate if a person needs lifetime insurance protection

Which of the following statements about endowment policies is true?

I only The face amount is paid if the insured dies during the policy period or at the end of the period if the insured is still alive.

Which of the following about a VUL (Variable universal life) insurance policy is true?

II only The policy owner has a variety of options for investment of the cash value

Which of the following statements about universal life insurance is true?

II only A monthly deduction is made from a policy's cash value for the cost of insurance protection

Which of the following statements about a life insurance policy is (are) true?

II only II. The insured event is the uncertainty regarding the time of death.

All of the following statements about universal life insurance are true EXCEPT

Interest credited to a policy's cash value is taxable to the policy owner in the year credited.

All of the following statements about ordinary life insurance are true EXCEPT

It offers policy owners flexibility to meet a variety of financial goals

Which of the following statements about limited payment life insurance is true?

Its use may be appropriate if a person wants paid up life insurance by retirement

Rachel needs permanent life insurance. Which method makes the most sense for her to employ?

Level-premium method

Which of the following about yearly renewable term insurance is true?

Neither I or II

The human life value is defined as the

PV of the family's share of a deceased breadwinner's future earnings

Alex, age 26, purchased a 20- payment whole life insurance policy. After Alex has made 20 premium payments, his life insurance policy is considered

Paid- up

Tom and Nancy Boyle provide financial support for their two children. In addition, they provide financial support for Tom's aged father and Nancy's aged mother. The Boyle family can be described as a

Sandwich family

Diane is a single parent. She has limited income and significant life insurance needs. Which type of life insurance makes sense for someone in this situation?

Term insurance

How do premiums for yearly renewable term insurance change as an insured gets older?

They increase at an increasing rate

Carl would like to purchase life insurance. He would also like to invest in a mutual fund. An agent told Carl about a form of life insurance in which Carl could select where the savings component is invested. This form of life insurance has fixed premiums and the cash value is not guaranteed. This type of life insurance is called

Variable life insurance

Which of the following about decreasing term insurance is true?

Face amount decreases during the policy period, but premiums remain level

All of the following statements about term insurance are true EXCEPT

(d) Most policies have a CV that is refunded when coverage ceases.

Which $50,000 life insurance contract if purchased when the insured was 32, would have the highest cash value when the insured is 50?

10 payment whole life

Which of the families below is likely to have the least need for a large life insurance policy?

A single Person

The NAAR for a life insurance policy is the difference between the

Face amount of the policy and the legal reserve

Which statement is true concerning premature death and life expectancy?

Both I & II I. Life expectancy has increased in the U.S. over the last century II. Surviving family members may experience a reduction in their standard of living if the family breadwinner dies prematurely

James purchased yearly renewable term insurance. All of the following are common characteristics of this coverage EXCEPT

Cash Value accumulation is slow to moderate

Tamara purchased a term insurance policy when she had high life insurance needs and limited income. Now Tamara can afford whole life insurance. What term life insurance provision will permit Tamara to switch her term insurance to whole life insurance without having to show that she is still insurable?

Conversion Provision

The purpose of an estate clearance fund is to pay all of the following EXCEPT

Education Cost

Linton Yield

the average annual rate of return on a cash-value policy if it is held for a specified number of years