PF Chapter 10

What characteristics should you consider in an insurance company?

*Professionally qualified representatives *Financial stability

Which of the following are factors that affect the price of an insurance policy?

*The mortality rate it expects among policyholders *The cost of doing business *The return on investments

The grace period typically allows a lapse of ______ to pay the premium payment.

28-31 days

____________ income earned on annuities is tax free during accumulation.

Blank 1: Interest

___________ life insurance is essentially a term policy with a cash value.

Blank 1: Universal

The nonforfeiture clause is a provision that prevents the forfeiture of ___________benefits if you choose to drop your insurance policy.

Blank 1: accrued

The nonforfeiture clause is a provision that prevents the forfeiture of_____________ benefits if you choose to drop your insurance policy.

Blank 1: accrued

Premiums for whole life insurance policies are determined based upon the health and the _____________ of the insured when it is purchased.

Blank 1: age

If you opt for a term insurance policy, as your children become independent and your ____________increase, you can reduce your __________.

Blank 1: assets, property, or properties Blank 2: coverage

There are several reasons for the incontestable clause; one is to protect the ______________ from financial loss if the insurance company refuses to meet the terms of the policy.

Blank 1: beneficiaries, beneficiary, recipients, insured, or policyholder

Under universal life insurance, part of your premium goes into an investment account that grows and earns interest called ____________ _____________

Blank 1: cash Blank 2: value

Households with __________ have the greatest need for life insurance.

Blank 1: children, dependents, or kids

An incontestability clause states that the insurer cannot ______________ the policy if it is in force for a specified period.

Blank 1: drop, cancel, invalidate, terminate, revoke, or forfeit

One of the main factors when determining which companies to buy policies from is whether or not the company is __________ stable.

Blank 1: financially or economically

Whole life insurance has ____________ premiums, at first to build up a reserve when the chances of dying are smaller, than does ____________ life insurance.

Blank 1: higher, high, larger, large, or greater Blank 2: term or temporary

An annuity is a contract that provides regular ___________ for as long as a person lives.

Blank 1: income or payments

Decreasing term insurance policy pays the beneficiary __________ as time passes.

Blank 1: less

Cash-value policies are good for people who must be forced to save and for those who plan to keep the policy for a(n) ___________ period of time.

Blank 1: long, extended, or longer

One factor that affects the price of a life insurance policy is the rate of death among policyholders, also called _____________ rate.

Blank 1: mortality or death

Your stage in the life cycle and type of household help determine your _________ for life insurance.

Blank 1: need or necessity

Term life insurance provides protection for a specific______________ of time.

Blank 1: period, portion, amount, length, duration, or term

Life insurance is when a person joins a risk-sharing group known as an insurance company and purchases a contract also called an insurance _________

Blank 1: policy

With a(n)_____________term option, you can continue your existing term insurance coverage for another term.

Blank 1: renewable

Cash-value policies provide a death benefit and a(n) ____________ account.

Blank 1: savings

The easy method is based on the assumption that it will take __________ years to adjust to financial consequences of death.

Blank 1: seven or 7

As a rule, you should deal with insurance companies with a(n) __________or __________rating. (use words and not letter grades for the ratings)

Blank 1: superior Blank 2: excellent

A conversion option allows you to change a(n) ___________ policy to a(n) ___________ coverage life policy.

Blank 1: term or temporary Blank 2: whole, permanent, ordinary, or straight

Double indemnity is a benefit under which the company pays ___________ the face value of a policy if the insured's death results from an accident.

Blank 1: twice or double

If suicide occurs during the first _________ years the policy is in force, only the amount of _________ paid are paid to the beneficiary.

Blank 1: two or 2 Blank 2: premiums

Which option allows you to change your term policy into a whole life policy without an additional medical examination?

Conversion

Which method uses an equation of 70 percent of your salary for seven years?

Easy method

Which of the following is NOT a charge you pay when buying a variable annuity?

Front-end load

Which of the following is NOT true?

Surrender charges on an annuity usually run for 25 years

Which of the insurance ratings system uses grades that look most similar to school grades (i.e., A+, A, A-, B+ -)?

Weiss Research

A contract that provides a regular income for as long as a person lives is called a(n):

annuity

People that live alone or with their parents mostly likely:

do not need life insurance

A benefit under which the company pays twice the face value of the policy if the insured's death results from an accident is called a:

double indemnity

If you choose to drop a policy, a provision that allows the insured not to forfeit all accrued benefits is called a(n):

nonforfeiture clause

The primary factor for determining premiums for whole life insurance policies is the:

person's age when the policy is purchased

The main reason to purchase an annuity is to give you ______ income for the rest of your life.

retirement

The primary reason to buy an annuity is to give you:

retirement income for life

A document attached to a policy that modifies its coverage is called a(n):

rider

Life expectancy in the United States has been:

steadily increasing

The name of a provision stating that if the insured dies by suicide during the first two years that the policy is in force, then the death benefit will equal the amount of premium paid is a(an):

suicide clause

Many times the company that is the most financially secure is the one with:

the ability to provide the lowest premiums

Multiyear level term insurance, rather than annual renewable term insurance, is advantageous because it allows you to pay:

the same premium for the life of the policy

A whole life policy that combines term insurance and investment elements is called:

universal life