Term life insurance

Ashley is very frugal and doesn't want to spend a lot of money on insurance. As a result, she's considering whether she should use the "buy term and invest the difference strategy." What is a potential drawback to using this strategy?

Ashley must be disciplined enough to actually invest rather than spend the savings each month.

In which of the following situations will the death benefits from a term life insurance policy be included in the decedent's gross estate?

Donte's life insurance proceeds were payable to his estate.

Michael wants to convert his $250,000 term policy into permanent coverage but is concerned about the premium increase. Which step might the insurer take to help Michael obtain a lower premium for the first year only?

Offer a term conversion credit.

Timson Industries pays all of the premiums for its group term life insurance plan. If Timson Industries has 20 employees who are eligible for the coverage, how many of them must be included in the plan?

15

Today's permanent life insurance policies are designed to mature when the insured reaches age:

120

George is a financial professional and recommends the "buy term and invest the difference" strategy to his client Stacey. Which step should Stacey take after she purchases term life insurance, if she decides to follow this strategy?

Invest the money saved in stocks, bonds, mutual funds, or other investment products.

What occurs with respect to the death benefit under mortgage protection term life insurance as the policy ages?

It decreases.

Kendra is married, has two children, and is the family breadwinner. Which of the following individuals will have insurance coverage if Kendra purchases a family protection policy?

Kendra, her spouse, and her children

Abby purchased a life insurance policy and named the following as beneficiaries: her husband, Ralph, is the policy's primary beneficiary, her two children are contingent beneficiaries, and her church is the tertiary beneficiary. How would the proceeds of Abby's policy be paid if both of her children predecease her?

Ralph will receive 100 percent of the proceeds.

Alex purchased a 25-year term policy with a return of premium rider and lived past the 25-year term. What will the insurer do at this point?

Refund all premiums paid.

Jill is insured under a $500,000 renewable and convertible term life insurance policy. At age 50, her insurance needs have changed. What should Jill do if she now only needs $250,000 of insurance but wants lifelong protection?

Sell one-half of the term policy through a life settlement.

Jasmine is married and has two young children. She works as a doctor and is an avid mountain climber and extreme skier in her free time. What is the likely result if she applies for a term life insurance policy?

The insurer may charge a higher premium due to Jasmine's hobbies.

Alice needs a large amount of life insurance for a few years while her children are young, but she has a small income and little remaining cash with which to pay premiums. Which of the following types of life insurance is likely to be most suitable for her?

ordinary whole life insurance

Yolanda has owned a renewable and convertible term life insurance policy for 20 years and now has the funds available to convert it to whole life insurance. She wants to be certain, however, that the premium charged for the whole life insurance is based on her age when she bought her initial term insurance policy. How can she accomplish this?

through an attained-age term conversion

Term life insurance is available with all of the following types of death benefits EXCEPT:

variable

Emma purchased a credit life insurance coverage when she took out a loan for a new car. At what point will the credit life insurance coverage end?

when Emma pays off the car loan

When will a term life insurance beneficiary receive the policy's death benefit proceeds income tax free?

when paid in a lump sum

Grayson is covered by a term life insurance policy, which contains a waiver of premium provision. After being injured in a car accident, Grayson cannot work. What will happen to Grayson's term life insurance coverage?

It will continue without further premium payments if he meets the definition of disability as stated in the policy.

Josie paid $500 in premiums this year for her personally owned term life insurance policy. Which statement about Josie's ability to take an income tax deduction for the premiums is true?

Josie cannot take an income tax deduction for the premiums she paid.

For which of the following clients should a financial professional typically recommend term rather than whole life insurance?

Julianna wants to ensure that surviving family members receive a lump-sum cash payment at her death, whenever that occurs.

Which of the following is not a permissible group term life insurance benefit schedule?

a benefit based on gender

Nicole lied when she stated on her life insurance application that she did not have diabetes. In fact, she had been diagnosed with diabetes and did nothing to try to control it. Parton Insurance Company relied on Nicole's statement when it issued her a policy and was able to rescind the policy when Nicole died eight months later from complications of her condition. What was Nicole's statement considered?

a material misrepresentation

Dillon and Arielle are just about to buy their first house and assume a substantial mortgage. Dillon wants to be sure that the house will be paid off if he dies during the mortgage term. Because their budget is being stretched just to afford the house, they have little money left over to buy life insurance. What type of life insurance is likely to be most suitable for them?

decreasing term life insurance

Which type of term life insurance is typically used in connection with credit life insurance?

decreasing term life insurance

he conditions for which a life insurance policy commonly pays accelerated benefits include all of the following EXCEPT:

financial hardship

Julius is the owner and insured under a $250,000 term life insurance policy and named his twin brother, Jax, as the beneficiary. At Julius' death, Jax will receive the $250,000 in equal installments for a period of five years and interest earnings on the proceeds will be added to the installment payments. Which settlement option did Julius select?

fixed period

Hank's wife was the primary beneficiary of his $500,000 term life insurance policy. She received interest payments of approximately $900 a month during her life, and at her death, their son received a lump-sum payment of $500,000. Under what settlement option would such payments be made?

interest-only option

What type of life insurance covers a person against death for a limited period of time?

term life

Which type of life insurance policy offers a level death benefit, a guaranteed cash value, and level premiums payable for life?

term life insurance

In an original age term conversion, what is the insured's issue age under the converted policy?

the insured's age when the term insurance was originally purchased