13.2 types of life insurance

The least expensive form of life insurance is A) term. B) whole life. C) universal life. D) variable life.

a

Which of the following insurance is intended to provide a limited choice of investments and an insurance component in the event of death? A) Whole life B) Universal life C) Term insurance D) Mortgage life

b

Which of the following insurance type is strictly intended to provide only insurance in the event of death? A) Whole life B) Term C) Universal life D) Variable life

b

Which of the following will not affect the premiums on a term life insurance policy? A) Age of the policyholder B) Percentage earned on savings portion of premium C) Gender of the policyholder D) Family medical history of the policyholder

b

Life insurance that provides insurance over a specified term and allows policyholders to invest residual funds is known as A) whole life insurance. B) term life insurance. C) universal life insurance. D) variable life insurance.

d

The cheapest form of life insurance that provides coverage for a specified time period is ________

term insurance

Which type of life insurance allows the policyholder to make his own individual investment decisions? A) Whole life B) Group life C) Variable life D) Deferred term life

c

Term insurance provided to a designated group of people with a common bond is called A) decreasing term insurance. B) group term insurance. C) whole life insurance. D) universal life insurance.

b

Whole life insurance is also referred to as A) endowment life insurance. B) universal life insurance. C) group life insurance. D) permanent insurance.

d

A disadvantage of term insurance is that A) it becomes more expensive when you renew it. B) the cash value portion of the premium is larger than other forms. C) you can only exchange your cash value for other insurance. D) it is expensive early in life when you need it the most.

a

The best substitute for mortgage insurance would be ________ insurance. A) decreasing term B) whole life C) universal life D) variable life

a

The best time to buy a whole life insurance policy in terms of expense is A) as a child. B) when you are in college. C) when you have dependents. D) in your retirement.

a

________ insurance is life insurance that is provided over a specified time period and does not build cash value. A) Term B) Whole life C) Universal life D) Variable life

a

________ life insurance can only by used to pay off a home in the event of the policyholder's death. A) Mortgage B) Decreasing-term C) Universal life D) Homeowner

a

A disadvantage of whole life policies is that A) the premiums are not predictable. B) they are much more expensive than term policies. C) the face value of the policy can change over time. D) the cash value is frozen and not available to policyholders.

b

A universal life policy gives policyholders the right to select their ________ that whole life policyholders do not have. A) term B) investments C) savings D) amount

b

If you wanted to provide more coverage to your family early in life when they need it the most and decrease this amount of coverage in later years, yet continue to pay the same premiums, you should buy a(n) ________ policy. A) whole life B) decreasing term C) universal life D) variable life

b

In using the Internet to price insurance, which of the following is not true? A) It is fast and convenient. B) It is usually more expensive. C) There is less pressure. D) You can compare rates among several companies at once.

b

One advantage of whole life insurance over term life insurance is A) premiums are not affected by age. B) whole life insurance forces people to save money. C) whole life insurance is less expensive than term life. D) whole life builds more cash value that term life.

b

Which of the following is not a type of life insurance covered in the text? A) Term B) Dependent life C) Whole life D) Universal life

b

A life insurance premium is ________ related to your age. A) somewhat B) occasionally C) directly D) inversely

c

If a policyholder with a universal life insurance policy skips a payment, then the policy A) is terminated. B) refunds the amount paid and terminates the policy. C) uses an amount from savings to pay the premium. D) has the premium increased.

c

In comparison to an equivalent amount of term insurance, mortgage life insurance A) costs less. B) costs the same. C) costs more. D) the cost depends on the age of the house

c

Low cost life insurance, often available without a physical exam, is generally offered by A) Internet insurance companies. B) mutual insurance companies. C) employer-sponsored group insurance plans. D) independent insurance agents.

c

Which of the following is false concerning term life insurance? A) The premiums increase as you renew the policy B) It will expire and be of no value if not renewed C) Has a cash value or savings feature as long as you keep the policy active D) It provides the same amount of cash to a beneficiary as whole life policies

c

Which of the following is not an option as a way to use the cash value of your whole life policy? A) Borrow the money at a low rate of interest B) Use the proceeds to buy term insurance in the same value as your whole life policy C) Have the insurance company invest your cash value in stocks or mutual funds of your choosing D) Cancel the policy and get your cash value returned to you

c

Which of the following policies will not give you a cash settlement if you terminate the policy? A) Whole life B) Universal life C) Decreasing term life D) Variable life

c

Whole life insurance has a ________ premium and has ________ cash value build up over the life of the policy. A) fixed; no B) variable; a C) fixed; a D) variable; no

c

You are putting $100 a month into a passbook savings account to pay for your child's college education. You worry that if you die before you get enough saved, your child will not be able to get a college education. Which of the following types of life insurance would best fit your needs at the lowest cost? A) Whole life B) Universal life C) Decreasing term D) Variable life

c

Your need for life insurance will last for 20 years. You also wish to save some money over that same time period. What kind of life insurance would fill this requirement? A) Term B) Decreasing term C) Universal life D) Deferred life insurance

c

If the premium on a term insurance policy is not paid by the due date, which of the following is true? A) The policy is immediately terminated. B) The death benefit of the policy is reduced by the amount of the premium owed. C) The premium will be deducted from the cash value of the policy. D) The policyholder is given a grace period to pay after which the policy will be terminated if premium is not paid.

d

If your life follows the pattern of college-marriage-kids-retirement, your need for life insurance will A) steadily increase. B) steadily decrease. C) stay the same. D) peak and then decline

d

Life insurance premiums are based on all of the following except A) the amount of coverage you desire. B) your age when you take out the policy. C) your health habits. D) the age of your children when the policy is taken out.

d

Of the following statements dealing with premiums on life insurance, which is not true? A) Some factors that affect premiums are decided at birth. B) Premiums will increase if you buy insurance when you are older. C) The kind of policy you buy will determine your premiums. D) There are very few things you can do to reduce your life insurance premiums.

d

Term life insurance is A) often available in group policies through employers. B) less expensive when you renew it. C) pure insurance with no savings feature. D) Both A and C

d

Which of the following factors does not affect your life insurance premiums? A) Your gender B) Your health C) The cash value of the policy D) Your level of education

d