Question 1

Insurance underwriting is best described as:

Accepted Answer

A)  the process used by insurers to decide who can be insured and to determine applicable rates that will be charged for premiums. 
B)  a set of activities used to identify the risk and rewards of investing an insured's funds on marketable securities. 
C)  production-related activities performed primarily by agents in the field. 
D)  a process of developing taxing structures for insurance policies. 
E)  a function most often performed by an actuary. 
A)  the process used by insurers to decide who can be insured and to determine applicable rates that will be charged for premiums. 
B)  a set of activities used to identify the risk and rewards of investing an insured's funds on marketable securities. 
C)  production-related activities performed primarily by agents in the field. 
D)  a process of developing taxing structures for insurance policies. 
E)  a function most often performed by an actuary.

Question 2

The primary purpose of life insurance is to provide:

Accepted Answer

A)  financial security for your dependents after your death. 
B)  protection from creditors and lawsuits before your death. 
C)  tax-advantaged investments for your family. 
D)  high-yield investments for you and your family. 
E)  liquidity to expand your business operations. 
A)  financial security for your dependents after your death. 
B)  protection from creditors and lawsuits before your death. 
C)  tax-advantaged investments for your family. 
D)  high-yield investments for you and your family. 
E)  liquidity to expand your business operations.

Question 3

The three major categories of life insurance are term life, straight life, and limited payment.

Accepted Answer

A) True 
 B)False

Question 4

Credit life insurance is one of the least expensive forms of life insurance.

Accepted Answer

A) True 
 B)False

Question 5

The right of the policyholder to the cash value of a whole life policy is a nonforfeiture right.

Accepted Answer

A) True 
 B)False

Question 6

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
Using the needs analysis method, we look at the survivors' needs if the income producer dies [ tomorrow | before his or her life expectancy ].

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 7

A life insurance policy can be structured so that the death benefits are paid directly to a named beneficiary rather than being considered part of your estate, which means that:

Accepted Answer

A)  the life insurance proceeds are paid directly to named beneficiaries after payment of state or federal income taxes. 
B)  the cash benefits from your life insurance policy cannot be claimed by creditors. 
C)  the life insurance proceeds are invested for the beneficiary. 
D)  the cash benefits are remitted to the beneficiary only after the beneficiary pays estate taxes. 
E)  the life insurance company makes additional payments to the family of the insured so that they continue to live comfortably. 
A)  the life insurance proceeds are paid directly to named beneficiaries after payment of state or federal income taxes. 
B)  the cash benefits from your life insurance policy cannot be claimed by creditors. 
C)  the life insurance proceeds are invested for the beneficiary. 
D)  the cash benefits are remitted to the beneficiary only after the beneficiary pays estate taxes. 
E)  the life insurance company makes additional payments to the family of the insured so that they continue to live comfortably.

Question 8

The multiple-of-earnings method of determining life insurance needs is simple to use but can be unreliable.

Accepted Answer

A) True 
 B)False

Question 9

A life insurance policy with a small face amount where the premium may be collected weekly by agents is termed:

Accepted Answer

A)  credit life insurance. 
B)  mortgage life insurance. 
C)  industrial life insurance. 
D)  special-purpose insurance. 
E)  group life insurance. 
A)  credit life insurance. 
B)  mortgage life insurance. 
C)  industrial life insurance. 
D)  special-purpose insurance. 
E)  group life insurance.

Question 10

Which of the following policy features allows the insured to increase coverage periodically without showing proof of insurability?

Accepted Answer

A)  Multiple indemnity clause 
B)  Guaranteed purchase option (GPO) 
C)  Disability clause 
D)  Viatical settlement 
E)  Accelerated benefits 
A)  Multiple indemnity clause 
B)  Guaranteed purchase option (GPO) 
C)  Disability clause 
D)  Viatical settlement 
E)  Accelerated benefits

Question 11

_____ determines the amount of life insurance coverage required for an individual by considering his or her financial obligations and available financial resources in addition to life insurance.

Accepted Answer

A)  The savings analysis method 
B)  The needs analysis method 
C)  The earnings analysis method 
D)  The liabilities analysis method 
E)  The borrowings analysis method 
A)  The savings analysis method 
B)  The needs analysis method 
C)  The earnings analysis method 
D)  The liabilities analysis method 
E)  The borrowings analysis method

Question 12

Risk avoidance is attractive when the estimated cost of avoidance is less than the estimated cost of managing risk in some other way.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a characteristic of a universal life insurance policy?

Accepted Answer

A)  No flexible premiums 
B)  Cash value lower than the death benefits 
C)  Absence of a savings feature 
D)  Fixed premiums and protection levels 
E)  Lighter fees than other insurance policies 
A)  No flexible premiums 
B)  Cash value lower than the death benefits 
C)  Absence of a savings feature 
D)  Fixed premiums and protection levels 
E)  Lighter fees than other insurance policies

Question 14

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
[ Level premium | Annual renewable ] term policies have become much more popular in recent years.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Question 15

Which of the following statements regarding term life insurance is true?

Accepted Answer

A)  All term policies maintain a level premium throughout all periods of coverage while the amount of protection decreases. 
B)  Term life usually offers lower initial premiums than other types of insurance. 
C)  Term life insurance offers permanent coverage. 
D)  A major disadvantage of term insurance is the lack of a convertibility provision. 
E)  Term life insurance provides for the accumulation of cash value. 
A)  All term policies maintain a level premium throughout all periods of coverage while the amount of protection decreases. 
B)  Term life usually offers lower initial premiums than other types of insurance. 
C)  Term life insurance offers permanent coverage. 
D)  A major disadvantage of term insurance is the lack of a convertibility provision. 
E)  Term life insurance provides for the accumulation of cash value.

Question 16

The basic purpose of insurance is to:

Accepted Answer

A)  protect the health of you and your family. 
B)  protect you and your family from financial losses . 
C)  supplement the income of you and your family. 
D)  shield you and your family from bad decisions. 
E)  protect you and your family from nonfinancial losses. 
A)  protect the health of you and your family. 
B)  protect you and your family from financial losses . 
C)  supplement the income of you and your family. 
D)  shield you and your family from bad decisions. 
E)  protect you and your family from nonfinancial losses.

Question 17

Sales commissions and marketing expenses can increase the costs of a fully loaded _____ policy.

Accepted Answer

A)  term life insurance 
B)  whole life insurance 
C)  universal life insurance 
D)  variable life insurance 
E)  mortgage life insurance 
A)  term life insurance 
B)  whole life insurance 
C)  universal life insurance 
D)  variable life insurance 
E)  mortgage life insurance

Question 18

Jonathan estimates that financial resources worth $2,000,000 will be necessary to protect his family after his death. What amount of insurance, as per the needs analysis method, should Jonathan purchase if he has current financial resources worth $1,000,000?

Accepted Answer

A)  $1,000,000 
B)  $2,000,000 
C)  $2,500,000 
D)  $1,500,000 
E)  $500,000 
A)  $1,000,000 
B)  $2,000,000 
C)  $2,500,000 
D)  $1,500,000 
E)  $500,000

Question 19

A(n) _____ policy is a type of term insurance.

Accepted Answer

A)  straight term 
B)  whole life 
C)  increasing term 
D)  variable term 
E)  risk assumption 
A)  straight term 
B)  whole life 
C)  increasing term 
D)  variable term 
E)  risk assumption

Question 20

INSTRUCTIONS: Choose the word or phrase in [ ] that will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. 
A [ viatical settlement | guaranteed purchase option (GPO) ] allows a terminally ill insurance holder to receive benefits before death.

Accepted Answer

The answer of INSTRUCTIONS: Choose the word or phrase in...

Insurance underwriting is best described as:

The primary purpose of life insurance is to provide:

The three major categories of life insurance are term life, straight life, and limited payment.

Credit life insurance is one of the least expensive forms of life insurance.

The right of the policyholder to the cash value of a whole life policy is a nonforfeiture right.

A life insurance policy can be structured so that the death benefits are paid directly to a named beneficiary rather than being considered part of your estate, which means that:

The multiple-of-earnings method of determining life insurance needs is simple to use but can be unreliable.

A life insurance policy with a small face amount where the premium may be collected weekly by agents is termed:

Which of the following policy features allows the insured to increase coverage periodically without showing proof of insurability?

_____ determines the amount of life insurance coverage required for an individual by considering his or her financial obligations and available financial resources in addition to life insurance.

Risk avoidance is attractive when the estimated cost of avoidance is less than the estimated cost of managing risk in some other way.

Which of the following is a characteristic of a universal life insurance policy?

Which of the following statements regarding term life insurance is true?

The basic purpose of insurance is to:

Sales commissions and marketing expenses can increase the costs of a fully loaded _____ policy.

Jonathan estimates that financial resources worth $2,000,000 will be necessary to protect his family after his death. What amount of insurance, as per the needs analysis method, should Jonathan purchase if he has current financial resources worth $1,000,000?

A(n) _____ policy is a type of term insurance.

Understanding the Financial Planning Process

Developing Your Financial Statements and Plans

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 8: Insuring Your Life

Insurance underwriting is best described as:

The primary purpose of life insurance is to provide:

The three major categories of life insurance are term life, straight life, and limited payment.

Credit life insurance is one of the least expensive forms of life insurance.

The right of the policyholder to the cash value of a whole life policy is a nonforfeiture right.

A life insurance policy can be structured so that the death benefits are paid directly to a named beneficiary rather than being considered part of your estate, which means that:

The multiple-of-earnings method of determining life insurance needs is simple to use but can be unreliable.

A life insurance policy with a small face amount where the premium may be collected weekly by agents is termed:

Which of the following policy features allows the insured to increase coverage periodically without showing proof of insurability?

_____ determines the amount of life insurance coverage required for an individual by considering his or her financial obligations and available financial resources in addition to life insurance.

Risk avoidance is attractive when the estimated cost of avoidance is less than the estimated cost of managing risk in some other way.

Which of the following is a characteristic of a universal life insurance policy?

Which of the following statements regarding term life insurance is true?

The basic purpose of insurance is to:

Sales commissions and marketing expenses can increase the costs of a fully loaded _____ policy.

Jonathan estimates that financial resources worth $2,000,000 will be necessary to protect his family after his death. What amount of insurance, as per the needs analysis method, should Jonathan purchase if he has current financial resources worth $1,000,000?

A(n) _____ policy is a type of term insurance.

Understanding the Financial Planning Process

Developing Your Financial Statements and Plans

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds and Real Estate

Planning for Retirement

Preserving Your Estate

Filters