Deck 38: Personal Insurance

Question 1

If a premium is not paid on the due date, the policy lapses.

Answer 1

False

Question 2

Group insurance expires when the person leaves the group.

Answer 2

True

Question 3

A person would not have an insurable interest in the life of a

A) spouse.
B) business partner.
C) friend.
D) son or daughter.

Answer 3

C

Question 4

Major medical policies have a deductible feature.

Question 5

Because partnership may be temporary, one partner has no insurable interest in the life of another.

Question 6

Most life insurance policies have a clause that allows the insured to put the policy back into effect if it lapses because of unpaid premiums.

Question 7

Term insurance is less expensive than whole life or endowment insurance.

Question 8

Employers often provide insurance for employees under individual policies.

Question 9

Hospital, surgical, and medical insurance are often combined into one basic health insurance policy.

Question 10

Life insurance usually has a deductible feature.

Question 11

The insurance company selects the method by which the proceeds of a life insurance policy are paid to the beneficiary.

Question 12

Life insurance premiums would not be affected by the insured's

A) age.
B) marital status.
C) health.
D) sex.

Question 13

Group insurance is available to company employees only.

Question 14

The savings feature of life insurance is called the cash value.

Question 15

What term insurance and whole life insurance have in common is

A) payment of proceeds upon the death of the insured.
B) cash value.
C) coverage for a specific term.
D) a deductible feature.

Question 16

To collect the proceeds of a life insurance policy, the purchaser must have an insurable interest in the life of the insured when the

A) insurance is purchased.
B) policy is issued.
C) first premium is paid.
D) insured dies.

Question 17

Major medical insurance protects against the high costs of serious illness.

Question 18

Life insurance in which the premiums increase as the insured's income increases is known as

A) endowment insurance.
B) universal life insurance.
C) modified life insurance.
D) limited payment life insurance.

Question 19

If a policy has been in effect for more than two years, the insurance company cannot cancel the policy for any reason.

Question 20

An assignment of the proceeds of a life insurance policy must be in writing.

Question 21

An insured who can no longer pay the premiums is protected by a(n)

A) incontestable clause.
B) coinsurance clause.
C) nonforfeiture clause.
D) all of these.

Question 22

An annuity provides income for

A) a specific period of time or the life of the owner.
B) thirty years.
C) all of these.
D) none of these.

Question 23

Term insurance is ____________________ if the insured can exchange the term policy for a whole life policy.

Question 24

The type of life insurance that provides the greatest coverage for the least amount of money is

A) limited payment.
B) ordinary.
C) endowment.
D) term.

Question 25

____________________ insurance is purchased for a certain number of years, such as ten.

Question 26

Failure to pay a premium on time may cause the policy to

A) subrogate.
B) be assigned.
C) lapse.
D) be considered fraudulent.

Question 27

A(n) ____________________ is the one who receives the proceeds of a life insurance policy.

Question 28

Medicare pays for

A) hospital expenses.
B) custodial care.
C) dental care.
D) routine physical exams.

Question 29

A(n) ____________________ provides an income for the insured but does not provide insurance protection.

Question 30

All of the following are nonforfeiture rights except

A) the automatic premium loan.
B) the lump sum option.
C) cash surrender value.
D) extended term insurance.

Question 31

Misstatement of the insured's age will result in

A) voiding of the policy.
B) possible cancellation of the policy by the insurance company.
C) adjustment of the face value of the policy by the insurance company.
D) none of these.

Question 32

Life insurance often used to fund business buyouts is called

A) key person insurance.
B) a buyout annuity.
C) business term insurance.
D) business liability insurance.

Question 33

Emergency room costs would be covered by

A) major medical insurance.
B) medical insurance.
C) hospital insurance.
D) surgical insurance.

Question 34

A life insurance policy that provides protection for a specific amount of time is known as a(n)

A) endowment policy or annuity.
B) paid-up policy.
C) term policy.
D) universal policy.

Question 35

Upon cashing in a life insurance policy, an insured would receive the

A) endowment value.
B) open value.
C) return of premiums paid.
D) cash surrender value.

Question 36

A policy issued to members of an organization is known as ____________________ insurance.

Question 37

The right to the proceeds of an insurance policy

A) cannot be assigned.
B) can be assigned only by the insured.
C) can be assigned by the insured and the beneficiary.
D) can be assigned only to a family member.

Question 38

The clause in a life insurance policy that permits an insured to pay the premium after the due date is the

A) coinsurance clause.
B) grace period clause.
C) nonforfeiture clause.
D) insurable interest clause.

Question 39

Term insurance is less costly than whole life insurance because

A) it is written for long terms.
B) the amount of the policy is limited.
C) it has no cash value.
D) it cannot be assigned.

Question 40

The Medicaid program is administered by

A) the federal government.
B) local government.
C) state government.
D) public hospitals.

Question 41

Life insurance policies have ____________________ rights, which prevent the policies from lapsing because of nonpayment of premium.

Question 42

____________________ insurance protects the insured and the insured's family against a loss of income because of illness or accident.

Question 43

On a life insurance application, Fletcher stated that he was a salesman. He was actually a window washer. After the policy was issued, the insurance company discovered the truth and sought to cancel the policy. Should it succeed?

Question 44

Most life insurance policies become effective when ____________________.

Question 45

____________________ is a government-financed program of medical coverage for indigent persons.

Question 46

Wilkes, a wealthy man, took out a life insurance policy and named his doctor, Byron, as the beneficiary. At Wilkes's death, may Byron collect the proceeds?

Question 47

According to the ____________________ clause, the beneficiary receives twice the face value of the policy if the insured dies accidentally.

Question 48

Burgess had a $50,000 life insurance policy with a double indemnity clause. Burgess had not yet paid the annual premium of $200 when he was killed in an automobile accident. How much will his beneficiary receive?

Question 49

Reynolds, aged 64, became disabled in an accident. Is he entitled to Medicare benefits?

Question 50

While skiing, Carey fell and broke his leg and was unable to work for two months. What type of insurance would cover Carey's medical bills and loss of income?