Chp 10 Life Insurance

Question 1

Thepremium payment period for a limited payment policy is longer than a whole life policy so the annual premium is lower

Accepted Answer

False

Question 2

Suicide clause means that the insurance company

Accepted Answer

Pays death benefit = to amount of premium if insured dies the first 2 years

Question 3

After you buy a new life insurance, you have a 10-year "free look" period which you can change your mind.

Accepted Answer

False

Question 4

Which life insurance policy allows you to change your premium without changing your coverage?

Accepted Answer

Universal

Question 5

The accidental death benefit is often called double indemnity

Accepted Answer

True

Question 6

Among the most important steps in the process of building your insurance program is

Accepted Answer

Choosing a good insurance agent

Question 7

A beneficiary is a person who

Accepted Answer

Is designated to receive life insurance proceeds

Question 8

Term insurance is protection for a random period of time, usually 1 to 12 months

Accepted Answer

False

Question 9

The IRS regulations prohibit the use of life insurance to make estate and death tax payments.

Accepted Answer

False

Question 10

The policy loan provision permits you to borrow any amount up to the cash value of the policy

Accepted Answer

True

Question 11

Most participating policies are sold by

Accepted Answer

Mutual life insurance companies

Question 12

Which statement is correct regarding mutual insurance companies?

Accepted Answer

A mutual company refunds part of the premium to the policyholders

Question 13

Life insurance is available from government agencies like the CIA or the FBI

Accepted Answer

False

Question 14

Two basic types of life insurance are temporary and permanent insurance

Accepted Answer

True

Question 15

The life expectancy of a female at the age of 30 is 50.6 years. It means that

Accepted Answer

50.6 is the average number of years that females at 30 years, still live

Question 16

Cash values of a __change yields earned by a separate fund, which can be stock, money market, or long term funds

Accepted Answer

Variable life insurance policy

Question 17

Life insurance proceeds may be used to provide karate lessons?

Accepted Answer

True

Question 18

On an annuity, interest on the principal and the interest compounded on that interest builds free of current income tax

Accepted Answer

True

Question 19

Which statement is correct about whole life insurance?

Accepted Answer

Whole life insurance builds up cash value

Question 20

The easy method of life insurance is based on a "typical family" needing 50% of the wage earner's salary for seven years

Accepted Answer

False

Question 21

A document attached to the policy modifying coverage by adding or excluding specified conditions is a rider?

Accepted Answer

True

Question 22

Which statement is correct regarding stock life insurance companies?

Accepted Answer

A stock company generally sells nonparticipating (non par) policies

Questions 22