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Exam 11: Life Insurance

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Question 21

Multiple Choice

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Which of the following statements about limited-payment life insurance is true?

A) It is a form of term insurance.
B) It matures at the end of the premium-payment period.
C) The premium decreases each year during the premium-payment period.
D) Its use may be appropriate if a person wants paid-up life insurance during retirement.

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Question 22

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Which of the following statements about savings bank life insurance is true?

A) The maximum amount that a depositor can purchase is $50,000.
B) The maximum amount of insurance that a depositor can purchase is limited to the amount of money on deposit in his or her savings account with the savings bank.
C) The objective of savings bank life insurance is to provide protection to the bank in case a borrower dies before a loan is repaid.
D) The objective of savings bank life insurance is to provide low-cost insurance to consumers by holding down expenses.

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Question 23

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Which of the following statements about second-to-die life insurance is (are) true? I.The insurance is a form of endowment coverage. II.The premium is lower than the combined cost of purchasing a life insurance policy on each insured.

Tom and Nancy Boyle provide financial support for their two children.In addition,they provide financial support for Tom's aged father and Nancy's aged mother.The Boyle family can be described as a

Which of the following types of families is likely to have the least need for a large amount of life insurance?

Which of the following $100,000 whole life insurance policies,issued by the same company to a man age 32,would require the highest first-year premium?

All of the following statements about variable life insurance are true EXCEPT

Which of the following statements about policies sold to preferred risks is (are) true? I.Preferred risks are people whose mortality experience (deaths per thousand at a given age) is expected to be more favorable than average. II.Insurers require preferred risks to purchase at least a minimum amount of life insurance,such as $250,000.

All of the following statements about term insurance are true EXCEPT

Michael wants to make sure that life insurance proceeds are available to pay his outstanding mortgage balance if he dies.He purchased a type of life insurance in which the amount of coverage gradually declines,just as his outstanding mortgage balance gradually declines.This type of life insurance is called

To calculate a human life value,it is necessary to deduct certain costs from a person's average annual earnings.These costs include

All of the following statements about universal life insurance are true EXCEPT

Which of the following statements about universal life insurance is (are) true? I.The interest rate credited to the cash value at the time the policy is issued remains fixed for the life of the policy. II.A monthly deduction is made from the policy's cash value for the cost of insurance protection.

The net amount at risk for an ordinary life insurance policy is the difference between the

Which of the following statements about endowment insurance policies is (are) true? I.The face amount is paid if the insured dies during the policy period or at the end of the policy period if the insured is still alive. II.The use of endowment insurance has increased in recent years because of its favorable tax treatment.

The purpose of an estate clearance fund is to pay all of the following EXCEPT

Disadvantages of the capital retention approach include which of the following? I.Assets are often liquidated too quickly. II.It underestimates the amount of life insurance needed.

Bill is attempting to determine how much life insurance to purchase.He has two dependent children and his wife does not work outside of the home.An advisor suggested that Bill should consider Social Security benefits when doing his life insurance planning.One concern in this regard is the period after Social Security benefits to a widow terminate until they resume again.This period is called the

Which of the following statements about life insurance cash values is (are) true? I.Cash values are a result of the level premium method of purchasing life insurance. II.The cash value of a policy must always exceed the policy's legal reserve.

What is the length of the readjustment period which is considered when the needs approach is used to determine the amount of life insurance to own?