Determining the amount of life insurance to purchase can be relatively easy because few factors affect a persons future financial goals and resulting need for life insurance.

True

False

2

1 point

The capital retention approach determines the amount of life insurance needed by first determining what level of annual income the insured wishes to provide for the family.

True

False

3

1 point

A decreasing term life insurance policy involves a gradual reduction in the premiums paid while the face value of the contract remains the same.

True

False

4

1 point

Universal life insurance allows the insured to buy death protection similar to that provided by term life insurance and then invest an additional amount with the insurer that is similar to the savings element in whole life insurance coverage.

True

False

Item at position 5

5

1 point

Item 5 is unpinned. Click to pin.

Variable life insurance is a form of term life insurance in which cash values are invested in the policyowners choice of investments.

True

False

6

1 point

All of the following statements concerning the methods of providing life insurance protection are correct EXCEPT

because death rates rise increasingly as individuals age, the net premium for term insurance also rises at an increasing rate

an insurance company can use 2 approaches to provide life insurance protection: term insurance, which is temporary protection, or cash value insurance, which is permanent protection that builds up a cash reserve or savings component

term insurance is a form of life insurance in which the death proceeds are payable in the event of the insureds death during a specified period and nothing is paid if the insured survives to the end of that period

the net premium for term insurance is determined by the survival rate for the attained age of the individual involved

7

1 point

Which of the following statements regarding annual renewable term (ART) life insurance is(are) CORRECT?

I. Annual renewable term life insurance is issued for 1 year, and the policyowner can renew for subsequent periods up to a maximum age.

II. A disadvantage of annual renewable term life insurance is that the insured must provide evidence of insurability at the time of renewal.

I only

II only

Both I and II

Neither I nor II

8

1 point

All of the following statements regarding whole life insurance are correct EXCEPT

the premiums on a whole life insurance policy increase over the life of the policy

whole life insurance accumulates a cash value that eventually equals the face amount of the policy

whole life insurance pays the policys face amount upon the death of the insured, regardless of when death occurs

the protection afforded by whole life insurance is permanentthe term never expires, and the policy never has to be renewed or converted

9

1 point

All of the following statements regarding variable universal life (VUL) insurance are correct EXCEPT

the cash value of a variable universal life insurance policy may fluctuate based on the performance of the selected subaccounts

agents who sell variable universal life insurance policies must be licensed to sell both life insurance and securities

variable universal life insurance has a fixed premium and a fixed death benefit

the owner of a variable universal life policy has the option to invest in a variety of subaccounts

10

1 point

When an employer provides group term life insurance, there are no tax consequences to the employee if the death benefit under the policy does not exceed

$50,000

$500,000

$75,000

$100,000

11

1 point

Which of the following statements regarding major medical insurance is(are) CORRECT?

I. Major medical plans generally contain a coinsurance provision, which provides that the plan will pay only a specified percentage of the covered expenses that exceed the deductible.

II. Generally, major medical plans can no longer have lifetime maximum coverage limits for essential health benefits.

I only

II only

Both I and II

Neither I nor II

12

1 point

All of the following statements concerning disability income insurance are correct EXCEPT

premiums for disability income insurance coverage are a function of the insureds health, gender, age, and the level of income benefits provided by the policy

a policy that integrates with Social Security will reduce payable benefits by the amount of Social Security the disabled person is eligible to receive

the Social Security program requires the disabled person to wait 1 month before receiving benefits

to qualify for disability income, one must become totally disabled while the policy is in force and remain so until the elimination (exclusion) period has ended

13

1 point

Which of the following statements regarding disability income insurance is(are) CORRECT?

I. During the elimination period, disability income benefits are not being paid.

II. The any occupation of disability is more favorable to the insured than the own occupation definition of disability.

I only

II only

Both I and II

Neither I nor II

14

1 point

Which of the following statements concerning the need for long-term care insurance is(are) CORRECT?

I. Medical expense policies do not pay for stays in extended care facilities such as nursing homes.

II. The premiums charged for long-term care coverage depend on the extent of benefits provided and the income level of the insured.

I only

II only

Both I and II

Neither I nor II

15

1 point

Which of the following statements regarding managed care health providers is(are) CORRECT?

I. HMOs usually allow their members very little choice of service providers.

II. PPO members are allowed to use non-PPO providers with the same deductibles and coinsurance that apply when they use PPO providers.

I only

II only

Both I and II

Neither I nor II