Chapter 10 Finances

E. Family need method Francisco and Maria have three children and want to complete a detailed worksheet to determine theamount of life insurance they need to purchase. Which method are they using to determine their lifeinsurance needs?A. Easy methodB. Dual income, no kids methodC. Formal calculation methodD. Nonworking spouse methodE. Family need method
D. Term life Which of the following is NOT a type of permanent insurance?A. Whole lifeB. Straight lifeC. Ordinary lifeD. Term lifeE. Cash value life
C. Your premium will be the same for the duration of your policy If you have a multiyear level term policy,A. You can convert your policy to a permanent type at the end of the term.B. You policy will continue for one year.C. Your premium will be the same for the duration of your policy.D. Your premium will not increase when you renew it.E. None of these is correct.
C. You can convert your term policy to a permanent policy. If you have a conversion term policy,
B. Multiyear level term This term life policy will guarantee that you will pay the same premium for the duration of yourpolicy.
C. The policy will return all premiums if you survive to the end of the policy. Which of the following is NOT a feature of whole life insurance?A. It accumulates cash value.B. It provides both a death benefit and a savings component.C. The policy will return all premiums if you survive to the end of the policy.D. You must pay interest on any outstanding policy loans.E. The policy requires that you pay a specified premium each year for the rest of your life.
D. It builds cash value. Of the following, which one is the most positive feature of whole life insurance?A. You must pay interest on any loans.B. You pay premiums each year for the rest of your life.C. It is more expensive than term insurance.D. It builds cash value.E. It is permanent life insurance.
E. Variable life Megan wants to purchase a life insurance policy that will allow her to invest in stock. Which of thefollowing policies should she buy?A. Adjustable lifeB. Group lifeC. Limited lifeD. Universal lifeE. Variable life
A. Adjustable life Molly is thinking about buying a life insurance policy, but she is not sure about how much she will needin the next few years. She may need to change her coverage as her needs change. Which of the followingpolicies would meet her needs?A. Adjustable lifeB. Group lifeC. Limited lifeD. Universal lifeE. Variable life
D. Universal life Polly wants the opportunity to change the amount she pays for her annual premium through the life of herinsurance policy without changing her coverage. Which of the following policies would meet her needs?A. Adjustable lifeB. Group lifeC. Limited lifeD. Universal lifeE. Variable life
B. Group life Pam just started working at XYZ Widget Company and finally wants to get insurance coverage. She doesnot want to take a medical exam to get coverage because she has some underlying health conditions andis concerned that she might not qualify for a policy. Which of the following life insurance policies shouldshe apply for?A. Adjustable lifeB. Group lifeC. Limited lifeD. Universal lifeE. Variable life
A) Credit life This life insurance is used to pay off certain debts, such as auto loans, in the event that you die before the debts are paid in full. Which of the following is not the best buy for the amount of protection offered for an individual?A) Credit life B) Adjustable lifeC) Group life D) Endowment life E) Term
D) Policy reinstatement Which of the following provisions requires the policyholder to again qualify as an acceptable risk and pay overdue premiums with interest in order to put a lapsed policy back in force?A) Incontestability clauseB) Misstatement of age provisionC) Naming a beneficiaryD) Policy reinstatementE) The grace period
B. Misstatement of age provision Fred bought life insurance when he was 47, although he told the insurance company that he was 42. Hehas since died. Which of the following provisions will affect the amount of money his beneficiaries willreceive?A. Incontestability clauseB. Misstatement of age provisionC. Naming a beneficiaryD. Policy reinstatementE. The grace period
E. The grace period Georgia was supposed to pay her premium by the 15th of the month. Which of the following provisionsallows her to keep her coverage if she is a couple of weeks late with paying her premium?A. Incontestability clauseB. Misstatement of age provisionC. Naming a beneficiaryD. Policy reinstatementE. The grace period
A. Incontestability clause Fred bought life insurance five years ago. He forgot to tell them that he had a heart condition, and, as aresult of that condition, he recently died. Which of the following provisions prevents the life insurancecompany from refusing to pay his beneficiaries because of his original misrepresentation?A. Incontestability clauseB. Misstatement of age provisionC. Naming a beneficiaryD. Policy reinstatementE. The grace period
A. Ben. Amy bought a life insurance policy and named Ben as her beneficiary. She has since died. Who willreceive the benefits from her policy?A. Ben.B. Ben’s beneficiaries.C. Her contingent beneficiaries.D. Her parents.E. None of these.
C. Guaranteed insurability option Bonnie is most concerned about being able to buy additional insurance without undergoing medicalexams. Which of the following riders should she consider?A. Waiver of premium disability benefitB. Accidental death benefitC. Guaranteed insurability optionD. Cost-of-living protectionE. Accelerated benefits
A. Waiver of premium disability benefit Bill is worried about being able to pay his premium if he is totally and permanently disabled before age60. Which of the following riders should he consider?A. Waiver of premium disability benefitB. Accidental death benefitC. Guaranteed insurability optionD. Cost-of-living protectionE. Accelerated benefits
B. Accidental death benefit Frank, age 38, was hit by a car and died. Which of the following riders provided an additional benefit forhis heirs?A. Waiver of premium disability benefitB. Accidental death benefitC. Guaranteed insurability optionD. Cost-of-living protectionE. Accelerated benefits
D. Cost-of-living protection A young employee is buying individual life insurance and is worried about the impact inflation will haveon his life insurance coverage. Which of the following riders should he consider?A. Waiver of premium disability benefitB. Accidental death benefitC. Guaranteed insurability optionD. Cost-of-living protectionE. Accelerated benefits
E. Accelerated benefits Mildred was diagnosed with terminal cancer and knows that she doesn’t have long to live. Which of thefollowing riders would allow her to receive cash now?A. Waiver of premium disability benefitB. Accidental death benefitC. Guaranteed insurability optionD. Cost-of-living protectionE. Accelerated benefits
B. Limited installment payment. The settlement option that pays the life insurance proceeds in equal periodic payments for a specifiednumber of years after your death is calledA. Lump-sum payment.B. Limited installment payment.C. Final life payment.D. Life income option.E. Proceeds left with the company.
D. Life income option. The settlement option that pays the life insurance proceeds to the beneficiary for as long as she or he livesis calledA. Lump-sum payment.B. Limited installment payment.C. Final life payment.D. Life income option.E. Proceeds left with the company.
E. Proceeds left with the company. The settlement option in which the company acts as trustee and pays interest to the beneficiary iscalledA. Lump-sum payment.B. Limited installment payment.C. Final life payment.D. Life income option.E. Proceeds left with the company.
D. Immediate annuity Which of the following products allows an individual to receive payments beginning now?A. Term insuranceB. Deferred annuityC. Whole life insuranceD. Immediate annuityE. Universal life insurance
D.An annuity is more advisable for people in poor health than for those who are likely to live longer than Which of the following statements is incorrect?A. A deferred annuity allows an individual to receive payments from an annuity at some future date.B. An immediate annuity allows an individual to receive payments from an annuity beginning at once.C. A life insurance policy allows the beneficiary to receive proceeds at some future date.D.An annuity is more advisable for people in poor health than for those who are likely to live longer thanaverage.E. An insurance company will calculate the annual amounts to pay each person for an annuity.
A. Fixed annuity Which of the following allows an individual to receive a fixed amount of income over a certain period oftime, or over his or her life?A. Fixed annuityB. Term insuranceC. Whole insuranceD. Variable annuityE. 401(k)
E) It is better to fully fund your IRA, Keogh, or 401(k) before buying an annuity. When considering why to buy annuities, which of the following statements is correct? A) It is better to fund a variable annuity before fully funding your IRA, Keogh, or 401(k).Incorrect ResponseB) It is better to fund a fixed annuity before fully funding your IRA, Keogh, or 401(k). C) The timing for payments of a fixed annuity are variable. D) A fixed annuity is one where the investments put into the annuity are variable.Correct AnswerE) It is better to fully fund your IRA, Keogh, or 401(k) before buying an annuity.
E. All of these. Which of the following is a charge you will pay when you purchase a variable annuity?A. Surrender charge.B. Mortality and expense risk charge.C. Administrative fee.D. Fund expense.E. All of these.
B. $196,000 Stephanie is the wage earner in a “typical family” with $40,000 gross annual income. Use the easymethod to determine how much insurance she should carry.A. $40,000B. $196,000C. $280,000D. $400,000E. $430,000
D. $130,000 Holly and Matt want to use the “nonworking” spouse method to determine the amount of life insurancecoverage they need. If their youngest child is 5 years old, how much do they need?A. $13,000B. $18,000C. $50,000D. $130,000E. $180,000
C. $98,000 Marianne and Roger are in good health and have reasonably secure careers. Each earns $45,000 annually.They own a home with a $125,000 mortgage; they owe $25,000 for their car loans and have $22,000 instudent loans. If one should die, they think that funeral expenses would be $12,000. What is their totalinsurance need using the DINK method?A. $12,000B. $86,000C. $98,000D. $172,000E. $217,000

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