Deck 9: Protecting Your Wealth - Health and Life Insurance

Question 1

You may be able save money on disability insurance premiums if your emergency fund is large enough to cover a few months' expenses,allowing you to select a longer waiting period.

Answer 1

True

Question 2

The 'regular occupation' definition of disability insurance coverage for two years,is the most common offered by group plans.

Answer 2

True

Question 3

The beneficiary of a life insurance policy cannot be the owner.

Answer 3

False

Question 4

CPP has a disability insurance option that will cover you if you are partially disabled.

Question 5

Over 30 percent of Canadians over age 65 receive some kind of kind of care due to long-term health problems.

Question 6

"Own occupation" disability insurance is the least expensive disability insurance coverage.

Question 7

Critical illness insurance benefits are paid out to disabled employees on a monthly basis.

Question 8

The cost of having an aide provide basic care such as assistance with feeding and dressing can easily cost over $50 000 per year.

Question 9

To collect the benefits from a critical illness insurance policy,you must survive a specified illness for 30 days.

Question 10

Disability insurance coverage will replace all your lost income while disabled.

Question 11

While the Canada Health Act is federal legislation,it is the responsibility of the provinces and territories to Administer and deliver health care services.

Question 12

Mortgage life insurance is usually the best deal because the policy owners get a group discount through the lender.

Question 13

The Canada Health Act ensures that all provinces offer the same medical services.

Question 14

A person age 25 to 35 has a greater than 50 percent chance of becoming disabled for longer than three months.

Question 15

There is very little need for individual disability insurance because most workers have employer-sponsored disability coverage and are also eligible for CPP and worker's compensation.

Question 16

In Canada,over twice as many people are covered by extended health care insurance than are covered by disability insurance.

Question 17

The death benefit and cash values are not guaranteed in a universal life insurance contract but are in whole life.

Question 18

If used properly,term life insurance can be an effective estate planning tool.

Question 19

Term life insurance is considered temporary insurance,since the policy is in effect for only a relatively short period of time.

Question 20

The Canada Health Act dictates that the provinces provide minimum universal standards of health care coverage.

Question 21

Which of the following is not an important consideration from the employer's perspective in sponsoring a group benefits plan?

A)The ability to write off premiums as business expenses
B)Providing coverage for employees who are uninsurable
C)Encouraging loyalty and trust from employees
D)Improving staff retention

Question 22

Whole life policies are the most popular form of life insurance and are used by most people to take advantage of tax sheltering investments.

Question 23

Some advantages of whole life insurance are that it can provide coverage until death,the premiums and death benefit are guaranteed,and there is a savings or cash value feature.

Question 24

Which of the following is True about the cost of health care in Canada?

A)The supplementary heath care benefits funded by the provinces vary across the country.
B)The federal government administers all Canadian health care through the Canada Health Act.
C)Health care costs as a portion of revenue are growing minimally over time.
D)Approximately half the funding for health care comes from private health care plans.

Question 25

While the Canada Health Act ensures that medically necessary services are provided based on individual need rather than the ability to pay,who funds the supplementary benefits available to certain segments of the population such as seniors,children,and social assistance recipients?

A)Canada Security Plan
B)Private sector insurance
C)The provinces and territories
D)Federal government assistance plan

Question 26

Which of the following is not an important consideration from the employee's perspective regarding group benefits plans?

A)Saving money on premiums for insurance
B)Coverage for employees who are uninsurable
C)Protection on top of government plans
D)Improving staff retention

Question 27

The income method,basing life insurance needs on multiples of current income,is the most useful method for determining how much life insurance a person should buy.

Question 28

A rider is an option that allows you to customize an insurance policy,such as by adding term insurance for a child.

Question 29

After the incontestability period a life insurance policy cannot be cancelled by the insurance company.

Question 30

Non-forfeiture options allow you to re-instate your term insurance if you lapse the policy accidentally and have no medical conditions.

Question 31

Additional insurance commonly offered through employers includes

A)dental insurance.
B)critical illness insurance.
C)liability insurance.
D)long-term care insurance.

Question 32

The major underwriting factors of life insurance are age,sex,smoking status,driving record,and other health and lifestyle considerations.

Question 33

A lump sum settlement option is usually the best choice,even if a beneficiary is not very good at managing money.

Question 34

Some disadvantages of term insurance are that it increases in cost when you renew it and that it has no value when it matures or you discontinue your policy.

Question 35

The budget method of determining life insurance needs considers a family's future expenses and goals.

Question 36

For long-term care insurance,all else equal,the higher the premium charged,the more comprehensive the coverage.

Question 37

Universal life insurance is similar to whole life except it provides less guarantees.

Question 38

The problem with the cash value built up in a whole life insurance policy is that the money can only be used to pay off the policy or buy additional insurance.

Question 39

Your life insurance policy can be terminated if you understate your age on the application form.

Question 40

What principles must the provinces and territories meet to qualify for the full Canada Heath Transfer?

A)Public administration,accountability,universality,portability and accessibility
B)Public administration,comprehensiveness,universality,portability and accessibility
C)Public administration,comprehensiveness,universality,accountability and accessibility
D)Public administration,fairness,portability,universality and comprehensiveness

Question 41

Which of the following is True about the chances of becoming disabled?

A)The probability of a 35-year-old becoming disabled for three months or longer before they reach age 65 is around 25 percent.
B)Because the chance of becoming disabled is small,most people do not need disability insurance coverage.
C)For people who become disabled for longer than three months,the average duration is over 2.2 years.
D)The probability of a 50-year-old becoming disabled for three months or longer before they reach age 65 is around 50 percent.

Question 42

Which of the following is True about disability insurance?

A)For most people,their emergency fund would look after them if they became disabled for a time.
B)Most people have excellent disability insurance coverage from their group insurance at work.
C)People under age 35 recover quickly and are less likely to become disabled than older people.
D)Becoming disabled could be more financially devastating than losing your home.

Question 43

Which of the following is correct regarding long-term care insurance?

A)It has an elimination period before owners are eligible to have their long-term care costs covered.
B)It is relatively inexpensive and good value for those over age 60.
C)It covers most Canadians over age 65 who receive care due to a long-term health problem.
D)It offers standard coverage and insurance premiums.

Question 44

As of 2012,which was True about life and health insurance in Canada?

A)Most health insurance plans offered disability insurance coverage.
B)Most employee group insurance provided dental insurance.
C)More than twice as many Canadians had extended health insurance than had disability insurance.
D)Public sector funding covered almost half of total health care expenditures.

Question 45

In comparing term insurance with mortgage life insurance,which of the following is True?

A)The premiums decrease with mortgage insurance but not with term insurance.
B)Mortgage insurance is less expensive because of the group discount.
C)The owner has more control with term insurance.
D)Mortgage insurance is guaranteed renewable.

Question 46

The similarity between disability income and long-term care insurance is

A)they both require proof of income.
B)they both have a waiting period.
C)they both provide a death benefit.
D)they both extend benefits beyond age 65.

Question 47

A disadvantage of term insurance is

A)that it becomes more expensive when you renew it.
B)the incontestability period.
C)the policy owner must make the investment decisions.
D)it might not be renewed if you develop a life threatening illness.

Question 48

What would be the out-of-pocket cost to an individual whose long-term care policy includes a 20 percent co-insurance clause? A current long-term illness has resulted in total expenses of $250 000.

A)$250 000
B)$200 000
C)$50 000
D)$0

Question 49

If Tom is a technology consultant and wants to purchase reliable long-term disability insurance coverage that is cost effective for him,which would be the best choice?

A)Professional occupation
B)Any occupation
C)Regular occupation
D)Own occupation

Question 50

An individual covered by disability insurance who has recently recovered and is returning to work after receiving benefits would be most concerned with

A)the waiting period.
B)the benefit period.
C)the guaranteed renewable provision.
D)the non-cancellable provision.

Question 51

Regarding the definition of "disability,"

A)the "any occupation" definition is the best one for the insured.
B)it varies from one disability policy to another and is the most important consideration.
C)the "own occupation" definition would pay benefits as long as you were not earning income from another occupation.
D)most employee group insurance uses the regular occupation to age 65 definition.

Question 52

Which of the following types of life insurance has a cash value component?

A)Term life
B)Dependant life
C)Whole life
D)Mortgage insurance

Question 53

If John's business had purchased disability insurance coverage for its employees which was guaranteed renewable,which of the following is True?

A)The insurance company must renew the coverage with same benefits and premiums at the renewal date.
B)The employer must renew the same benefits each year,even if the premiums increase.
C)The insurance company must renew the coverage with the same benefits but could increase the premiums.
D)The insurance company must renew the coverage,but could change the definition of disability used.

Question 54

Which of the following statements is True regarding disability insurance?

A)You should have it even if you are retired and living on a pension.
B)The principle of indemnification will limit the amount of coverage you can get.
C)If you are self-employed,critical illness insurance would be a better option than disability.
D)Disability insurance from an employee group plan is the best coverage.

Question 55

Which of the following would be of little concern when calculating the amount of disability insurance needed?

A)The cost of one's monthly mortgage payments
B)One's level of CPP disability coverage
C)One's employee group disability insurance coverage
D)One's financial goals

Question 56

Individual health insurance plans

A)duplicate coverage offered by group plans.
B)expire when you resign your employment.
C)have less expensive premiums.
D)are purchased directly through agents.

Question 57

Critical illness insurance

A)is one of the benefits commonly offered in employee group insurance plans.
B)reimburses you for treatment expenses if you survive a life-altering illness at least 30 days.
C)pays a lump sum if you survive a life-altering illness listed in the policy for at least 30 days.
D)pays a lump sum on a list of life-threatening illnesses,with evidence from a physician.

Question 58

Employee group health insurance policies do not commonly offer

A)critical illness insurance.
B)employee assistance programs.
C)health insurance coverage for family members.
D)life insurance.

Question 59

You are putting $300 per month into a savings account to pay for your child's post-secondary education.You worry that if you die before you get enough saved,your child will not be able to get a good education.Which of the following types of life insurance would best fit your needs at the lowest cost?

A)Whole life
B)Universal life
C)Term life
D)Variable life

Question 60

Which of the following is True regarding employer sponsored long-term disability insurance?

A)Most group plans offer full disability benefits payable to age 65.
B)Most firms offer employees disability insurance.
C)Most plans use the 'any occupation' definition after two years of disability.
D)A typical disability policy covers about 90 percent of the employee's gross salary.

Question 61

Whole life insurance has a premium that

A)declines.
B)is variable.
C)is fixed.
D)increases.

Question 62

Which of the following factors is most important in determining your life insurance premium rate?

A)Your profession
B)Your health
C)Your net worth
D)The amount of coverage

Question 63

The Wongs prefer whole life insurance because it will provide for their beneficiaries,regardless of how long they live,but they cannot afford the premiums for the full $1.1 million coverage they feel they need.What would be the best option for them?

A)Purchase an affordable amount of whole life insurance and add a term rider.
B)Purchase term insurance and add a guaranteed insurability rider.
C)Purchase creditor insurance and group life insurance only.
D)Purchase universal life insurance only.

Question 64

Which considerations would be irrelevant when considering whether to cancel an old life insurance policy and start a new one?

A)The suicide clause
B)The premium schedule
C)The incontestability dates
D)The grace period

Question 65

What happens if a policyholder with a universal life insurance policy misses a payment?

A)The policy is terminated after 30 days.
B)The cash value is refunded and the policy terminated.
C)Funds are withdrawn from the cash value to pay the premium.
D)The policy is terminated after 60 days.

Question 66

Which of the following is True regarding policy dividends from insurance?

A)They only apply to Universal Life policies.
B)They are investment distributions.
C)They only apply to participating policies.
D)They are taxable profits to shareholders.

Question 67

What is the most important difference between universal life (UL)insurance and whole life (WL)insurance?

A)With WL the policy would terminate after 30 days if a premium is missed.
B)With UL the policy owner is responsible for selecting the investments.
C)With WL the policy owner is responsible for selecting the investments.
D)With UL the policy would terminate after 30 days if a premium is missed.

Question 68

Which of the following insurance types is only intended to provide insurance in the event of death?

A)Whole life
B)Term life
C)Universal life
D)Variable life

Question 69

Which of the following is the most important consideration in deciding on creditor insurance versus personally owned life insurance?

A)Who the beneficiary is
B)Who the creditor is
C)What the face amount is
D)What the term is

Question 70

Sam's annual income is $60 000 and Jane is staying home looking after their children.If Sam died,they figure it would take $350 000 invested at four percent to provide suitable income for the family for 15 years until the kids are more independent.They would also like to have $40 000 set aside for university for his two children.Sam and Jane's total RRSP savings are $120 000.How much life insurance does he need using the budget method?

A)$270 000
B)$350 000
C)$390 000
D)$500 000

Question 71

The income method,used to calculate your life insurance coverage,multiplies your current annual income by

A)your expenses per month.
B)the number of your dependents.
C)an arbitrary number,such as 10.
D)a present value factor of your future income earning potential.

Question 72

The job marketability of your spouse

A)would be considered in the budget method of determining life insurance needs.
B)is used in the income method of determining life insurance needs.
C)is not important in determining life insurance needs.
D)is the main factor in determining whether you need life insurance.

Question 73

Which of the following is an important rider for a young person who is not sure of their future life insurance needs?

A)Waiver of premium rider
B)Guaranteed insurability rider
C)Accidental death rider
D)Term rider

Question 74

Jane and Vitorio are both professionals earning roughly $140 000 each annually.If one of them died and their debts were gone,the survivor could easily live on their own income.They have a combined net worth of $950 000.They have debts in the amount of a $250 000 mortgage and car loans of $85 000.In addition,they pay off their credit cards each month,usually around $21 000.If anything should happen to either one of them,they want to leave their family debt-free.How much life insurance should they consider?

A)They should each have a policy for $356 000.
B)None because their net worth is $950 000.
C)They should each have a policy for $475 000.
D)They should each have a policy for $335 000.

Question 75

If you buy a term insurance policy with a conversion option,this means that you

A)can covert the policy to variable life insurance before it terminates.
B)can convert the amount of coverage by a set amount at the renewal time.
C)can convert it to a whole life policy before it terminates.
D)can convert it to a longer term at the renewal time.

Question 76

The budget method for determining the amount of life insurance needed is based on

A)your investments and cash flow.
B)your annual income and expenses.
C)you current situation and your company pension.
D)your current situation and expected future needs.

Question 77

When calculating the amount of life insurance premiums,underwriters of life insurance would not be concerned with

A)the amount of coverage you desire.
B)your age when you take out the policy.
C)your health habits.
D)the length of time you plan to keep the coverage.

Question 78

Jenny has no dependents,an annual income of $50 000,and debt of $100 000.How much insurance should she buy using the income method and a factor of 10?

A)none
B)$100 000
C)$400 000
D)$500 000

Question 79

A disadvantage of whole life policies is that

A)the premiums are not predictable.
B)the premiums are higher than for term policies.
C)the face value of the policy can change over time.
D)the cash value is not available to policy owners.

Question 80

Which is True in comparing universal life (UL)insurance and whole life (WL)insurance?

A)With WL the cash value is not guaranteed.
B)With UL you may receive policy dividends.
C)With WL the premiums are flexible.
D)With UL the premiums are flexible.