Question 1

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

Accepted Answer

Term life insurance provides coverage for a specific period of time, such as 10 or 20 years, after which the policy ends. Unlike permanent life insurance, which provides coverage for the rest of the insured's life, term insurance is designed to meet temporary needs and is considered temporary insurance.

Question 2

Universal life insurance is the same from one insurance company to another and is,therefore,the most common and popular form of life insurance.

Accepted Answer

Universal life insurance policies can vary from one insurance company to another in terms of policy features, costs, and investment options. While it is a popular form of life insurance, it is not the same across all insurers.

Question 3

Whole life policies are the least expensive way to meet your life insurance needs.

Accepted Answer

Term life insurance policies are typically the least expensive option for meeting life insurance needs, while whole life policies can be more expensive due to the added savings and investment components they often include.

Question 4

Term insurance will provide most of a young family's life insurance coverage due to its affordable cost.

Accepted Answer

Term insurance tends to be less expensive than other types of life insurance, making it a popular choice for young families who may have more immediate financial concerns to address. It provides coverage for a specified period of time and can be a cost-effective way to ensure financial protection for your loved ones.

Question 5

The beneficiaries of life insurance policies can only be family members or those directly impacted by a person's death.

Accepted Answer

The beneficiaries of life insurance policies can be anyone designated by the policyholder, including friends or charities. They do not need to be family members or those directly impacted by the person's death.

Question 6

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

Accepted Answer

The cash value of a whole life insurance policy can be used for other purposes such as taking out a loan, withdrawing cash, or surrendering the policy for its cash value. However, there may be tax consequences and fees associated with these actions.

Question 7

If no one else relies on your income,life insurance may not be necessary.

Accepted Answer

Life insurance is typically intended to provide financial support for dependents or loved ones in case of the policyholder's death. If no one relies on your income, then life insurance may not be necessary.

Question 8

If you want to borrow money from the cash value of your whole life policy,the interest rates are relatively high and the terms of the loan are quite strict.

Accepted Answer

Borrowing against the cash value of your whole life insurance policy typically offers relatively low interest rates compared to unsecured loans, and the terms are often more flexible since you're essentially borrowing from yourself.

Question 9

Whole life policies can be structured to provide a higher level of death benefits to beneficiaries in the early years of the policies or for the policies to be paid off in a certain time period,for example twenty years.

Accepted Answer

Whole life policies can be structured with various options, including providing higher levels of death benefits in the early years or paying off the policy in a certain time period such as twenty years.

Question 10

During the time the policy is in effect,term life insurance has a good savings and investment component.

Accepted Answer

Term life insurance does not have a savings or investment component. It is designed purely for protection and does not accumulate cash value like whole life or universal life insurance policies.

Question 11

A person's need for life insurance varies quite a bit over his or her lifetime.

Accepted Answer

It is true that a person's need for life insurance can vary depending on factors such as age, marital status, dependents, and other financial obligations.

Question 12

Life insurance may not be that important for a couple who both work full-time and who could each be self-sufficient without the other person's income.

Accepted Answer

Life insurance is typically recommended for individuals who have dependents who would be financially impacted by their death. If both individuals are able to support themselves without relying on the other's income, then life insurance may not be necessary.

Question 13

Life insurance is an indication of good financial planning,since it provides a payment to the policyholder upon his or her death.

Accepted Answer

Life insurance provides a payment to the beneficiaries upon the death of the policyholder, not to the policyholder themselves.

Question 14

The only reason a person would buy life insurance is to eliminate or substantially reduce the financial consequences of that person's death by providing income to his or her dependents.

Accepted Answer

The answer of The only reason a person would buy...

Question 15

Life insurance may be obtained through all of the following except

Accepted Answer

The federal government does not offer life insurance. It is possible to obtain life insurance through financial institutions, private insurance companies, or through an employer-sponsored plan.

Question 16

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.

Accepted Answer

Term insurance is a type of insurance policy that provides coverage for a specific period of time. However, once the term ends, the policy has no value, which means that if you outlive the policy, you will not receive any payout. Additionally, when you renew a term insurance policy, the cost may increase based on factors such as age and health status.

Question 17

Life insurance proceeds are not used to

Accepted Answer

Life insurance proceeds are meant to provide financial support to the policyholder's beneficiaries after their death. They are not meant to be used for personal financial goals such as retirement or charitable purposes.

Question 18

Advantages of whole life insurance policies are that they provide long-term coverage,the rates are fixed,and they have a savings or cash value feature.

Accepted Answer

Whole life insurance policies do provide long-term coverage, the rates are fixed, and they have a savings or cash value feature.

Question 19

A limited payment option on a whole life policy pays a smaller share of the policy face value to beneficiaries during the first five years of the policy.

Accepted Answer

A limited payment option on a whole life policy refers to a payment structure where the policyholder makes payments for a limited period, such as 10 or 20 years, after which the policy is fully paid up and coverage continues for the rest of the policyholder's life. It does not affect how the death benefit is paid out to beneficiaries.

Question 20

Life insurance is critical to protect a family's financial situation in the event that a breadwinner dies.

Accepted Answer

Life insurance provides a death benefit to beneficiaries in the event of the insured's death, providing a financial safety net for their loved ones. Without life insurance, a family may struggle to cover expenses such as funeral costs, mortgage payments, and other bills, which can cause financial insecurity and instability.

Quiz 13: Life Insurance