Deck 9: Life, Health, and Disability Insurance

Question 1

A two-earner couple may have

A) the greatest need for life insurance.
B) no need for life insurance.
C) a moderate need for life insurance, especially if they have a mortgage.
D) the greatest need for an annuity.
E) no need for an annuity.

Answer 1

a moderate need for life insurance, especially if they have a mortgage.

Question 2

Your second step in determining a life insurance program should be to

A) consult a local insurance company agent.
B) consider whether you wish to leave your dependants debt free
C) estimate your life insurance requirements.
D) determine your life insurance objectives.
E) evaluate the ratings of the insurance company.

Answer 2

consider whether you wish to leave your dependants debt free

Question 3

Which statement is correct about whole life insurance?

A) Whole life insurance is cheaper than term life.
B) Policy holders overpay in the later years of the policy.
C) Whole life premiums increase with your age.
D) Whole life insurance is the best choice for most people.
E) Whole life insurance builds up cash value.

Answer 3

Whole life insurance builds up cash value.

Question 4

If you wanted to pay exactly the same life insurance premium each year, you would choose a

A) variable life policy.
B) participating policy.
C) term insurance policy.
D) nonparticipating policy.
E) endowment policy.

Question 5

A beneficiary

A) acts as a trustee of your insurance policy.
B) is a guardian of your children.
C) acts on your behalf after you die.
D) is designated to receive life insurance proceeds.
E) takes your money and runs.

Question 6

A participating life insurance policy has

A) lower premiums than a nonparticipating policy.
B) about the same premium as the nonparticipating policy.
C) been declared illegal in many states.
D) somewhat higher premiums than nonparticipating policy.
E) has no potential for earning dividends.

Question 7

Which type of life insurance plan requires you to pay premiums for a stipulated period, usually 20 or 30 years or until you reach a specified age?

A) modified life policy
B) variable life policy
C) adjustable life policy
D) limited payment policy
E) endowment policy

Question 8

Who has the greatest need for life insurance?

A) children
B) singles living alone
C) singles living with parents
D) dual income couple
E) households with small children

Question 9

The method of determining life insurance requirements that does not ignore such important factors as emergency funds and your liquid assets is called the

A) easy method.
B) "family need" method
C) DINK method.
D) "nonworking" spouse method.
E) hard method.

Question 10

Life insurance premiums are determined basically by the

A) forces of supply.
B) forces of demand.
C) forces of competition.
D) use of mortality tables.
E) guesswork of insurance executives.

Question 11

Suppose you are a typical family. Your annual income is $60,000. Use the income replacement method to determine your need for life insurance. Your insurance should be in the amount of

A) $245,000.
B) $294,000.
C) $345,000.
D) $400,000.
E) $450,000.

Question 12

Which of the following statements is correct for term insurance?

A) Premiums for term insurance remain constant.
B) Term insurance is protection for a specified period of time.
C) Term insurance has cash value.
D) Term insurance is usually more expensive than whole life insurance.
E) Not available in a form that pays less to the beneficiaries as time passes.

Question 13

A plan that insures a large number of persons under the terms of a single policy without a medical examination is called a(n) ____________ life insurance policy plan.

A) individual
B) whole
C) large number
D) permanent
E) group

Question 14

Subject to certain minimums, which life insurance is designed to let you pay premiums at any time in virtually any amount?

A) universal life
B) ordinary life
C) whole life.
D) adjustable life
E) variable life

Question 15

Which of the following statements is true about group life insurance?

A) Group life has been losing its popularity recently.
B) Generally the cost of insurance is the same for each employee.
C) Group insurance is not a good bargain for older employees regardless of age.
D) Principles that apply to other forms of insurance do not apply to group life insurance.
E) Not worth getting.

Question 16

Which of the following methods can be used to estimate your life insurance requirements?

A) income replacement method.
B) family need method.
C) average income replacement method.
D) A and B are correct.
E) A, B and C are correct

Question 17

Which of the following items are required in calculating your life insurance need?

A) annual income and approximate expenses.
B) emergency fund.
C) financial needs.
D) liquid assets.
E) annual income and approximate expenses, emergency fund, financial needs, and liquid assets.

Question 18

You probably have little or no need for life insurance if you are

A) married and your spouse works.
B) divorced and have two children.
C) a single person living alone or with parents.
D) gainfully employed.
E) a household with several children.

Question 19

Which of the following will be used to determine a term insurance policy?

A) age at which people will die.
B) number of people who will die this year.
C) number of people who will buy insurance this year.
D) number of agents who sell life insurance.
E) number of accidents in the region

Question 20

What factors should you consider before you buy insurance?

A) your present and future sources of income
B) your savings
C) group life insurance
D) pension benefits
E) your present and future sources of income, your savings, group life insurance, and pension benefits.

Question 21

After you buy new life insurance you have a "free look" period of ______ days.

A) 10
B) 7
C) 21
D) 30
E) 28

Question 22

Generally, disability income policies with longer waiting periods

A) have higher premiums.
B) have lower premiums.
C) have about the same premium.
D) Are issued by smaller insurance companies.
E) Are issued by larger insurance companies.

Question 23

The waiting period in disability income insurance is called ____________ period.

A) Exclusion
B) no benefit
C) Coverage
D) trade-off
E) Elimination

Question 24

Which type of insurance provides for the partial replacement of income lost by employees as a result of an accident, illness, etc.?

A) Comprehensive major medical
B) Major medical expense
C) Physician's expense
D) Disability income
E) Surgical expense

Question 25

Critical illness benefits are paid

A) immediately after the policyholder dies
B) to the policyholder before he or she dies
C) in equal installments over a period of 5 years
D) to the spouse of the policy holder
E) five days after the policyholder dies

Question 26

Suicide clause means that the insurance company

A) can cancel the policy if age has been misstated.
B) will pay the death benefit equal to the amount of the premium paid, if the insured dies during the first two years that the policy is in force.
C) allows the insured to pay premiums in installments.
D) automatically pays the premium out of the policy's cash value.

Question 27

Which of the following is not a common settlement option?

A) life income option.
B) limited installment payment.
C) lump-sum payment.
D) variable installment payment.
E) proceeds left with the company.

Question 28

A factor that affects the cost of a life insurance policy is

A) the seasons.
B) inflation.
C) provincial laws.
D) federal laws.
E) the mortality rate.

Question 29

Which type of insurance is probably the most neglected form of available insurance protection?

A) life
B) liability
C) disability
D) car
E) home and property

Question 30

Because you are young and healthy now, you may overlook the very real need for

A) Disability income insurance.
B) health insurance.
C) Dental insurance.
D) vision care insurance.
E) liability insurance.

Question 31

In planning your insurance program, you should

A) seek advice from a competent financial adviser.
B) determine what insurance is required.
C) consider social security and other group insurance.
D) decide what type of insurance best meets your needs.
E) seek advice from a competent financial adviser, determine what insurance is required, consider social security and other group insurance, and decide what type of insurance best meets your needs.

Question 32

Which of the following is not an important trade off in purchasing disability income insurance?

A) waiting period
B) amount of down-payment
C) duration of benefit.
D) accident and sickness coverage.
E) guaranteed renewability.

Question 33

The price that a company charges for a life insurance policy is affected by

A) the company's cost of doing business.
B) inflation.
C) the seasons.
D) provincial regulations.
E) federal regulations.

Question 34

What percent of all applicants who apply for life insurance are found to be insurable?

A) 58
B) 68
C) 85
D) 90
E) 98

Question 35

Which health insurance coverage requires careful shopping because coverage and cost vary from company to company?

A) group health
B) individual health
C) hospital expense
D) surgical expense
E) physician's expense

Question 36

A method of evaluating the cost of life insurance by taking into account the time value of money is called

A) double indemnity.
B) guaranteed insurability.
C) an interest-adjusted index.
D) the consumer price index.
E) a present value index.

Question 37

Which type of health insurance policy may not cover all of your health insurance needs or may deny benefits if you lose your job?

A) group health
B) individual health
C) Basic health
D) Comprehensive medical
E) Disability income

Question 38

The prices of life insurance policies

A) vary considerably.
B) are relatively the same.
C) are higher for females.
D) have remained constant.
E) are higher in the Midwest than in the Northeast.

Question 39

A document attached to the policy that modifies its coverage by adding or deleting a specified condition is called a(n)

A) beneficiary.
B) waiver of premium.
C) automatic premium loan.
D) rider.
E) incontestability clause.

Question 40

Most health insurance policies issued by health and life insurance companies are sold to

A) victims of communicable diseases.
B) individuals with families.
C) single individuals with no dependents.
D) Employees and their dependents.
E) Employers, who in turn offer the benefits to employees.

Question 41

The main difference between whole life insurance and critical illness insurance is that critical illness insurance

A) has a higher approval rating
B) is cheaper
C) is more difficult to understand
D) pays the proceeds before the policyholder's death
E) has limits on the amount of insurance you can purchase

Question 42

If you are uncertain whether you will need life insurance beyond the age of 65, which of the following features should you chose?

A) Renewability option
B) Conversion option
C) Nonforfeiture option
D) Participating option
E) Retractable option

Question 43

A good supplemental health and disability insurance plan should

A) offer basic coverage for hospital costs.
B) provide for prescription drug cost not covered by your provincial plan.
C) provide for dental maintenance including dentures and oral surgery.
D) include vision care insurance.
E) offer basic coverage for hospital costs, provide for prescription drug cost not covered by your provincial plan, provide for dental maintenance including dentures and oral surgery, and include vision care insurance.

Question 44

Factors that affect the price a company charges for a life insurance policy include

A) the returns on its investments
B) the mortality rate it expects among its policyholders
C) the features the policy contains
D) competition among companies with comparable policies
E) all these factors affect the price a company charges for a life insurance policy

Question 45

In choosing supplemental health and disability insurance, ideally, you should

A) get a basic plan with a major supplementary plan.
B) get dental and vision plans.
C) buy dread disease and cancer insurance plans.
D) purchase nursing home insurance.
E) purchase accident insurance.

Question 46

Which of the following is the most common settlement option?

A) life income option.
B) limited installment payment.
C) lump-sum payment.
D) variable installment payment.
E) proceeds left with the company.

Question 47

A(n) _______ provides specified benefits regardless of whether the actual expenses are greater or less then the benefits.

A) medical expense policy
B) comprehensive expense insurance
C) interim expense insurance
D) indemnity policy
E) reimbursement policy

Question 48

The "free-look" period allows you to cancel your life insurance without penalty anytime within _________ day(s)

A) one
B) ten
C) thirty
D) sixty
E) ninety

Question 49

You wish to build up a cash surrender value within your life insurance policy. Which of the following types of life insurance would permit you to do so?
I. Whole Life Insurance
II. Term-to-100 Insurance
III. Universal Life Insurance
IV. Declining Term Insurance

A) I and III only
B) I, II and III only
C) IV only
D) I, III and IV only
E) I and II only

Question 50

You wish to ensure that your life insurance will not cease once you reach the age of 70. Which types of life insurance would satisfy this need?
I. Whole Life Insurance
II. Term-to-100 Insurance
III. Universal Life Insurance
IV. Declining Term Insurance

A) I and II only
B) I, II and III only
C) IV only
D) I, III and IV only
E) 1 and IV only

Question 51

If you are diagnosed with a life-threatening illness and expect to incur high medical costs before you die, which type of insurance would provide money for your final medical costs?

A) Life insurance
B) Critical illness insurance
C) Professional insurance
D) House insurance
E) Long-term care

Question 52

Of all life insurance applicants, _________ percent are found to be insurable, though some may have to pay higher premiums because of an existing medical condition

A) 50
B) 62
C) 86
D) 98
E) 100

Question 53

Most insurers limit benefits from all sources to no more than ____________ percent of your take-home pay.

A) 30-40
B) 40-50
C) 70-80
D) 60-70
E) 50-60

Question 54

The whole life policy is an insurance plan for which the policyholder

A) pays a specified premium each year for as long as he or she lives
B) is also called a straight life policy
C) is also called a cash-value life policy
D) is also called an ordinary life policy
E) all the answers are correct

Question 55

Which of the following statements is true of long-term-care insurance?

A) Canadians are generally unaware of its existence.
B) It covers you when you have a disability that leaves you unable to take care of yourself.
C) It covers you when you have a disability and may need help at home with daily activities.
D) Canadians are generally unaware of its existence and it covers you when you have a disability that leaves you unable to take care of yourself.
E) Canadians are generally unaware of its existence; it covers you when you have a disability that leaves you unable to take care of yourself; and it covers you when you have a disability and may need help at home with daily activities.

Question 56

A basic supplementary health and disability insurance plan should

A) provide at least one year's hospital room and board in full.
B) provide at least $2 million lifetime maximum for each family member.
C) pay 100 percent for out-of-hospital expenses.
D) include hospital costs, supplementary prescription drug charges, and dental maintenance.
E) include vision care insurance.

Question 57

The premium for non-cancelable and guaranteed renewable disability income insurance is higher,

A) therefore, younger people should skip these coverages.
B) hence, the insurance companies enjoy better profit margins.
C) therefore, very few older workers should carry these coverages.
D) but the coverages are well worth the extra cost
E) hence, the policy pays benefits for life.

Question 58

Critical illness insurance does not usually cover __________________.

A) cancer
B) stroke
C) HIV/AIDS
D) blindness
E) organ transplant

Question 59

The waiting period for disability income insurance benefits is usually _________ after the beginning of the policy.

A) 0 days (no waiting period)
B) 10 days
C) 15 days
D) 30 to ninety days
E) 365 days

Question 60

Dental expense insurance provides reimbursement for

A) oral examinations.
B) fillings.
C) extractions.
D) inlays.
E) all of the above provide reimbursement.

Question 61

Households with small children most often have the greatest need for life insurance.

Question 62

Renewable term and decreasing term are types of whole life policies.

Question 63

A rider is any document attached to the policy that modifies its coverage by adding or excluding specified conditions or altering its benefits.

Question 64

The easy method of estimating life insurance requirements is remarkably useful.

Question 65

The principle of home insurance can be applied to the lives of persons.

Question 66

The incontestability clause stipulates that the insurance company can dispute the validity of the policy during the insured's lifetime.

Question 67

A term insurance policy pays a benefit only if you die during the period that the policy covers.

Question 68

Canadians are amongst the least life-insured people in the world.

Question 69

The premium for the whole life policy increases with your age.

Question 70

Universal life is a type of permanent life insurance

Question 71

Single persons living alone have little or no need for life insurance.

Question 72

The policy loan provision does not permit you to borrow any amount up to the cash value of the policy.

Question 73

Even though it is expensive, you should consider the accidental death benefit in a life insurance policy.

Question 74

Life insurance may be used as a way to provide liquidity at the time of death.

Question 75

If you wish to pay exactly the same premium each year, you would choose a participating policy.

Question 76

Agents and direct insurers represent multiple insurance companies and can offer the products of those companies where the agent or direct insurer has a contract.

Question 77

Double indemnity is when the insurance company pays twice the face value of the policy if the insured's death results from an accident.

Question 78

A nonparticipating policy has somewhat higher premiums than a participating policy.

Question 79

The accidental death benefit is often called double indemnity.

Question 80

Most people buy life insurance to protect someone who depends on them from financial losses caused by their death.