Deck 9: Life, Health, and Disability Insurance

Question 1

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

Answer 1

True

Question 2

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

Answer 2

False

Question 3

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

Answer 3

True

Question 4

Universal life is a type of permanent life insurance

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

Critical illness benefits are usually added by riders to new or existing policies.

Question 11

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

Question 12

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

Question 13

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 14

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

Question 15

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 16

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

Question 17

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

Question 18

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

Question 19

The accidental death benefit is often called double indemnity.

Question 20

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

Question 21

Group health insurance plans comprise about 60 percent of all health insurance issued by health and life insurance companies.

Question 22

Group health insurance will cover you but not your immediate family.

Question 23

The fact is that for all age groups disability is more likely than death.

Question 24

The "free-look" period allows you to cancel your life insurance without penalty.

Question 25

Basically, the word disability has only one definition.

Question 26

Just about every worker is covered by disability income insurance.

Question 27

An interest-adjusted index is a method of evaluating the cost of life insurance by taking into account the time value of money.

Question 28

Disability income insurance is probably the most coveted form of available insurance protection.

Question 29

In Canada all basic medical procedures are provided for under provincial government health plans.

Question 30

Long-term-care insurance is a type of supplemental health insurance

Question 31

Disability income insurance benefits provide regular cash income lost by employees as the result of an accident, illness, or pregnancy.

Question 32

Group health insurance covers all of your health insurance needs.

Question 33

Disability benefits begin on the first day you are disabled.

Question 34

The lump-sum payment is the most widely used settlement option for life insurance policies.

Question 35

Most people are more likely to lose their income due to death than due to disability.

Question 36

Individual health insurance covers either one person or family.

Question 37

Good disability plans pay when you are unable to work at your regular job; poor disability plans pay only when you are unable to work at any job.

Question 38

With a lump-sum payment, the insurance company pays the face amount of the policy in one installment to the beneficiary or to the estate of the insured.

Question 39

The price of life insurance policies varies very little among life insurance companies.

Question 40

Disability can cause even greater financial problems than death.

Question 41

Critical insurance illness usually provides money for care if you are diagnosed with a serious illness such as AIDS.

Question 42

You should aim for a disability benefit amount that when added to your other income will equal about 90 percent of your gross pay.

Question 43

The "free-look" period allows you to cancel your life insurance without penalty anytime within 10 days.

Question 44

Life insurance is one of the few ways to provide liquidity at the time of death.

Question 45

In most cases, your employer pays part or all of the cost of disability income protection plan.

Question 46

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

Question 47

You should seek a disability policy that pays benefits for life.

Question 48

A particular insurance company will not be equally competitive for all policies.One company might have a competitively priced policy for 24-year-olds but not for 35-year-olds.

Question 49

Disability income benefits begin on the 10^thday you are disabled.

Question 50

A co-payment provision requires the policyholder to share the expenses beyond the deductible amount.

Question 51

A deductible is the amount the policyholder must pay before the policy benefits begin.

Question 52

The premium for noncancelable and guaranteed renewable coverage is higher, but the coverages are well worth the extra cost.

Question 53

Very few employers provide disability income protection for their employees through the group insurance plans.

Question 54

The price of life insurance policies varies considerably among life insurance companies.

Question 55

Basic health insurance coverage should include hospital costs, supplementary prescription drug charges, and dental maintenance.

Question 56

Critical insurance illness is gaining recognition in Canada as a valuable insurance tool.

Question 57

Canadian consumers are generally unaware that long-term care insurance even exists.

Question 58

Of all life insurance applicants, 98 percent are found to be insurable, though some may have to pay higher premiums because of an existing medical condition.

Question 59

The "free-look" period allows you to cancel your life insurance without penalty anytime within 30 days.

Question 60

Generally, disability income policies with shorter waiting periods have lower premiums.

Question 61

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 dependents debt free
C)estimate your life insurance requirements.
D)determine your life insurance objectives.
E)evaluate the ratings of the insurance company.

Question 62

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 63

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 64

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 65

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 66

In Canada most basic medical procedures are provided for under provincial government health plans.

Question 67

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 68

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 69

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 70

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 71

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 72

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 73

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.

Question 74

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 (use 7 years)

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

Question 75

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 76

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 77

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 78

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.

Question 79

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 80

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