Consumer experts typically recommend all of the following rules when buying life insurance EXCEPT A) Consider the financial strength of the insurer. B) Deal with a competent agent. C) Ignore all factors other than cost. D) Shop around for a low-cost policy. ANSWER Answer: C
Date: September 19th, 2020
Why might the use of “grades” assigned by a life insurance company rating organization not be a reliable guide for consumers? I. There may be variations in grades given by different rating organizations. II. They ignore factors such as profitability and quality of investments. A) I only B) II only C) both I and II […]
Date: September 19th, 2020
Which of the following statements about the yearly-rate-of-return method (also known as the Belth method) of calculating the yearly rate of return for a life insurance policy is (are) true? I. The formula requires the use of benchmark prices per $1,000 of protection. II. The main drawback of the formula is its complexity, necessitating the […]
Date: September 19th, 2020
Consumer experts typically recommend which of the following rules when purchasing life insurance? I. Avoid policies which pay dividends. II. Purchase life insurance equal to ten times your annual salary. A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: D
Date: September 19th, 2020
Which statement about the incontestable clause is true? I. It protects the beneficiary if the insurer tries to deny a claim years after the policy is issued. II. If protects the insurer from having to pay a claim during the first two years if the insured made a material misrepresentation or concealed material information in […]
Date: September 19th, 2020
Marcus is concerned that inflation will erode the purchasing power of the face value of his life insurance policy. His agent suggested that Marcus add a provision that allows him to purchase one-year term insurance equal to the percentage change in the consumer price index without having to demonstrate insurability. This provision is called a(n) […]
Date: September 19th, 2020
Beth purchased a participating life insurance policy 6 years ago. Her life insurance needs have increased, but she has developed a medical condition that makes it impossible for her to purchase more life insurance at affordable premiums. Which dividend option makes sense for Beth to use given her medical condition? A) cash B) apply to […]
Date: September 19th, 2020
Janet is the beneficiary of her uncle’s $200,000 life insurance policy. When her uncle died, Janet selected a settlement option that pays monthly benefits for as long as she lives. If Janet dies before receiving $200,000, payments will continue to a contingent beneficiary until a total of $200,000 has been paid. What settlement option did […]
Date: September 19th, 2020
Lionel purchased a $200,000 ordinary life insurance policy when he was 25 years old and had significant life insurance needs. Now Lionel is 50. His mortgage is almost paid-off and his children have left home and are financially independent. Lionel no longer wants to pay premiums, but he would like to have some permanent life […]
Date: September 19th, 2020
A factor that can be ignored when determining the cost of life insurance is A) time value of money. B) premiums paid. C) settlement options. D) dividends. ANSWER Answer: C
Date: September 19th, 2020
