The purchase of term insurance is justified by which of the following circumstances? I. The insured wants to save money through the policy for a specific need. II. The insured has a temporary need for life insurance protection. A) I only B) II only C) both I and II D) neither I nor II […]
Date: September 19th, 2020
Which of the following statements about life insurance cash values is (are) true? I. Cash values are a result of the level premium method of purchasing life insurance. II. The cash value of a policy must always exceed the policy’s legal reserve. A) I only B) II only C) both I and II D) neither […]
Date: September 19th, 2020
Sarah is using the needs approach to determine how much life insurance to buy. Her cash needs are $30,000; her income needs are $140,000; and special needs are $100,000. Sarah has the following assets: $20,000 in bank accounts, $30,000 in retirement plans, and $40,000 in investment accounts. Sarah owns no individual life insurance. She is […]
Date: September 19th, 2020
Jessica is an agent for LMN Life Insurance Company. She met with Brad, who was interested in purchasing life insurance. Jessica explained the various uses of life insurance, including income for Brad’s wife during the 1- or 2-year period following Brad’s death. This period is known as the A) dependency period. B) estate clearance period. […]
Date: September 19th, 2020
Julian, age 45, would like to determine how much life insurance to purchase using the human life value approach. He assumes his average annual earnings over the next 20 years will be $40,000. Of this amount, $20,000 is available annually for the support of his family. Julian will generate this income for 20 more years […]
Date: September 19th, 2020
Which of the following pieces of information is needed to calculate a person’s human life value? A) the marital status of the person. B) the person’s estimated annual Social Security benefits after retirement. C) the person’s cost of self-maintenance. D) current outstanding debts, including mortgage debt. ANSWER Answer: C
Date: September 19th, 2020
Which of the following statements regarding convertible term insurance is true? A) Evidence of insurability must be provided to convert the policy. B) More term policies are converted using the original-age method than using the attained-age method. C) The converted coverage has a lower face amount than the term coverage. D) The annual premium for […]
Date: September 19th, 2020
The human life value is defined as the A) present value of a deceased breadwinner’s future gross income. B) future value of a deceased breadwinner’s past earnings. C) present value of the family’s share of a deceased breadwinner’s future earnings. D) future value of the family’s share of a deceased breadwinner’s future earnings. […]
Date: September 19th, 2020
When using the needs approach, several “special needs” should be considered. One special need is money to cover unexpected events, such as major car repairs, dental bills, or home repairs. Money set aside for this purpose is called a(n) A) estate clearance fund. B) emergency fund. C) readjustment period fund. D) mortgage redemption fund. […]
Date: September 19th, 2020
Which of the following statements about the needs approach for estimating the amount of life insurance to purchase is (are) true? I. It involves an analysis of various family needs which must be met if a family breadwinner dies. II. Its use is appropriate only if a person currently has no life insurance protection. A) […]
Date: September 19th, 2020
