#1
Which of the following is a key benefit of life insurance?
Income replacement in case of death
ExplanationProvides financial support for dependents in the event of the policyholder's death.
#2
What role does the 'beneficiary' play in life insurance policies?
Receiving the death benefit
ExplanationThe person or entity designated to receive the death benefit when the policyholder passes away.
#3
What is the primary purpose of a term life insurance policy?
Providing coverage for a specific term
ExplanationOffers temporary coverage for a predetermined period, often with lower premiums.
#4
In retirement planning, what does the '401(k)' refer to?
An employer-sponsored retirement savings plan
ExplanationA tax-advantaged account for individuals to save for retirement with contributions from their employer.
#5
Which type of life insurance provides both death benefit and cash value accumulation?
Whole life insurance
ExplanationOffers lifelong coverage with a death benefit and a cash value component that grows over time.
#6
What is the 'rule of 72' commonly used for in financial planning?
Estimating investment returns
ExplanationA quick formula to estimate how long it takes for an investment to double based on a fixed annual rate of return.
#7
What is the 'Social Security Full Retirement Age' for someone born in 1960 or later?
67
ExplanationThe age at which individuals can receive full Social Security retirement benefits without reduction.
#8
What is an annuity in the context of financial planning?
A series of periodic payments over time
ExplanationAn investment product that provides regular payments, often used for retirement income.
#9
What is the concept of 'long-term care insurance' related to?
Insurance for extended medical and personal care
ExplanationCovers expenses associated with extended healthcare services, not typically covered by health insurance.
#10
In retirement planning, what is the purpose of a 'Roth IRA'?
Tax-free withdrawals in retirement
ExplanationA retirement account where contributions are made with after-tax dollars, allowing for tax-free withdrawals in retirement.
#11
What is the primary goal of retirement income planning?
Ensuring a steady income stream in retirement
ExplanationFocuses on strategies to secure a reliable and consistent income during retirement years.
#12
What is the purpose of a 'living benefit rider' in a life insurance policy?
Accelerating the death benefit in case of terminal illness
ExplanationAllows the policyholder to access a portion of the death benefit in case of a qualifying terminal illness.