#1
Which of the following is not a common type of life insurance?
Property insurance
ExplanationProperty insurance is not a common type of life insurance; it covers property, not life.
#2
What is the primary purpose of life insurance?
To protect against financial loss from death
ExplanationThe primary purpose of life insurance is to provide financial protection in case of death, mitigating the impact on beneficiaries.
#3
What does the 'face value' of a life insurance policy refer to?
The amount of coverage stated in the policy
ExplanationThe face value of a life insurance policy is the stated amount of coverage provided by the policy.
#4
What happens to a term life insurance policy at the end of its term?
The policy terminates and coverage ends
ExplanationAt the end of its term, a term life insurance policy terminates, and coverage ceases.
#5
What is the primary difference between term life insurance and whole life insurance?
Term life insurance provides coverage for a specific period, while whole life insurance provides coverage for the insured's entire life
ExplanationThe primary difference is that term life insurance is for a specific period, while whole life insurance covers the insured's entire life.
#6
Which feature distinguishes term life insurance from whole life insurance?
Covers a specific time period
ExplanationTerm life insurance provides coverage for a specific period, while whole life insurance covers the insured's entire life.
#7
What is a beneficiary in a life insurance policy?
The person who receives the death benefit
ExplanationA beneficiary in a life insurance policy is the person or entity designated to receive the death benefit.
#8
What is underwriting in the context of life insurance?
The process of determining the premium amount
ExplanationUnderwriting in life insurance involves assessing risk and determining the appropriate premium amount for the policy.
#9
Which of the following is a feature of universal life insurance?
Ability to adjust coverage and premiums
ExplanationUniversal life insurance offers flexibility, allowing policyholders to adjust coverage and premiums over time.
#10
Which of the following is a reason why someone might choose term life insurance?
To cover temporary financial obligations
ExplanationTerm life insurance is often chosen to cover specific temporary financial obligations, providing short-term protection.
#11
Which of the following statements about cash value in life insurance is true?
It can be borrowed against or withdrawn by the policyholder
ExplanationCash value in life insurance can be accessed by the policyholder through loans or withdrawals.
#12
In life insurance, what is the 'grace period'?
The period of time during which premium payments can be made after the due date without policy lapse
ExplanationThe grace period in life insurance allows policyholders to make premium payments after the due date without risking policy lapse.
#13
What is the main purpose of the cash value component in whole life insurance?
To accumulate savings over time
ExplanationThe cash value component in whole life insurance serves as a savings component, accumulating value over the policy's duration.
#14
In life insurance, what does 'accelerated death benefit' refer to?
A benefit that allows the insured to access a portion of the death benefit if diagnosed with a terminal illness
ExplanationAn accelerated death benefit in life insurance allows the insured to access part of the death benefit in case of a terminal illness diagnosis.
#15
Which of the following is a characteristic of a participating whole life insurance policy?
Policyholders have a voice in the management of the insurance company
ExplanationParticipating whole life insurance allows policyholders to have a voice in the management of the insurance company.