#1
Which of the following is a type of life insurance that covers a specific period of time?
Term life insurance
ExplanationTerm life insurance provides coverage for a specific period, typically 10, 20, or 30 years.
#2
Which of the following is a characteristic of term life insurance?
It provides coverage for a specific period of time.
ExplanationTerm life insurance offers coverage for a specified time frame and does not accumulate cash value.
#3
Which of the following statements about whole life insurance is true?
The policy builds cash value over time and offers a guaranteed death benefit.
ExplanationWhole life insurance builds cash value over time and provides a guaranteed death benefit to the policyholder's beneficiaries.
#4
What is the purpose of a life insurance policy's beneficiary designation?
To designate who will receive the death benefit upon the insured's death
ExplanationThe beneficiary designation specifies who will receive the death benefit when the insured passes away.
#5
In the context of life insurance, what does the term 'premium' refer to?
The amount of money paid by the policyholder to purchase the policy
ExplanationThe premium is the money paid by the policyholder to purchase and maintain the life insurance policy.
#6
What is the cash value component of a permanent life insurance policy?
The portion of premiums that are invested and accumulate over time
ExplanationThe cash value represents the savings or investment portion of a permanent life insurance policy.
#7
What is the primary advantage of universal life insurance over whole life insurance?
Flexibility in premium payments and death benefits
ExplanationUniversal life insurance allows flexible premium payments and death benefit adjustments, offering more financial flexibility.
#8
Which of the following riders provides additional coverage for specific events such as accidental death or dismemberment?
Accidental death benefit rider
ExplanationThe accidental death benefit rider provides extra coverage in case of accidental death or severe injury.
#9
What is the purpose of the accelerated death benefit rider?
To provide a portion of the death benefit to the insured if diagnosed with a terminal illness
ExplanationThe accelerated death benefit rider allows the policyholder to receive a portion of the death benefit if diagnosed with a terminal illness.
#10
What is the primary difference between term life insurance and permanent life insurance?
Term life insurance provides coverage for a specific period, while permanent life insurance provides coverage for the insured's entire life.
ExplanationTerm life insurance has a specific coverage period, while permanent life insurance covers the insured's entire lifetime.
#11
Which of the following statements about variable life insurance is true?
The cash value fluctuates based on the performance of underlying investment options.
ExplanationVariable life insurance cash value varies with the performance of investments chosen by the policyholder.
#12
Which of the following types of life insurance allows the policyholder to allocate cash value among different investment options?
Variable universal life insurance
ExplanationVariable universal life insurance allows policyholders to allocate cash value to various investment options, offering flexibility.
#13
Which of the following statements about viatical settlements is true?
Viatical settlements involve the purchase of a life insurance policy from a terminally ill individual for less than the face value.
ExplanationViatical settlements involve buying a life insurance policy from a terminally ill individual at a price below its face value.
#14
What is the purpose of a life insurance policy's incontestability clause?
To prevent the insurer from contesting the validity of the policy after a certain period of time has passed
ExplanationThe incontestability clause prevents the insurer from contesting the policy's validity after a specific time period has elapsed.