#1
Which of the following best describes the concept of life insurance?
A contract between an individual and an insurer
ExplanationDefines life insurance as a contractual agreement.
#2
What is the primary purpose of life insurance?
To provide financial protection to beneficiaries upon the death of the insured
ExplanationMain objective is to offer financial security upon the insured's demise.
#3
What is the purpose of the beneficiary designation in a life insurance policy?
To specify who receives the death benefit upon the insured's death
ExplanationDesignates the recipient of the death benefit.
#4
Which of the following is a characteristic of term life insurance?
Provides coverage for a specific period
ExplanationCovers a predetermined duration only.
#5
Which of the following is NOT a type of life insurance?
Short-term life insurance
ExplanationShort-term life insurance is not a recognized form.
#6
What is the cash value component of a permanent life insurance policy?
The savings component that grows over time
ExplanationRepresents the accumulating savings aspect.
#7
What is the main advantage of permanent life insurance over term life insurance?
Builds cash value over time
ExplanationAccumulates cash value throughout the policy's duration.
#8
What does the underwriting process in life insurance involve?
Assessing the risk of insuring an individual
ExplanationEvaluates the risk associated with insuring a person.
#9
Under what circumstance would a life insurance policy pay out the death benefit?
Upon the insured's death during the policy term
ExplanationPayout occurs upon the insured's death within the policy term.
#10
What happens to the premiums paid in a life insurance policy if the insured cancels the policy?
Forfeited
ExplanationPremiums are lost if the policy is canceled.
#11
What is the purpose of the suicide clause in a life insurance policy?
To limit the insurer's liability in case of suicide within a certain period
ExplanationLimits insurer liability if suicide occurs within a specified timeframe.
#12
Which of the following statements about the cash value component of a permanent life insurance policy is true?
It can be borrowed against by the policyholder
ExplanationPolicyholder can borrow against the accumulated cash value.