Chapter 12 – Life Insurance
78. (p. 388) Which is a correct statement about life insurance?
79. (p. 389) Individuals and families purchase life insurance primarily to:
80. (p. 389) Life insurance premiums are determined basically by the:
Chapter 12 – Life Insurance
81. (p. 389) The 2001 CSO Table separates the mortality experience by:
82. (p. 389) The life expectancy of a female at the age of 30 is 47.65 years. It means that:
83. (p. 389) Which of the following are common uses of life insurance proceeds?
Chapter 12 – Life Insurance
84. (p. 392) What should you consider before you buy life insurance?
85. (p. 392) You probably have little or no need for life insurance if you are:
86. (p. 392) A two-earner couple likely will have:
Chapter 12 – Life Insurance
87. (p. 392) Who has the greatest need for life insurance?
88. (p. 392) Your first step in determining a life insurance program should be to:
89. (p. 393) The easy method of determining life insurance requirements assumes that your
family is:
Chapter 12 – Life Insurance
90. (p. 393) Your annual income is $50,000. What is your life insurance need based on the easy
method?
91. (p. 393) Which method of determining life insurance requirements is designed specifically
for a working couple with no dependents?
92. (p. 394) The DINK method assumes that:
Chapter 12 – Life Insurance
93. (p. 394) Insurance experts have estimated that extra costs of up to $_____________ a year
may be required to replace the services of a homemaker in a family with small children.
94. (p. 394) The method of determining life insurance requirements that considers factors such as
Social Security and your liquid assets is called the:
95. (p. 393) Your annual income is $35,000. What is your life insurance need based on the easy
method?
Chapter 12 – Life Insurance
96. (p. 393) The DINK method of determining life insurance need is best suited for:
97. (p. 393) The total debts of you and your spouse include the following: mortgage, $180,000;
auto loan, $10,000; credit card balance, $2,000; and other debts of $6,000. Further, you
estimate that your funeral will cost $4,000. Your spouse expects to continue to work after
your death. What is your life insurance need using the DINK method?
Chapter 12 – Life Insurance
98. (p. 394) Using the “nonworking” spouse method, what should be the life insurance needs for
a family whose youngest child is 7 years old?
99. (p. 394) Using the “nonworking” spouse method, what should be the life insurance need for a
family whose youngest child is 10 years old?
Chapter 12 – Life Insurance
100. (p. 394) Catherine Carey has made the choice to stay home and raise her three kids while
her husband works. She wants to determine her insurance need. What method was specifically
designed for someone in her situation?
101. (p. 393) Your annual income is $100,000. You have a spouse, two kids, a dog and a
mortgage – a typical family. What is your life insurance need based on the easy method?
102. (p. 392) Who is likely to have the least need for life insurance?
Chapter 12 – Life Insurance
103. (p. 394) Jeff Willis has five kids and more debt than the average family. What method
would probably be the best method for him to use to calculate his insurance needs?
104. (p. 393) The insurance industry rule of thumb that a typical family will need 70% of salary
for seven years in order to adjust for the financial consequences of a salary earner’s death is
known as which of the following estimation methods?
Chapter 12 – Life Insurance
106. (p. 396) Most participating policies are sold by:
107. (p. 396) Which statement is correct regarding mutual insurance companies?
108. (p. 396) Which statement is correct regarding stock life insurance companies?
Chapter 12 – Life Insurance
109. (p. 396) Which type of insurance is sometimes called temporary insurance?
110. (p. 396) Which one of the following statements correctly applies to term insurance?
111. (p. 398) The most common type of permanent life insurance is called:
Chapter 12 – Life Insurance
112. (p. 398) Which statement is correct about whole life insurance?
113. (p. 400) Which type of life insurance plan requires you to pay premiums for a stipulated
period, usually 20 or 30 years, or until you reach a specified age?
114. (p. 400) A special form of the limited payment plan is the ____________ premium policy.
Chapter 12 – Life Insurance
115. (p. 400) The cash values of a(an) ____________ life insurance policy fluctuate according to
the yields earned by a separate fund, which can be a stock fund, a money market fund, or a
long-term fund.
116. (p. 401) Subject to certain minimums, which life insurance is designed to let you pay
premiums at any time in virtually any amount?
117. (p. 401) Which type of life insurance policy combines term insurance and investment
elements?
Chapter 12 – Life Insurance
118. (p. 403) Some experts claim that credit life insurance policies are:
119. (p. 401) A plan that insures a large number of persons under the terms of a single policy
without requiring medical examinations is called a(n) ____________ life insurance policy
plan.
120. (p. 401) Fundamentally, group insurance is ____________ insurance.
Chapter 12 – Life Insurance
121. (p. 401) Which of the following statements is true about group life insurance?
122. (p. 395) Lori Simpson is thinking about purchasing some life insurance. She goes to a
company where the policyholders are essentially the owners of the company. What type of
life insurance company has she visited?
123. (p. 395) Jerry Lewis is thinking about purchasing some life insurance. He goes to a
company that is owned by shareholders. What type of life insurance company has he visited?
Chapter 12 – Life Insurance
124. (p. 397) Francesca Brown has a life insurance policy that provides her with protection for
the next five years. However, she can get five more years of protection at the end of this term
without having to have a medical examination because she will be less than 70 years old at
that time. Her premiums will rise during each five-year period. What type of term life
insurance does Francesca likely have?
125. (p. 397) Frank Keating has a life insurance policy that can be exchanged for a whole life
policy without a medical examination. Once it has been exchanged, the premiums will
increase. What type of term life insurance does Frank likely have?