Chapter 12 – Life Insurance
126. (p. 397) Renee Warning has a life insurance policy where the payments to beneficiaries get
smaller as time passes. What type of term life insurance does Renee likely have?
127. (p. 398) Which of the following names refer to permanent insurance?
128. (p. 397-398) Taylor Jones has a life insurance policy that returns every cent she pays in
premiums if she outlives the term of the policy. She knows this policy costs 30 to 50 percent
more than a traditional policy but thinks it is worth it. What type of term life insurance does
Taylor have?
Chapter 12 – Life Insurance
129. (p. 398) Shelley Jackson has a life insurance policy where she makes payments of $185 per
year for the rest of her life. This policy has a cash value that increases while she continues to
make payments. If she gives up her insurance, the cash value is the amount she would receive
from this policy. What type of life insurance does Shelley likely have?
130. (p. 400) Tim Bridges has a life insurance policy where he makes payments of $265 per year
until he reaches the age of 65. His policy is then ‘paid up’ for life. His beneficiaries will
receive the face value upon his death. What type of life insurance does Tim likely have?
Chapter 12 – Life Insurance
131. (p. 400-401) John Camey has a life insurance policy that is tied to a separate stock fund. The
cash value of his insurance policy depends on the value of this fund. He is guaranteed a
minimum death benefit but the death benefit can be higher, depending on the value of the
fund. What type of life insurance does John likely have?
132. (p. 401) Jim Brown has a life insurance policy that allows him to change his policy to fit his
changing needs. He can change either the premium he pays or the period of coverage. What
type of insurance does Jim likely have?
Chapter 12 – Life Insurance
133. (p. 401) Russell Lowe has a life insurance policy that allows him to pay his premiums
virtually at any time and virtually in any amount, subject to certain minimums. What type of
insurance does Russell likely have?
134. (p. 396) Jane Curtain has a participating life insurance policy that returns part of her
premiums at the end of the year. What is the money that is returned to Jane called?
135. (p. 406) Richard Beck has a life insurance policy which he has altered to include an
accidental death benefit payable to his son and daughter. This alteration has most likely been
done by attaching a(n) ____ to the policy.
Chapter 12 – Life Insurance
136. (p. 405) Lisa Smith has her age listed on her driver’s license as being three years younger
than it actually is. This is also how old she tells her insurance company she is. Her insurance
company has discovered she lied about her age. What provision of her life insurance contract
states that her benefits will be what her premium would have bought if she had been truthful
about her age?
137. (p. 404) Your life insurance policy is valuable only if it:
138. (p. 404) A beneficiary is a person who:
Chapter 12 – Life Insurance
139. (p. 404) The grace period normally allows ____________ days to elapse, during which time
the premium may be paid on an insurance policy.
140. (p. 405) A suicide clause means that the insurance company:
141. (p. 406) A document attached to the policy that modifies its coverage by adding or deleting
a specified condition is called a(n):
Chapter 12 – Life Insurance
142. (p. 407) In planning your insurance program, you should:
143. (p. 409) An authoritative rating guide to the financial stability of the nation’s insurers is
published by all of the following except:
144. (p. 410) A method of evaluating the cost of life insurance by taking into account the time
value of money is called:
Chapter 12 – Life Insurance
145. (p. 410) If your insurance agent does not give you an interest-adjusted index, your best bet
is to:
146. (p. 412) What percent of all applicants who apply for life insurance are found to be
insurable?
147. (p. 410) The prices of life insurance policies:
Chapter 12 – Life Insurance
148. (p. 412) After you buy new life insurance you have a “free look” period of ______ days.
149. (p. 414) A financial contract written by an insurance company to provide you with a regular
monthly income for as long as you live is called:
150. (p. 414-415) An annuity is often described as being:
Chapter 12 – Life Insurance
151. (p. 415) A prime reason for buying an annuity is to:
152. (p. 415) A contract stating that the annuitant will receive a constant amount of income over
a certain period or for life is called a:
153. (p. 393) Scott Cumbie believes he has a ‘typical’ family and wants to determine his life
insurance need. What method would probably be the fastest method for him to use to
calculate his insurance need?
Chapter 12 – Life Insurance
154. (p. 390-391) Which of the following was not a demographic used by the National Center for
Health Statistics to analyze life expectancies for its life expectancy table released in 2006?
155. (p. 402) When compared with Universal Life policies and Whole Life policies, which of the
following is typically an advantage of a Term Life policy?
156. (p. 410) Which of the following questions are important to consider when choosing an
insurance agent?
Chapter 12 – Life Insurance
157. (p. 388) What is life insurance? What is its purpose and principle?
Chapter 12 – Life Insurance
158. (p. 393) What are the four methods of determining your life insurance needs? Explain the
basic principle of each method.
Chapter 12 – Life Insurance
159. (p. 396) What are the two types of life insurance companies? Explain the basic features of
each type.
160. (p. 396-398) What do the terms “term”, “decreasing” or “declining term”, and “whole life”
mean with respect to life insurance?
Chapter 12 – Life Insurance
161. (p. 404) List some of the important provisions found in most life insurance policies.
162. (p. 407) What are the steps in creating a plan to buy your life insurance?
Chapter 12 – Life Insurance
163. (p. 414-415) What is an annuity? What is the difference between life insurance and an
annuity? Include payment options and tax considerations.
164. (p. 410) When choosing an insurance agent, what are some important questions to ask?