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Chapter Quiz
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1
Which of the following is a reason to have life insurance?
A)To pay off your mortgage before you retire
B)To avoid paying taxes during your retirement
C)To avoid paying estate taxes upon your death
D)To pay off your debts upon your death
2
You can easily estimate the amount of life insurance you need by:
A)Multiplying your current income by 7 and 70%.
B)Adding up how much you owe and subtracting your age multiplied by 7.
C)Multiplying your current income by the number of dependants you have.
D)Multiplying your current income by the number of year left before retirement.
3
A life insurance company that offers policies that pay dividends to policyholders is called a:
A)Term life insurance company
B)Mutual company
C)Stock company
D)Whole life insurance company
4
Life insurance that provides protection against loss of life for a specified time period is called:
A)Whole life insurance
B)Credit life insurance
C)Term life insurance
D)Limited payment insurance
5
A life insurance policy that only pays off your certain debts upon your death is called:
A)Whole life insurance
B)Credit life insurance
C)Term life insurance
D)Limited payment insurance
6
The part of a life insurance policy that covers two people and pays only after both have died is called:
A)A suicide clause
B)A nonforfeiture clause
C)Accelerated benefits rider
D)Second-to-Die Option
7
The suicide clause in some life insurance policies provides payment of:
A)The premiums paid if the insured person commits suicide within the first 2 years of the policy term.
B)The full benefit if the person commits suicide within 2 years of the policy term.
C)Half of the full benefit if the person commits suicide within the first 2 years of the policy term.
D)Half of the premiums paid if the person commits suicide within 2 years of the policy term.
8
The settlement option that pays beneficiaries for as long as that person lives is called:
A)Lump-sum payment
B)Proceeds left with the company
C)Life income option
D)Limited installment payment
9
A financial contract that provides you with regular income before your death is called:
A)A reverse life insurance policy
B)An annuity
C)A reverse mortgage
D)An IRA
10
One of the benefits of an annuity is:
A)Your contributions are paid with pretax dollars
B)There are no fees associated with an annuity
C)Interest builds up tax free during the accumulation period
D)There is no accumulation period





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