Life Insurance Quiz
Questions: 16 · 10 minutes
1. Noah has life insurance only through his employer. Before changing jobs, which issue is especially important to investigate?
Whether the death benefit will automatically become part of his salary
Whether the coverage ends, continues temporarily, or can be converted or transferred after employment ends
Whether his new employer must honor every term of the former employer's plan
Whether leaving the job turns the policy into homeowners insurance
2. Why do life insurance applications typically ask for accurate and complete information?
So the applicant can choose whether a future claim is reviewed
Because material inaccuracies can affect underwriting and may jeopardize coverage or a later claim, subject to applicable law and policy terms
So the policy will automatically cover every possible cause of loss
Because accurate answers guarantee the lowest available premium
3. Which feature is commonly associated with whole life insurance?
Premiums that are recalculated every month according to stock prices
Coverage that automatically ends when the insured changes jobs
Lifelong coverage with a cash-value component, provided policy requirements are met
A death benefit available only when death results from an accident
4. What does a policy's face amount generally refer to?
The stated death benefit before adjustments such as outstanding policy loans
The total premiums the policyholder is expected to pay
The insurer's estimate of the insured person's lifetime earnings
The cash value available immediately after every policy purchase
5. What is the primary purpose of life insurance?
To reimburse the insured for routine healthcare expenses
To provide a financial benefit to named beneficiaries after the insured person dies
To guarantee investment gains during the insured person's lifetime
To replace property damaged in an accident
6. Maya wants coverage for the 20 years she expects to have a mortgage and dependent children. Which policy type most directly matches that temporary need?
A disability income policy
A travel insurance policy renewed annually
A whole life policy that must be surrendered after 20 years
A 20-year term life policy
7. Jordan misses premium payments beyond any applicable grace period, and the policy ends for nonpayment. What has most likely occurred?
The policy has matured
The policy has been assigned
The policy has lapsed
The policy has been converted into an annuity
8. Who is a life insurance beneficiary?
The professional who evaluates the application
The company responsible for issuing the policy
The person or entity designated to receive policy proceeds after the insured's death
The person whose life is covered by the policy
9. Sam is estimating how much life insurance might be appropriate. Which approach is most useful as a starting point?
Choose the same amount as a friend with a similar income
Use only one year's salary, regardless of debts or dependents
Select the largest amount advertised without considering affordability
Review obligations, income-replacement needs, dependents, existing resources, future expenses, and an affordable premium
10. What generally distinguishes term life insurance from permanent life insurance?
Term insurance is designed to cover a specified period
Term insurance can cover only accidental deaths
Term insurance always builds cash value
Term insurance cannot name an individual beneficiary
11. Eli borrows against the cash value of a permanent policy and does not repay the loan. What is a possible consequence?
The beneficiary automatically becomes responsible for Eli's other debts
The policy immediately changes into property insurance
The available death benefit may be reduced, and a large loan can threaten the policy's continued coverage
The original premium payments are automatically refunded
12. A person has been approved for a new life insurance policy and plans to replace an existing one. What is generally the prudent next step?
Cancel the existing policy as soon as the new application is submitted
Confirm that the new policy is issued, accepted, and in force before ending the existing coverage
Stop paying both policies until the insurers decide which one should continue
Transfer the old policy's beneficiary without reviewing the new contract
13. During underwriting, why might an insurer ask about health, occupation, and lifestyle?
To select the policy's beneficiary
To decide how the beneficiary must spend the proceeds
To guarantee that no future claim will be reviewed
To assess the application and determine eligibility or pricing
14. What is a life insurance rider?
A person who receives proceeds if the primary beneficiary dies later
A document that replaces the entire insurance contract each year
A loan that must be taken when cash value reaches a set amount
An optional provision that modifies or adds specified policy benefits or features
15. In a life insurance policy, what is a premium?
The payment required to keep coverage in effect according to the policy terms
The amount automatically added to the death benefit each year
The fee a beneficiary pays to submit a claim
The amount an insurer deducts from every death claim
16. After marrying and having a child, Priya notices that her former partner is still listed as her life insurance beneficiary. What is the most relevant action?
Review the beneficiary designation and update it if that reflects her current wishes
Wait, because a will always overrides every beneficiary designation
Stop paying premiums until the insurer changes the beneficiary automatically
Open a bank account with the same beneficiary and leave the policy unchanged