Difficulty: Mixed
What is life insurance designed to provide?
A Financial benefit to beneficiaries
B Guaranteed investment profit
C Free medical treatment
D Automatic debt cancellation
Answer: A. Financial benefit to beneficiaries. Life insurance can pay a benefit to named beneficiaries under policy terms.
Who is the insured in a life policy?
A Named insurance agent
B Person whose life is covered
C Claim reviewer
D Premium collector
Answer: B. Person whose life is covered. The insured is the person whose life the contract covers.
Who is the policyowner?
A Always the beneficiary
B Always the insurer
C Person who owns the contract
D The medical examiner
Answer: C. Person who owns the contract. The owner holds policy rights, subject to the contract and law.
Who receives a life-insurance death benefit?
A Insurance regulator
B Policy salesperson
C Premium auditor
D Named beneficiary
Answer: D. Named beneficiary. A beneficiary is designated to receive the policy benefit.
What does the death benefit refer to?
A Amount payable after covered death
B Premium paid yearly
C Policy application cost
D Cash value in every plan
Answer: A. Amount payable after covered death. The death benefit is paid according to contract terms after a covered death.
Which life policy covers a set period?
A Whole life insurance
B Term life insurance
C Travel insurance
D Motor insurance
Answer: B. Term life insurance. Term coverage applies for a specified period.
What may permanent life insurance include?
A Only one-month protection
B Vehicle repair coverage
C Long-term coverage features
D Travel delay benefits
Answer: C. Long-term coverage features. Permanent life products are designed for longer-duration coverage, subject to terms.
What is a beneficiary designation?
A Choosing the insurer’s auditor
B Selecting a premium date
C Setting the claim deadline
D Naming who may receive benefits
Answer: D. Naming who may receive benefits. The designation records who is intended to receive benefits.
Why review beneficiary details periodically?
A Circumstances can change
B Policies never allow updates
C Premiums depend only on names
D Claims require no beneficiary
Answer: A. Circumstances can change. Life events may make a beneficiary review appropriate, subject to policy rules.
What is a premium in life insurance?
A Death benefit amount
B Payment for keeping coverage
C Beneficiary’s annual income
D Claim investigation fee
Answer: B. Payment for keeping coverage. Premiums are payments required to maintain the policy.
Which factor may affect life-insurance pricing?
A Favorite music
B Household paint color
C Insurer’s risk assessment
D Beneficiary’s shoe size
Answer: C. Insurer’s risk assessment. Insurers assess relevant risk information when setting eligibility and price.
What is underwriting in life insurance?
A Paying death benefits
B Choosing a beneficiary
C Renewing a driver’s license
D Evaluating application risk
Answer: D. Evaluating application risk. Underwriting evaluates risk to decide whether and on what terms to insure.
Why disclose requested health information accurately?
A Support proper underwriting
B Guarantee a claim
C Remove policy exclusions
D Lower every premium
Answer: A. Support proper underwriting. Accurate disclosures help the insurer assess the application.
Which document commonly begins a life-policy application?
A Claim settlement receipt
B Proposal or application form
C Policy renewal card
D Beneficiary payment
Answer: B. Proposal or application form. Applicants provide information through the insurer’s application process.
What should be checked after a policy is issued?
A Only the cover design
B An agent’s personal details
C Names, benefits, and terms
D Unrelated bank records
Answer: C. Names, benefits, and terms. Review the issued policy for correct names, benefit details, and terms.
What does a maturity benefit describe?
A Premium tax refund always
B Any hospital reimbursement
C Automatic yearly bonus
D Benefit payable at stated maturity
Answer: D. Benefit payable at stated maturity. Some policies provide a maturity benefit if their terms specify one.
Do all life policies build cash value?
A No, product types differ
B Yes, every policy
C Only term policies
D Only travel policies
Answer: A. No, product types differ. Some policies have cash-value features; others generally do not.
What may cash value mean in some permanent policies?
A Guaranteed investment gain
B Accumulated policy value
C Annual claim payment
D A separate health deductible
Answer: B. Accumulated policy value. Certain permanent policies build value under their contract terms.
Which statement about term life cash value is generally accurate?
A Always grows tax-free
B Pays every year
C Usually no cash value
D Equals all premiums
Answer: C. Usually no cash value. Term policies generally do not build cash value.
When may a term policy pay its death benefit?
A Any time after expiry
B After every premium
C At each policy anniversary
D Covered death during term
Answer: D. Covered death during term. Term coverage generally pays when the insured dies during the covered term.
What can happen to term premiums at renewal?
A They may increase
B They always disappear
C They are always fixed
D They become a claim
Answer: A. They may increase. Renewal premiums may rise; review the contract and renewal terms.
Why compare a new life policy with existing coverage?
A Guarantee lower premiums
B Avoid unsuitable replacement decisions
C Remove health questions
D Keep duplicate costs
Answer: B. Avoid unsuitable replacement decisions. Compare terms and needs before changing existing coverage.
What should happen before cancelling old coverage?
A Cancel before applying
B Assume approval is guaranteed
C Confirm replacement coverage first
D Skip policy review
Answer: C. Confirm replacement coverage first. Avoid a gap by confirming replacement coverage before cancelling an existing policy.
What is insurable interest in life insurance?
A A promised investment return
B A premium discount
C A claim deadline
D Recognized financial interest in insured
Answer: D. Recognized financial interest in insured. Insurable-interest requirements depend on applicable law and policy circumstances.
Which need can life insurance help address?
A Financial support for dependents
B Guaranteed investment returns
C All future expenses
D Automatic debt forgiveness
Answer: A. Financial support for dependents. Life benefits may help dependents with financial needs after a covered death.
What can help estimate the amount of life cover needed?
A Favorite hobbies
B Dependents and financial obligations
C A friend’s policy amount
D Social-media followers
Answer: B. Dependents and financial obligations. Needs can depend on income, dependents, debts, and future obligations.
Does one coverage amount fit every household?
A Yes, globally
B Only for term plans
C No, needs differ
D Only for families
Answer: C. No, needs differ. Coverage needs vary by personal circumstances.
What does a policy exclusion identify?
A Premium payment method
B Beneficiary’s address
C Insurer’s headquarters
D Circumstances not covered
Answer: D. Circumstances not covered. Exclusions describe events or situations the contract does not cover.
Why read life-policy exclusions and conditions?
A Understand coverage limits
B Guarantee approval
C Avoid all premiums
D Increase sum assured
Answer: A. Understand coverage limits. The policy wording defines conditions and limits on benefits.
What is a rider in life insurance?
A A claim receipt
B Optional added policy benefit
C A renewal invoice
D A medical bill
Answer: B. Optional added policy benefit. A rider adds or changes benefits under a policy.
Does every rider have identical terms?
A Yes, all are identical
B Only price varies
C No, wording varies
D Riders have no conditions
Answer: C. No, wording varies. Rider benefits and eligibility depend on contract wording.
What is a policy lapse?
A Benefit automatically doubles
B Beneficiary changes
C Premium becomes a claim
D Coverage ends after nonpayment
Answer: D. Coverage ends after nonpayment. Nonpayment can cause a policy to lapse under its terms.
What is a grace period?
A Extra time for premium payment
B Free coverage forever
C Claim investigation period
D Beneficiary review
Answer: A. Extra time for premium payment. Some policies provide extra premium-payment time; conditions vary.
Why keep premium-payment records?
A Guarantee a claim
B Confirm payments and dates
C Change policy terms
D Replace the contract
Answer: B. Confirm payments and dates. Payment records help verify premium transactions.
What is a policy loan available on?
A Every term policy
B All health plans
C Some cash-value policies
D Every motor policy
Answer: C. Some cash-value policies. Some permanent life policies allow loans against value; terms vary.
What should someone check before taking a policy loan?
A Only the insurer logo
B Agent’s favorite product
C Unrelated claim history
D Interest and benefit effects
Answer: D. Interest and benefit effects. Loans can affect policy value and benefits according to contract terms.
What is a surrender value?
A Amount on eligible policy exit
B Death benefit always
C Annual premium total
D Beneficiary’s tax amount
Answer: A. Amount on eligible policy exit. Some policies specify a value on surrender, subject to terms and charges.
Why is early surrender worth reviewing carefully?
A It always increases coverage
B Charges may reduce value
C It guarantees full refund
D It removes all conditions
Answer: B. Charges may reduce value. Early exit can have financial consequences under the policy.
What does a policy illustration show?
A Guaranteed future market return
B Every future claim outcome
C Projected policy values or benefits
D Regulator approval of suitability
Answer: C. Projected policy values or benefits. Illustrations may show projected values; distinguish guarantees from non-guaranteed figures.
Which values should be identified in an illustration?
A Only the highest projection
B Only agent commission
C No values
D Guaranteed and non-guaranteed
Answer: D. Guaranteed and non-guaranteed. Check which policy values are guaranteed and which are illustrated projections.
What is a participating life policy?
A May share declared surplus
B Always returns market gains
C Has no benefits
D Covers only travel
Answer: A. May share declared surplus. Some participating policies may provide bonuses under contract terms.
Are policy bonuses always guaranteed?
A Yes, every bonus
B No, terms determine guarantees
C Only in term plans
D All bonuses are fixed
Answer: B. No, terms determine guarantees. Bonus treatment depends on policy wording and whether values are guaranteed.
How can a policyholder update personal details?
A Tell an unknown caller
B Post publicly online
C Follow insurer’s official process
D Change the policy document
Answer: C. Follow insurer’s official process. Use the insurer’s official channel for policy servicing.
What can beneficiaries do after a covered death?
A Change all contract terms
B Set future premiums
C Approve underwriting
D Submit a benefit claim
Answer: D. Submit a benefit claim. Beneficiaries or representatives can follow claim procedures stated by the insurer.
Which records may support a life claim?
A Policy and required documents
B Unrelated shopping receipts
C Another person’s application
D Old advertisements
Answer: A. Policy and required documents. The insurer specifies documents needed to assess a claim.
What should a buyer consider before choosing a premium?
A Only first payment size
B Long-term affordability
C Expected lottery winnings
D A friend’s budget
Answer: B. Long-term affordability. Choose coverage with premiums that remain affordable under the buyer’s circumstances.
Where can consumers check local life-insurance rules?
A Unverified online forum
B Unknown sales caller
C Official regulator or authority
D Anonymous social post
Answer: C. Official regulator or authority. Rules depend on jurisdiction; use the official regulator or insurance authority.
What is a sensible way to choose among policies?
A Pick the longest title
B Choose lowest premium alone
C Copy another household
D Compare needs, costs, and terms
Answer: D. Compare needs, costs, and terms. Compare coverage, cost, features, and contract conditions against personal needs.
Which statement about life insurance is accurate?
A Benefits depend on policy terms
B Every claim pays automatically
C All plans build value
D Premiums guarantee profits
Answer: A. Benefits depend on policy terms. Policy wording, exclusions, and claim requirements determine benefits.
What matters when reviewing cash-value access?
A Only the agent’s slogan
B Fees, limits, and tax rules
C Every future market price
D No contract terms
Answer: B. Fees, limits, and tax rules. Access rules and possible tax treatment vary by product and jurisdiction.