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WorksheetsLife Insurance Fundamentals – Worksheet MCQs
Total questions: 30
Worksheet time: 15mins
What is required to have insurable interest?
Consent from the applicant
Financial or emotional loss if the insured dies
Family relation
Mutual agreement
What is the purpose of the Law of Large Numbers in insurance?
To calculate loss ratios
To predict future losses more accurately
To create insurance pools
To limit adverse selection
A life agent represents which party?
The insured
The state
The insurer
The policyholder
What is the consideration in an insurance contract?
The death benefit
The premium payment and the promise to pay a claim
The agent's commission
The underwriting process
Which of the following is NOT an element of a legal contract?
Offer and acceptance
Consideration
Competent parties
Licensing
Which of the following is a characteristic of term life insurance?
Builds cash value
Provides coverage for a limited time
Has high premiums
Covers only accidental death
Which of the following would NOT be considered a life insurance rider?
Waiver of Premium
Accidental Death Benefit
Guaranteed Insurability
Living Benefit Option
A whole life insurance policy:
Has a limited duration
Provides a death benefit only
Builds cash value
Cannot be canceled by the insurer
A universal life insurance policy provides:
Fixed premiums
Cash value with flexible premiums
Only a death benefit
No death benefit if premiums are missed
The accelerated death benefit rider allows the policyholder to:
Increase the death benefit
Withdraw funds if diagnosed with a terminal illness
Borrow against the cash value
Extend the length of coverage
Variable life insurance:
Has guaranteed premiums
Allows the policyholder to invest the cash value in separate accounts
Does not provide a death benefit
Is a form of term life insurance
A life insurance policy’s contestability period is usually:
1 year
2 years
3 years
5 years
Which of the following is the best definition of a beneficiary in a life insurance policy?
The person who pays the premiums
The person who receives the death benefit
The person who decides policy changes
The insurance company’s representative
A revocable beneficiary:
Cannot be changed once named
Can be changed by the policyholder without the beneficiary’s consent
Has ownership rights to the policy
Cannot receive the death benefit under any circumstances
The cash value of a life insurance policy:
Is paid out as the death benefit
Can be borrowed against
Is only available with term life policies
Is not available in any life policies
If a policyholder dies during the grace period of a life insurance policy, the death benefit will:
Be reduced by the amount of the overdue premium
Not be paid
Be paid in full
Be paid only if the premiums were paid within the last 30 days
Which of the following nonforfeiture options allows the policyholder to stop paying premiums but continue coverage?
Cash surrender value
Extended term insurance
Reduced paid-up insurance
Accumulation option
A group life insurance policy:
Is available only to employees of a company
Typically requires individual underwriting
Usually has a higher premium than individual policies
Is issued to a single employer or group
The convertibility option in a term life insurance policy:
Allows conversion to a universal life policy
Provides an option to change to a whole life policy without evidence of insurability
Automatically renews the policy after the term ends
Provides for a death benefit for accidental death only
Which type of life insurance provides coverage for a limited time?
Whole Life
Term Life
Universal Life
Variable Life
A policy that combines death benefit protection with an investment component is called:
Term
Whole Life
Variable Life
Final Expense
What rider allows additional coverage without proof of insurability?
Guaranteed Insurability Rider
Waiver of Premium
Accidental Death
Return of Premium
What happens to the premium in a level term policy?
Increases yearly
Decreases
Remains the same
Based on interest rates
What is the primary purpose of a health maintenance organization (HMO)?
To offer coverage for long-term care
To provide insurance for life-threatening diseases
To offer prepaid, comprehensive health services
To provide only inpatient hospital coverage
The main difference between a HMO and a PPO is:
HMOs provide coverage only for emergency care, while PPOs do not
PPOs provide a broader network of healthcare providers than HMOs
HMOs offer a larger variety of plans than PPOs
PPOs cover only hospitalization, while HMOs cover all health expenses
Health savings accounts (HSAs) can be used to:
Pay for life insurance premiums
Save for retirement
Pay for qualified medical expenses
Cover long-term care expenses
A disability income policy typically pays:
A percentage of the worker’s income for a limited period
A flat rate to cover all medical expenses
Only if the disability is work-related
Benefits only for short-term illnesses
The primary purpose of long-term care insurance is to cover:
Medical expenses for short-term hospital stays
Expenses related to chronic illness or disability
Death benefits for survivors
Emergency medical care in foreign countries
Which of the following health insurance policies typically has the lowest premium?
Comprehensive health insurance
High-deductible health insurance
Long-term care insurance
Disability income insurance
Medicare Part A primarily covers:
Prescription drugs
Hospital inpatient care
Private health insurance
Eye exams and glasses
