Test Bank Kapoor 13e chapter 12 PDF

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Test bank for Personal Finance 13th Edition

By Jack Kapoor and Les Dlabay and Robert J. Hughes and Melissa Hart
ISBN10: 1260013995
ISBN13: 9781260013993...

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Personal Finance, 13e (Kapoor) Chapter 12 Life Insurance 1) Most people buy life insurance to protect someone who depends on them from financial losses caused by their death. Answer: TRUE Difficulty: 1 Easy Topic: Life insurance needs and objectives Learning Objective: 12-01 Define life insurance and describe its purpose and principle. Bloom's: Understand Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 2) Most American families face a substantial loss when one spouse dies unexpectedly. Answer: TRUE Difficulty: 1 Easy Topic: Life insurance needs and objectives Learning Objective: 12-01 Define life insurance and describe its purpose and principle. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 3) Life insurance is one of the most important and expensive purchases you may ever make. Answer: TRUE Difficulty: 2 Medium Topic: Life insurance needs and objectives Learning Objective: 12-01 Define life insurance and describe its purpose and principle. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 4) Consumer awareness of life insurance has changed little over the years. Answer: TRUE Difficulty: 2 Medium Topic: Life insurance needs and objectives Learning Objective: 12-01 Define life insurance and describe its purpose and principle. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic

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5) Life insurance proceeds may be used to provide an education or income for children. Answer: TRUE Difficulty: 2 Medium Topic: Life insurance needs and objectives Learning Objective: 12-01 Define life insurance and describe its purpose and principle. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 6) Life insurance proceeds may be used to provide a retirement income. Answer: TRUE Difficulty: 2 Medium Topic: Life insurance needs and objectives Learning Objective: 12-01 Define life insurance and describe its purpose and principle. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 7) Most insurance companies can determine how long a particular person will live. Answer: FALSE Difficulty: 3 Hard Topic: Life expectancy Learning Objective: 12-01 Define life insurance and describe its purpose and principle. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 8) Single persons living alone usually have little or no need for life insurance. Answer: TRUE Difficulty: 2 Medium Topic: Life insurance needs and objectives Learning Objective: 12-02 Determine your life insurance needs. Bloom's: Understand Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic

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9) Households with small children usually have the greatest need for life insurance. Answer: TRUE Difficulty: 1 Easy Topic: Life insurance needs and objectives Learning Objective: 12-02 Determine your life insurance needs. Bloom's: Understand Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 10) Before you buy life insurance, you should determine whether you really need life insurance. Answer: TRUE Difficulty: 2 Medium Topic: Life insurance needs and objectives Learning Objective: 12-02 Determine your life insurance needs. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 11) If your death would cause financial stress for your spouse or children, you should consider purchasing life insurance. Answer: TRUE Difficulty: 2 Medium Topic: Life insurance needs and objectives Learning Objective: 12-02 Determine your life insurance needs. Bloom's: Understand Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 12) Two-earner couples may have a moderate need for life insurance, especially if they have a mortgage or other large debts. Answer: TRUE Difficulty: 3 Hard Topic: Life insurance needs and objectives Learning Objective: 12-02 Determine your life insurance needs. Bloom's: Understand Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic

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13) How much insurance one should carry is an important question for every person who owns or intends to buy life insurance. Answer: TRUE Difficulty: 2 Medium Topic: Life insurance needs and objectives Learning Objective: 12-02 Determine your life insurance needs. Bloom's: Understand Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 14) A life insurance policy puts a price on the life of the insured person. Answer: TRUE Difficulty: 2 Medium Topic: Life insurance needs and objectives Learning Objective: 12-02 Determine your life insurance needs. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 15) The easy method of determining life insurance needs is based on the rule of thumb that a "typical family" will need about 70 percent of your salary for seven years. Answer: TRUE Difficulty: 3 Hard Topic: Life insurance needs and objectives Learning Objective: 12-02 Determine your life insurance needs. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 16) The DINK method of determining life insurance needs assumes that your spouse will continue to work after your death. Answer: TRUE Difficulty: 3 Hard Topic: Life insurance needs and objectives Learning Objective: 12-02 Determine your life insurance needs. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic

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17) If you have no dependents and your spouse earns as much as you do, you have simple insurance needs. Answer: TRUE Difficulty: 2 Medium Topic: Life insurance needs and objectives Learning Objective: 12-02 Determine your life insurance needs. Bloom's: Understand Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 18) The "family need" method of determining life insurance needs provides a thorough estimation of your life insurance needs. Answer: TRUE Difficulty: 1 Easy Topic: Life insurance needs and objectives Learning Objective: 12-02 Determine your life insurance needs. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 19) Mutual companies issue only nonparticipating policies. Answer: FALSE Difficulty: 2 Medium Topic: Life insurance companies and considerations Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 20) A term insurance policy pays a benefit only if you die during the period that the policy covers. Answer: TRUE Difficulty: 1 Easy Topic: Types of life insurance policies Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic

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21) The premium for a whole life policy increases with your age. Answer: FALSE Difficulty: 1 Easy Topic: Life insurance policy costs Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 22) Universal life, variable life, and adjustable life are types of term life insurance. Answer: FALSE Difficulty: 2 Medium Topic: Types of life insurance policies Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 23) You can purchase life insurance from two types of life insurance companies. Answer: TRUE Difficulty: 1 Easy Topic: Life insurance companies and considerations Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 24) Stock life insurance companies are owned by their policyholders. Answer: FALSE Difficulty: 1 Easy Topic: Life insurance companies and considerations Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic

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25) Most life insurance companies are mutuals. Answer: FALSE Difficulty: 2 Medium Topic: Life insurance companies and considerations Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 26) In a participating policy, a part of the premium is refunded to the policyholder annually. Answer: TRUE Difficulty: 3 Hard Topic: Life insurance policy costs Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 27) The premium that is refunded to policyholders of a participating policy is called the policy dividend. Answer: TRUE Difficulty: 2 Medium Topic: Insurance terminology Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 28) Two basic types of life insurance are temporary and permanent insurance. Answer: TRUE Difficulty: 1 Easy Topic: Types of life insurance policies Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic

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29) Permanent insurance can be limited payment, variable, adjustable, or universal life insurance. Answer: TRUE Difficulty: 3 Hard Topic: Types of life insurance policies Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 30) Group life and credit life insurance are generally permanent forms of insurance. Answer: FALSE Difficulty: 3 Hard Topic: Types of life insurance policies Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 31) Term insurance is protection for a specified period of time, usually 1, 5, 10, or 20 years. Answer: TRUE Difficulty: 2 Medium Topic: Types of life insurance policies Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 32) Term insurance continues for the entire term even if you stop paying the premiums. Answer: FALSE Difficulty: 2 Medium Topic: Life insurance policy provisions Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic

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33) Term insurance is a basic, "no frills" form of life insurance and is the best value for most consumers. Answer: TRUE Difficulty: 1 Easy Topic: Life insurance policy comparisons Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Understand Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 34) Term life insurance premiums decrease as you get older. Answer: FALSE Difficulty: 2 Medium Topic: Life insurance policy costs Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 35) The coverage of term insurance ends at the conclusion of the term, but you can continue it if you have a renewability option. Answer: TRUE Difficulty: 2 Medium Topic: Life insurance policy provisions Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 36) If you have convertible term insurance, you can exchange it for a whole life policy without a medical examination and at a higher premium. Answer: TRUE Difficulty: 3 Hard Topic: Life insurance policy provisions Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Understand Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 9 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

37) Decreasing term life insurance is no longer available. Answer: FALSE Difficulty: 1 Easy Topic: Types of life insurance policies Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 38) The amount of your whole life insurance premium for each $1,000 of coverage depends primarily on the age at which you purchase the insurance. Answer: TRUE Difficulty: 2 Medium Topic: Life insurance policy provisions Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 39) Because the premium payment period for a limited payment policy is shorter than that of a whole life policy, the annual premium is higher. Answer: TRUE Difficulty: 3 Hard Topic: Life insurance policy costs Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Understand Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 40) A special form of the limited payment plan is the single-premium policy. In this type of contract, you make only one very large premium payment. Answer: TRUE Difficulty: 3 Hard Topic: Types of life insurance policies Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 10 Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written onsent of McGraw-Hill Education.

41) The cash values of a variable life insurance policy increase at a constant rate over time. Answer: FALSE Difficulty: 3 Hard Topic: Life insurance policy costs Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 42) When you purchase a variable life policy, the insurance company assumes the risk of poor investment performance. Answer: FALSE Difficulty: 2 Medium Topic: Types of life insurance policies Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Understand Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 43) Universal life is a whole life policy that combines term insurance with an investment option. Answer: TRUE Difficulty: 2 Medium Topic: Types of life insurance policies Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 44) Credit life insurance is used to repay a personal debt should the borrower die before doing so. Answer: TRUE Difficulty: 1 Easy Topic: Types of life insurance policies Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic

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45) Credit life insurance policies for auto loans and home mortgages are usually the best buys for the protection they offer. Answer: FALSE Difficulty: 2 Medium Topic: Types of life insurance policies Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Understand Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 46) Industrial life insurance is the most popular form of insurance today. Answer: FALSE Difficulty: 2 Medium Topic: Types of life insurance policies Learning Objective: 12-03 Distinguish between the types of life insurance companies and analyze various types of life insurance policies. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 47) An important provision in every life insurance policy is the right to name your beneficiary. Answer: TRUE Difficulty: 1 Easy Topic: Life insurance policy provisions Learning Objective: 12-04 Select important provisions in life insurance contracts. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: automatic 48) A rider is any document attached to the policy that modifies its coverage by adding or excluding specified conditions or altering its benefits. Answer: TRUE Difficulty: 2 Medium Topic: Life insurance policy riders Learning Objective: 12-04 Select important provisions in life insurance contracts. Bloom's: Remember Accessibility: Keyboard Navigation; Screen Reader Compatible Gradable: auto...