Time to find out who’s been paying attention.
1. What is an appropriate method for determining the amount of life insurance to carry?
a. Needs Analysis
b. Capitalization of earnings
c. Both a & b
d. Neither a nor b
2. Life insurance proceeds paid by reason of death are
a. Always income tax free
b. Never income tax free
c. Usually income tax free
3. Who can initiate a policy loan?
a. The insured
b. The beneficiary
c. The owner
d. All of the above
4. Policy dividends
a. Are always taxable
b. Are never taxable
c. Are taxable only to the extent they exceed basis
5. Policy dividends can be
a. Received in cash
b. Used to reduce the premium
c. Used to purchase more insurance
d. Left to accumulate at interest
e. All of the above
6. The waiver of premium rider on a life insurance policy is most like a
a. Disability income policy
b. Long term care policy
c. The deductible on your homeowner’s policy
d. The co-pay on your health insurance policy
7. The premiums waived under the waiver of premium provision
a. Must be repaid
b. Create a loan against the policy
c. Only must be repaid if the policy is surrendered
d. None of the above
8. This type of life insurance has no cash value
a. Variable life
b. Universal life
c. Term life
d. Whole life
9. This type of life insurance gives you a say in how the cash value is invested
a. Variable life
b. Universal life
c. Term life
d. Whole life
10. If you choose to surrender a whole life policy after 10 years, you can receive
a. The guaranteed cash value
b. The net cash value
c. A term insurance policy for the same face amount that requires no premiums
d. A whole life policy for a lesser amount that will never require premiums
e. All of the above
f. a, c and d
g. b, c and d
Check your answers here. I don’t think this quiz is a challenging as the previous one, but I’d still be interested to hear from you if you got them all right. As always, thanks for reading.