Quiz: Do you know how Life Insurance Works?
Choosing a life insurance policy can be overwhelming. Take this quiz to see how much you know about life insurance in general and the benefits of having life insurance.
What is the goal of life insurance?
- to pay for as much medical care as necessary
- to ensure you die wealthy
- financial security for your family
How long is the term of a life insurance policy?
- a year
- a lifetime
- as long as you decide
Who is the beneficiary of a life insurance policy?
- the person(s) who will receive the money
- the person you bought the policy from
- the person you are insuring
What was the first ancient civilization on record to use life insurance?
Who invented the first actuarial tables?
- Edmund Halley
- Alan Turing
- Isaac Newton
Which of the following factors are likely to increase your life insurance premium?
- being male
- being female
- being young
What is the usual procedure for claiming a life insurance policy?
- Fill out a claim form.
- Provide a death certificate.
- both of the above
On what grounds might a claim be denied?
- if suicide is the cause of death
- if the person died alone
- if the person who died is younger than 40
Who should take out life insurance?
- someone who lives alone
- someone with dependants
- someone who worries a lot
People in what age group usually need life insurance?
- young professionals
- retired people
What is the most common reason for retired people to take out a life insurance policy?
- to pay off a mortgage
- to pay for living a retirement community
- to assist with funeral costs
If you have a life insurance policy that is tied to your mortgage for the purpose of paying off the mortgage, what happens to the policy as you pay off the mortgage?
- It decreases in value.
- It increases in value.
- The value does not change.
Besides family, who else is commonly nominated as a life insurance beneficiary?
Which of the following is a feature of a permanent life insurance policy but not a term policy?
- cash value component
- fixed premiums
- fixed term
What is usually the maximum length of time that you can have a term policy?
- 10 years
- 20 years
- 30 years
What is the first step in deciding how much to spend on life insurance?
- Calculate your financial value.
- Ask your friends what they spend.
- Go with the salesperson's best offer.
What is the term given to the total amount of coverage you need?
- beneficiary payout
- face value
- total value
What is a good rule of thumb to help determine how much your policy should be worth?
- Buy a policy that pays out two and half times your annual income.
- Buy a policy that replaces your salary for five to seven years.
- Buy a policy that gets your family the most money you can afford.
What else do you need to know before taking out a life insurance policy?
- policy cancellation terms
- how long you need the policy
- both of the above
Why might you be attracted to the idea of borrowing money from the cash value of your insurance policy?
- if you want to take out a mortgage
- if you have poor credit
- if you want furnish your home