Quiz: Protecting Your Family: What do you know about buying life insurance?
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Protecting Your Family: What do you know about buying life insurance?
By: Staff
Image: refer to hsw

About This Quiz

For parents, life is all about taking care of your family to the best of your abilities. This includes making sure your children and spouse can support themselves in case of your death. Take our quiz to learn the dos and don'ts of buying life insurance for your family.

Term life insurance is just what it says -- insurance for a predetermined length of time. You can decide how long you need term life insurance, and you're fully covered for that period as long as you maintain your payments.

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True or false: Whole life insurance is more expensive than term life insurance.

Whole life insurance covers you for your entire life, and it blends an investment fund with insurance. Term life rates are much less expensive, since they're much more straightforward and only for a designated period of time.

The insurance premium is the monthly, quarterly, annual or biannual payment needed to pay for your life insurance policy.

4.0 of 20
True or false: To qualify for a life insurance policy, you must always undergo a medical exam.

Many -- but not all -- life insurance companies require an in-home medical examination. Whether you need an exam depends on the value of the policy and/or the insurance carrier's requirements.

Paying your premium is key to keeping your life insurance coverage. You must be sure you can pay your premium each time it's due, or you risk losing a valuable asset for your family.

6.0 of 20
What is another term for whole life insurance?

Since whole life insurance covers you for a lifetime, it's also often called "permanent" life insurance. It's often bought as an investment because of its long-term coverage.

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True or false: An average term life policy should last until your youngest child can support him or herself.

Term life insurance can last for any number of years. For parents, it's recommended to keep a term life policy until your youngest child doesn't need financial support from you.

8.0 of 20
Is life insurance on your child worth buying?

Insurance experts will tell you that it's not worth spending money on life insurance for your child. Policies are cheap, but they mature very slowly, and parents are more likely to die before children.

A beneficiary is the trust fund or person who will receive the monetary value of the policy upon the policyholder's death.

10.0 of 20
True or false: You should always designate your child as your beneficiary.

If your children are minors, they should never become the direct beneficiaries of your life insurance. Minors cannot legally handle issues that arise when executing an insurance policy.

11.0 of 20
Even if you receive life insurance through your employer, should you buy more coverage?

Employment is never permanent, but your children's and spouse's dependence on you is. You should always have extra coverage because you never know if and when you may be out of a job.

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If you're diagnosed with a terminal illness after you secure a life insurance policy, can the insurance company cancel your policy?

An insurance company cannot legally cancel a policy due to terminal illness, even if you're diagnosed within 90 days of beginning your policy. The only exception is if the company can prove you gave false information when applying for the insurance.

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How often should you review your life insurance policy?

You need to assess your life insurance annually and whenever a major life change occurs, including the birth of a child, marriage, divorce or caring for an elderly parent.

14.0 of 20
How can you get a better rate on your insurance?

Improving your health can translate into more life insurance coverage available to you, and at better rate. Think about making some lifestyle changes before you decide to buy life insurance.

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What's the general guideline for knowing how much insurance coverage to buy?

Insurance agents will typically tell you to buy a policy that's worth anywhere from 10 to 20 times your annual income.

16.0 of 20
True or false: It's cheaper and easier to buy life insurance from an agent.

Agents benefit greatly from selling insurance policies, at a hefty cost to you. Web sites that offer insurance quotes can help you cut out the agent while providing similar services for less.

17.0 of 20
In 2010, about what percentage of American households were without any life insurance?

Despite affordable premium rates, about 35 million Americans (30 percent of the population) are without life insurance coverage. Out of those 35 million, 11 million have children younger than 18.

18.0 of 20
What's the best way to learn whether an insurance company is reputable?

Independent agencies, such as Moody's or Fitch, evaluate and grade each company that sells insurance policies. Use their guide to help make an educated and informed decision.

19.0 of 20
Which of the following should you NOT consider when determining how much insurance to buy?

While there are many factors to consider when calculating how much insurance you need, the most important are how much it will cost your family to live on, as well as money needed to pay off a home mortgage, car payments, loans, credit cards and the like.

20.0 of 20
True or false: Life insurance death benefits are not subject to being taxed.

Whoever receives the death benefit from an insurance policy does not have to pay income tax on the benefit.

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