1. The potentially largest component of potential financial losses from premature death is

a. final expenses.

b. replacement of the lost income stream.

c. readjustment period expenses.

d. college education expenses.

2. The choices a life insurance policy beneficiary and/or the policyholder have concerning the form of payment of the death benefit are called

a. multiple indemnity clauses.

b. guaranteed renewability options.

c. nonforfeiture values.

d. settlement options.

3. The type of life insurance that pays a death benefit and has aspects of an investment is

a. group life insurance.

b. term life insurance.

c. cash-value life insurance.

d. guaranteed renewable insurance.

4. Who of the following would be least likely to need life insurance?

a. a married mother working part-time outside the home who has young children

b. a forty-five-year-old widower who lives with and supports his retired father

c. a thirty-five-year-old single lawyer with a disabled younger brother whose parents are deceased

d. a married certified public accountant with no children whose spouse is a dentist

5. A parent in his early thirties has determined that he needs about $1 million in additional life insurance. What would be the best way to meet this need?

a. one term life insurance policy

b. several level-premium term life insurance policies with differing face amounts

c. one cash-value life insurance policy

d. several cash-value life insurance policies with differing face amounts

6. Your approach to life insurance should be to

a. buy low and sell high.

b. buy now and pay later.

c. insure less and pay less.

d. buy term and invest the rest.

7. The type(s) of financial risk reduced via life insurance is/are

a. dying too soon, before you can provide for others.

b. living too long and, thus, outliving your wealth.

c. cost of health care prior to death.

d. both dying too soon and cost of health care prior to death.

8. A five-year term insurance policy where the face amount and the premium stays the same each year rather than goes up with your age is

a. guaranteed renewable term insurance.

b. convertible term insurance.

c. decreasing term insurance.

d. annual renewable term insurance.