Unit 6: Selling Life Insurance

Question 1

An insurance producer analyzed Dwight’s life insurance needs, taking into account the amount of money Dwight anticipated needing for his funeral and the amount of income that would be required to maintain his family’s standard of living in the event of his death, including projected college costs and the costs of supporting his spouse. This producer was using
A. The analytical approach to needs analysis
B. The human life value approach to needs analysis
C. The needs approach to needs analysis
D. The planning approach to needs analysis

Answer 1

C because it focuses on the financial needs that will arise as a result of Dwight’s death

Question 2

Wilma's husband John died three years ago, leaving her with two grade school aged children. Which income period is Wilma in?
A. Family dependency
B. Preretirement
C. Retirement
D. Grieving

Answer 2

A

Question 3

Which of the following is an advantage of life insurance as property?
A. Life insurance is generally paid for in one lump sum
B. Life insurance requires no physical upkeep
C. Life insurance requires careful managerial care on the part of the policyholder
D. Life insurance has little potential for a positive return on investment

Answer 3

B

Question 4

Life insurance proceeds are generally the only source of income for serving dependents of a breadwinner
A. True
B. False

Answer 4

B

Question 5

Anna wishes to purchase enough insurance to support her husband for the rest of his life if she should die prematurely and then leave a sizable inheritance for her children upon his death. Which method should be used to calculate the amount of insurance necessary?
A. Capital conservation
B. Capital liquidation
C. Human life value
D. Needs analysis

Answer 5

A should be used to calculate the amount of insurance needed because of the concern to leave the principle intact for her children

Question 6

Ken has terminal cancer and wants to access the death benefit of his life insurance policy to pay medical expenses. How might he be able to do this
A. He won’t be able to access the policy funds until after his death
B. He may access the funds through accelerated benefits
C. He may access the funds either through a viatical settlement or by use of the accelerated benefits provision

Answer 6

D

Question 7

Shane is a master carpenter in business for himself. His business is probably operated as
A. A corporation
B. A sole proprietorship
C. A partnership
D. A limited liability company

Answer 7

B

Question 8

Which of the following is NOT financed using life insurance?
A. Buy-sell agreement
B. Section 303 stock redemption
C. Cross purchase agreement
D. Split dollar plan

Answer 8

D

Question 9

An insurance producer analyzed Bonita’s life insurance needs, taking into account Bonita’s net annual salary, her expenses, her current age, and depreciation of the dollar over time.
This producer was using
A. The analytical approach to needs analysis
B. The human life value approach to needs analysis
C. The needs approach to needs analysis
D. The planning approach to needs analysis

Answer 9

B