Question

Answer True or False about Life Insurence:

1) A cost of living rider that you purchase as part of your insurance life insurance policy gives you the option to buy additional insurance coverage to compensate for inflation.

2) All variable life insurance policies guarantee a minimum death benefit.

3) An insurance premium is a fee paid to an insurance company in exchange for risk protection.

4) I have a $300,000 mortgage. I am paying for two college tuitions. My salary is the only source of family income. It would not make sense for me to buy life insurance because this will only increase my expenses.

5) If you buy a life insurance policy that insures your life for $1,000,000 you are the “Insured”.

6) If you purchase a variable life insurance policy, then amount of the death benefit depends on the returns of earned by the funds where your premiums are invested

7) If you stop paying the premiums on a term life insurance policy, the insurance company will pay you the value of all premiums paid plus interest.

8) In general, level term life insurance is high-benefit coverage you buy for a set period of time. Premiums are typically lower than for permanent insurance such as universal life policies.

9) Life insurance helps bridge the gap between the financial needs of your dependents and the amount available from other sources, is the amount to be provided by life insurance.

10) Life insurance provides a generally income tax-free lump sum of money for your survivors in the event of your death. The appropriate amount of insurance depends only depends on your age.

Answer 1

1)

The statement is False because cost of living rider that you purchase as part of your insurance life insurance policy gives you protection against inflation and does not have to buy a new insurenace. It is an add on to original insurance

2) The statement is False because to get a guranteed minimum death benefit, one has to buy the extra coverage. Not all policies have this

3) The statement is true.

4) The statement is False because even though buying an insurance will increase expenses but the risk protection that it provides far outweights the costs.