Question

Just answer True or False?

1. A 401(K) plan is a good substitute for a life insurance policy.

2. 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.

3. All variable life insurance policies guarantee a minimum death benefit.

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

5. 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.

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

7. 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.

8. 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.

9. 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.

10. 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.

Answer 1

1. True

Reason: A 401(k) offered by employer offers a high growth and wide range of investments unlike life insurance policy.

2. True

Reason: It covers the infltion amount at the time of maturity.

3. True

Reason: Variable life Insurance policy offers minimum death benefit but we need to pay extra premiums

4. True

Reason: If we pay premium for Insurance we can be insured for risk that may occur to us in future i.e., Insurance company will take care of our risk.

5. False.

Reason: Since you are only the bread winner in your family it is recommended to buy life insurance policy as it will be of a great help to your family in case of your sudden demise or retirement.

6. True

Reason: A person or a property whose life is covered by insurance policy is called Insured. Strictly speaking person is a life insurance policy is called "assured" since death is unavoidable and is certin to happen. But the trems insured and assured are used interchangeably.

7. True

Reason: The premiums are invested in variety of investments and returns earned by them accrue to the holder of policy.

8. False

Reason: Insurance company only gives Surrender Value which will be less than your premiums paid.

9. True

Reason: Universal life insurance policies premium is more than level term insurance policy.

10. True

Reason: Insurance policy acts as a great help to your beneficiary family in case of your death and it bridges the gap their resources and required needs.