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Questions and Answers
The death benefit from a life insurance policy is typically subject to taxes.
The death benefit from a life insurance policy is typically subject to taxes.
False
Policy gains can affect the adjusted cost basis (ACB) of a life insurance policy.
Policy gains can affect the adjusted cost basis (ACB) of a life insurance policy.
True
Taxation does not apply to dividends received from life insurance policies.
Taxation does not apply to dividends received from life insurance policies.
False
A full surrender of a life insurance policy does not involve any calculation for policy gain.
A full surrender of a life insurance policy does not involve any calculation for policy gain.
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Partial surrenders of life insurance policies can lead to reduced coverage amounts.
Partial surrenders of life insurance policies can lead to reduced coverage amounts.
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Policy loans typically incur interest charges that can affect their repayment.
Policy loans typically incur interest charges that can affect their repayment.
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Group life insurance provides the same benefits as individual life insurance.
Group life insurance provides the same benefits as individual life insurance.
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The adjusted cost basis (ACB) is determined only by the policyholder's last acquired date.
The adjusted cost basis (ACB) is determined only by the policyholder's last acquired date.
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Participating whole life policies allow policyholders to receive dividends.
Participating whole life policies allow policyholders to receive dividends.
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Non-participating policies do not provide dividends to policyholders.
Non-participating policies do not provide dividends to policyholders.
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The cash surrender value (CSV) is a feature exclusively found in term life insurance.
The cash surrender value (CSV) is a feature exclusively found in term life insurance.
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Limited payment whole life policies require premiums to be paid for the entire life of the insured.
Limited payment whole life policies require premiums to be paid for the entire life of the insured.
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Term-100 life insurance provides coverage until the insured reaches age 100.
Term-100 life insurance provides coverage until the insured reaches age 100.
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Automatic premium loans (APL) ensure that a policy remains active if premium payments are missed.
Automatic premium loans (APL) ensure that a policy remains active if premium payments are missed.
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Paid-up additions (PUA) can only be purchased through a cash payment.
Paid-up additions (PUA) can only be purchased through a cash payment.
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The mortality charge is included in traditional whole life policies but not in universal life insurance.
The mortality charge is included in traditional whole life policies but not in universal life insurance.
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Dividends from participating whole life policies can be used to reduce premiums.
Dividends from participating whole life policies can be used to reduce premiums.
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There are no investment options available for the accumulation of dividends in participating policies.
There are no investment options available for the accumulation of dividends in participating policies.
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Flexibility for policyholders is a defining feature of universal life insurance.
Flexibility for policyholders is a defining feature of universal life insurance.
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Death benefits and cash values are unaffected by dividend illustrations in participating policies.
Death benefits and cash values are unaffected by dividend illustrations in participating policies.
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Premium offset policies allow policyholders to use dividends to cover premiums.
Premium offset policies allow policyholders to use dividends to cover premiums.
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A level death benefit plus account value is one of the death benefit options available.
A level death benefit plus account value is one of the death benefit options available.
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Collateral for third-party loans is not a feature included in universal life (UL) insurance.
Collateral for third-party loans is not a feature included in universal life (UL) insurance.
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Indexed death benefit is a type of death benefit option.
Indexed death benefit is a type of death benefit option.
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The guaranteed insurability benefit (GIB) rider allows additional insurance to be purchased without proof of insurability.
The guaranteed insurability benefit (GIB) rider allows additional insurance to be purchased without proof of insurability.
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Policy loans are an option available in the accumulating fund segment of universal life insurance.
Policy loans are an option available in the accumulating fund segment of universal life insurance.
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Accidental death riders are provided for permanent policies only.
Accidental death riders are provided for permanent policies only.
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Cumulative premiums can be included in the level death benefit option.
Cumulative premiums can be included in the level death benefit option.
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Premium offsets are an option in the accumulating fund section of universal life insurance.
Premium offsets are an option in the accumulating fund section of universal life insurance.
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Dread disease (DD) benefit is included in the supplementary benefits section.
Dread disease (DD) benefit is included in the supplementary benefits section.
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Open-ended increases are a type of death benefit option.
Open-ended increases are a type of death benefit option.
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Investment choices in universal life insurance include daily interest accounts.
Investment choices in universal life insurance include daily interest accounts.
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Level death benefits always provide higher payouts than indexed death benefits.
Level death benefits always provide higher payouts than indexed death benefits.
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Guaranteed investment accounts are one of the available investment components.
Guaranteed investment accounts are one of the available investment components.
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Surrendering the policy is a part of the death benefit options.
Surrendering the policy is a part of the death benefit options.
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The family coverage rider is a part of supplementary benefits.
The family coverage rider is a part of supplementary benefits.
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Private corporations can have a capital gains exemption.
Private corporations can have a capital gains exemption.
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A key person's life insurance is irrelevant when obtaining loans.
A key person's life insurance is irrelevant when obtaining loans.
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Criss-cross insurance is a type of buy-sell agreement.
Criss-cross insurance is a type of buy-sell agreement.
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An incomplete insurance application does not affect the underwriting process.
An incomplete insurance application does not affect the underwriting process.
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Standard risk classes are associated with the highest premiums.
Standard risk classes are associated with the highest premiums.
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Riders and supplementary benefits can be included in an insurance policy.
Riders and supplementary benefits can be included in an insurance policy.
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Group life insurance does not provide any additional coverage options.
Group life insurance does not provide any additional coverage options.
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The Medical Information Bureau (MIB) helps insurance companies assess risk.
The Medical Information Bureau (MIB) helps insurance companies assess risk.
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Attained age is the same as chronological age in life insurance.
Attained age is the same as chronological age in life insurance.
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Policies may be issued without any medical examination for certain applicants.
Policies may be issued without any medical examination for certain applicants.
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Hazardous occupations have no impact on life insurance premiums.
Hazardous occupations have no impact on life insurance premiums.
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Permanent residents are treated the same as Canadian citizens for life insurance purposes.
Permanent residents are treated the same as Canadian citizens for life insurance purposes.
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Cross-purchase agreements guarantee a buyer during the sale of a business.
Cross-purchase agreements guarantee a buyer during the sale of a business.
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Administration costs have no effect on insurance premiums.
Administration costs have no effect on insurance premiums.
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Everyone will eventually experience the risk of _____.
Everyone will eventually experience the risk of _____.
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Taxable income will affect the probability of a person's death at a specific age.
Taxable income will affect the probability of a person's death at a specific age.
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Mortality rate refers to the average number of years a person can expect to live.
Mortality rate refers to the average number of years a person can expect to live.
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Factors like age and health can influence an individual's risk of _____.
Factors like age and health can influence an individual's risk of _____.
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Life insurance companies classify individuals based solely on their income level.
Life insurance companies classify individuals based solely on their income level.
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One reason for delaying life insurance is the perception that death is far away.
One reason for delaying life insurance is the perception that death is far away.
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Life expectancy is measured by the probability of dying at a certain age.
Life expectancy is measured by the probability of dying at a certain age.
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Risk management strategies are used to address the risk of _____.
Risk management strategies are used to address the risk of _____.
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The claims process includes proof of age and gender documentation.
The claims process includes proof of age and gender documentation.
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Surrendering a policy means retaining all its benefits.
Surrendering a policy means retaining all its benefits.
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Churning and twisting refer to the practices related to replacing life insurance policies.
Churning and twisting refer to the practices related to replacing life insurance policies.
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New mortgage acquisition is not a factor in monitoring changing client needs.
New mortgage acquisition is not a factor in monitoring changing client needs.
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Incontestability clauses protect the insurance company from providing benefits after a policy has been in effect for a specified period.
Incontestability clauses protect the insurance company from providing benefits after a policy has been in effect for a specified period.
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Beneficiaries can be designated as revocable or irrevocable in a life insurance policy.
Beneficiaries can be designated as revocable or irrevocable in a life insurance policy.
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Administrative changes to an insurance policy do not require underwriting.
Administrative changes to an insurance policy do not require underwriting.
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Misstatement of age can affect the payment upon death in a life insurance policy.
Misstatement of age can affect the payment upon death in a life insurance policy.
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Grace periods are related to policy renewal processes.
Grace periods are related to policy renewal processes.
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Claim forms must be completed before any death benefits can be processed.
Claim forms must be completed before any death benefits can be processed.
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Leaving Canada does not affect life insurance policies at all.
Leaving Canada does not affect life insurance policies at all.
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Tax treatment of death benefits is a consideration in life insurance planning.
Tax treatment of death benefits is a consideration in life insurance planning.
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Group life insurance claims are processed in the same way as individual life insurance claims.
Group life insurance claims are processed in the same way as individual life insurance claims.
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A policy can be assigned as collateral to secure a loan.
A policy can be assigned as collateral to secure a loan.
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Contingent beneficiaries are paid first in the event of a claim.
Contingent beneficiaries are paid first in the event of a claim.
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Study Notes
Introduction to Life Insurance
- Life insurance addresses the financial implications of death.
- Everyone faces the risk of death, though its probability changes with age.
- Mortality rates are used to estimate an individual's risk of death.
- Factors influencing mortality risk include: age, gender, health, lifestyle, occupation.
- Insurers categorize individuals based on these factors for mortality data compilation.
- Life expectancy is the average remaining lifespan of a group or individual.
- Probability of death is the likelihood of dying at a specific age.
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Description
This quiz explores the fundamentals of life insurance, focusing on the financial implications of death and the factors that affect mortality risk. You'll learn about mortality rates, life expectancy, and how insurers categorize individuals based on various risk factors. Prepare to enhance your understanding of how life insurance works and its significance in financial planning.
