AFK AFK Insurance Fundamentals

Question 1

What type of life insurance provides a death benefit for a specified period and has no cash value component?

Accepted Answer

Term life insurance

Answer

Whole life insurance

Answer

Universal life insurance

Answer

Variable life insurance

Question 2

What distinguishes whole life insurance from term life insurance?

Accepted Answer

Whole life provides lifetime coverage with a cash value component

Answer

Whole life has no death benefit

Answer

Term life costs more than whole life

Answer

Whole life only covers accidental death

Question 3

What is the primary purpose of disability income insurance?

Accepted Answer

To replace a portion of income when the insured cannot work due to illness or injury

Answer

To pay medical bills after an accident

Answer

To fund long-term care services

Answer

To provide a death benefit to dependents

Question 4

In life insurance, what is the 'incontestability clause'?

Accepted Answer

A clause that prevents the insurer from denying a claim based on misrepresentation after a specified period (usually 2 years)

Answer

A provision preventing the insurer from raising premiums

Answer

A rule requiring policyholders to submit claims within 30 days

Answer

A guarantee that premiums will not increase during the policy term

Question 5

Which type of annuity guarantees a fixed interest rate for a specified period and is not tied to market performance?

Accepted Answer

Fixed annuity

Answer

Variable annuity

Answer

Indexed annuity

Answer

Immediate annuity

Question 6

Long-term care insurance typically covers which of the following services?

Accepted Answer

Assistance with activities of daily living (ADLs) in a nursing home, assisted living, or at home

Answer

Acute hospital stays and surgeries

Answer

Prescription drug costs in retirement

Answer

Short-term rehabilitation after an injury