CMFAS Life Insurance M5

Question 1

What is the primary purpose of life insurance?

Accepted Answer

To provide financial protection to dependents upon the insured's death

Answer

The primary purpose of life insurance is to provide financial protection by paying a benefit to the insured's beneficiaries upon death.

Question 2

What is a term life insurance policy?

Accepted Answer

A policy that provides coverage for a specific period only

Answer

Term life insurance provides coverage for a fixed period (e.g., 10, 20, or 30 years). If the insured dies during the term, the beneficiary receives the death benefit.

Question 3

What is a whole life insurance policy?

Accepted Answer

A policy that provides lifelong coverage and may accumulate cash value

Answer

Whole life insurance provides coverage for the insured's entire lifetime and typically includes a savings component that builds cash value over time.

Question 4

What is the difference between the policyholder and the insured?

Accepted Answer

The policyholder owns the policy; the insured is the person whose life is covered

Answer

The policyholder owns the policy and pays premiums. The insured is the person whose life is covered. They can be different people.

Question 5

What is a premium in life insurance?

Accepted Answer

The amount paid periodically to keep the insurance policy in force

Answer

A premium is the regular payment (monthly, quarterly, or annually) made by the policyholder to the insurance company to maintain coverage.

CMFAS Practice Test

CMFAS Practice Test

CMFAS Life Insurance M5