5. Insurance and Risk
Life Insurance — Quiz
Test your understanding of life insurance with 5 practice questions.
Practice Questions
Question 1
Which of the following factors is least likely to impact the premium of a life insurance policy?
Question 2
A 30-year-old individual wants to estimate the amount of life insurance coverage needed to replace their income for 25 years. Their annual salary is $80,000, and they assume a 3% annual discount rate. What is the estimated coverage amount needed using the present value of an annuity formula?
Question 3
Which of the following is a potential disadvantage of naming a minor as the primary beneficiary on a life insurance policy without establishing a trust or custodian?
Question 4
A 40-year-old individual is considering a $500,000 term life insurance policy for 15 years. The annual premium is $450. What is the total amount the individual will pay in premiums if they keep the policy for the entire term and no changes are made?
Question 5
Which of the following describes a scenario where a life insurance policy’s death benefit might be reduced?