LOMA 281 Module 2 Lesson 1 - Term Life Insurance Questions and Answers with complete solution

Assume that Caryer has life insurance on his own life. Select the box beside each financial need that you think life insurance can meet Paying household expenses (utility bills, food, clothing, etc) Covering outstanding debts (mortgage and car loans, etc) Paying future outstanding medical, hospital, and funeral expenses Providing financial support for the family Funding a child's education - All the above Term Life Insurance - Life Insurance that provides a death benefit only if the insured dies during the period specified in the policy True or False: Few policy terms are shorter than one year - True Level Term Insurance - Term life insurance that provides a policy benefit that remains the same over the term of the policy. Simplest form of term life insurance Decreasing Term Life Insurance - Term life insurance that provides a policy benefit that decreases in amount over the term of coverage Mortgage Insurance - A plan of decreasing term insurance designed to provide a benefit amount that corresponds to the decreasing amount owed on a mortgage loan When Michael bought a house, he obtained a mortgage loan from the Archway Bank. He also bought a mortgage insurance policy from Able Life. Is Archway Bank a party to Michael's mortgage insurancecontract with Able Life? - No - the mortgage loan and the insurance contract are two separate transactions When Michael bought a house, he obtained a mortgage loan from the Archway Bank. He also bought a mortgage insurance policy from Able Life. Who can Michael name as the beneficiary of his mortgage insurance policy? - His wife, Archway Bank, or someone else When Michael bought a house, he obtained a mortgage loan from the Archway Bank. He also bought a mortgage insurance policy from Able Life. If Michael names his wife as the policy beneficiary, does she have to use the policy proceeds to repay the mortgage loans? - No - She can use the proceeds to repay the mortgage loan, but she isn't required to Credit Life Insurance - A type of term life insurance designed to pay the balance due on a loan if the borrower dies before the loan is required