Insurance - Study Mode

[#711] Using the conversion option present in a term policy you can convert the same to _________.
Correct Answer

(A) Whole life policy

Explanation

Solution: Using the conversion option present in a term policy you can convert the same to Whole life policy. Most term life insurance policies sold today come with a conversion feature that allows you to convert some or all of your term life insurance policy to a permanent policy like whole life, universal life or variable life.

[#712] What is the primary purpose of a life insurance product?
Correct Answer

(C) Protection against the loss of economic value of an individual’s productive abilities

Explanation

Solution: Protection against the loss of economic value of an individual’s productive abilities is the primary purpose of a life insurance product. The primary purpose for purchasing life insurance is to provide financial stability to beneficiaries in the event of the insured's death.

[#713] Who among the following is best advised to purchase a term plan?
Correct Answer

(C) An individual who needs insurance but has a low budget

Explanation

Solution: An individual who needs insurance but has a low budget is advised to purchase a term plan. Term plans are beneficial for those who want higher coverage at low premium rates, providing financial protection for their family in case they are not around.

[#714] Which of the below statement is incorrect with regards to decreasing term assurance?
Correct Answer

(B) Premium amount decreases with the term of coverage

Explanation

Solution: Premium amount doesn't decreases with the term of coverage. Premium payments often start at a higher level than policies with similar coverage but are ultimately worth more than competitors as policyholders experience increased coverage over time at no additional expense.

[#715] Which of the below statement is correct with regards to endowment assurance plan?
Correct Answer

(C) It has both a death benefit as well as a survival component

Explanation

Solution: Endowment assurance plan has both a death benefit as well as a survival component. Endowment plan is a life insurance policy which provides you with a combination of both i.e.: an insurance cover, as well as an savings plan. It helps you in saving regularly over a specific period of time, so that you are able to get a lump sum amount on policy maturity, if the policyholder survives the policy term.