Life Insurance Quiz – Five answers you should know

Here’s a simple quiz that will not only test your knowledge but also provide you with facts to help you understand life insurance better. When it comes to life insurance, Ignorance is not bliss! The more you know the better equipped you will be to choose the right policy based on your personal circumstances.

1. What are the two basic types of life insurance?

All life insurance policies fall under two broad categories—permanent or temporary life insurance. Temporary coverage is met with term life insurance while permanent, or lifelong life insurance is met with whole life insurance. There are several types of whole life insurance policies which include universal life insurance, 2nd to die life insurance, to age level guaranteed life insurance, and several others.

Just as a side note. While whole life and term life insurance are the two broad categories, there are other types of life insurance products available such as:

• Accidental life insurance – this type of policy doubles the death benefits if you die because of an accident.
• Child life insurance – this type of policy insures your child.
• Final expense life insurance – this offers minimal death benefits that would cover funeral expenses.
• No-Medical Exam life insurance – you can get life insurance without having to go through a medical.

2. Which is the best type of policy to purchase?

There is nothing like the "best" policy. Life insurance is available in such a variety of products designed to suit your specific life insurance needs. Therefore, the "best" policy is very subjective to your own personal situation. The type of policy that best suit your needs at the most affordable premiums and from a life insurance company that has excellent financial rating would be the best policy for you.

3. True or False. All insurance policies have similar features and there is very little price difference between each policy.

False. Life insurance is competitive business and therefore the underwriting system of each company differs in order to offer a distinguishing advantage to prospective customers. Some may look at smokers and their smoking habits a little more closely than others and offer better rates to smokers who smoke one or two cigarettes a day as against those who are chain smokers. Many a times, there is a significant difference in the pricing and shopping around for life insurance will give you the advantage of best pricing.

4. When is the right time to get life insurance?

The right time to get life insurance is when you are young and healthy. Life insurance companies offer the best premium rating to such people. You’ll be able to secure low cost life insurance rates and lock them in, long term.

A life insurance policy definitely needs to be in place when you have dependents. Life insurance is typically used to replace income lost when an earning member of the family dies. Life insurance policies ensure that your family is able to live in the same comfortable lifestyle that they are accustomed to.

5. True or False. Almost everyone needs life insurance.
True. Although the degree of need varies, almost everyone needs life insurance.

• People who need life insurance the most are young couples starting their families, especially those who have loans to pay off.
• Not having anyone else to share responsibility of the children, single parents need life insurance to protect the financial interests of their children.
• Retired people need life insurance especially if they have a large estate. Estate taxes, which are due only after a person dies, may amount to a huge expense for beneficiaries. A life insurance policy can be used to offset those expenses. Retired people may also want to consider augmenting their retirement fund with a life insurance policy.
• Small business owners need life insurance to protect against losses that would occur with the death of a partner.
• Single people need life insurance (remember it is cheap when you are young!) to cover any student loans that may be paying off or even to cover funeral expenses so that surviving members of the family are not burdened by these expenses.
• Stay-at-home-spouses (SAHS) also need to be insured. If a SAHS dies, a surviving spouse would need to hire a housekeeper, place children in a daycare or a hire a nanny, etc. Some estimate the services of a SAHS to be worth more than $140,000 annually.

Purchasing a life insurance policy could be one of the most important decisions you make. Make sure you understand life insurance and are well-informed so that you make a wise decision to safeguard the financial future of your family.

About AccuQuote:
AccuQuote is a leader in providing term life quotes to people across the United States. In 1986 it began operating with a single goal: to make the process of buying term life insurance as easy as possible for its customers. Their experienced professionals consistently deliver the most affordable term life insurance rates by comparing thousands of life insurance policies from dozens of top-rated carriers.