Buying life insurance is an important decision. You want to make sure you understand what you’re getting, or else it may affect your loved ones.
Curious to test your understanding of life insurance basics? Dive into our quick True or False quiz and see how you do. And don’t worry if you’re not quite the expert yet – we’re here to guide you every step of the way.
Question 1:
In order for your spouse to get your life insurance money if you die, they must own your policy. True or False?
Answer
False – you can be the master of your own policy. The beneficiary, not the owner, is the one who gets the death benefit. So, you can be both the owner and the insured, and have your spouse as the beneficiary.
Intrigued? Read this article: Things to Know About the Owner of a Life Insurance Policy.
Question 2:
If you buy a term policy with a 20-year term length, your coverage expires in 20 years. True or False?
Answer
True – a term life insurance policy provides coverage for a set term. If you own a 20-year term policy, it expires 20 years after the date of purchase. Other common term lengths are 10, 15, 30, and 40-year terms.
If you want to stay insured longer, you have options. Read this article: What Happens When Term Life Insurance Expires?
Question 3:
Your life insurance coverage should be equal to 10 times your income. True or False?
Answer
False – Life insurance is not a one-size-fits-all affair. While many financial advisors suggest you should own a policy worth 10 times your salary, this isn’t the magic number for everyone.
Learn more: How Much Life Insurance Should I Get?
Question 4:
If you have life insurance through your job, you don’t need a personal life insurance policy. True or False?
Answer
False – We suggest you double up your work life insurance policy with a personal one. Group life insurance isn’t guaranteed to follow you if you leave your job which would leave your loved ones unprotected.
Want the scoop on this? Read more: Is My Life Insurance Through Work Enough?
Question 5:
If you outlive your term life insurance policy, you get your money back. True or False?
Answer
False – You’re not getting a refund for surviving beyond your term policy, just like your unused car insurance doesn’t come back to you. The only exception? A return of premium policy, but be ready to shell out higher premiums for the privilege.
Question 6:
You can buy life insurance on your next-door neighbor. True or False?
Answer
False – You need to have an insurable interest in someone else to buy life insurance on them and your neighbor’s finances likely don’t impact yours.
Learn more: Can I Buy Life Insurance on Someone Else?
Question 7:
Your policy premiums increase each year. True or False?
Answer
False – Once you buy a term life insurance policy, your premiums are locked in. The earlier and healthier you are when you buy a policy, the cheaper it is. Lock in that low rate! Get an instant quote below.
Question 8:
Term life insurance is less expensive than whole life insurance. True or False?
Answer
True – Whole life insurance might last a lifetime and build cash value, but it also can cost 10-20 times more than a term policy.
Although term insurance is usually a better fit for most, permanent insurance has its perks too. Find out which is best for you: Do I Need Term or Whole Life Insurance? Differences, Pros & Cons
Question 9:
You can name your dog as your life insurance policy’s beneficiary. True or False?
Answer
False – As adorable as Mr. Fluffikins might be, he can’t be a beneficiary. But don’t worry, you can still secure his future with a trust or include pet-care instructions in your will.
There’s lots of good information here, including how to ensure care for pets: The Difference Between a Will and a Trust
Question 10:
You need to have a medical exam in order to buy life insurance. True or False?
Answer
False – Not all life insurance applicants need a medical exam. Some companies offer accelerated underwriting for qualified applicants, skipping the medical exam altogether. But keep in mind, not everyone can hop aboard the no-exam life insurance train.
More details here: Can You Get Term Life Insurance with No Medical Exam?
So, how did you do? Whether you aced the quiz or just learned a ton of new things, you’re now one step closer to mastering the life insurance basics! Craving more knowledge? Visit our blog.
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