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Life Assurance Quiz

Comprehensive quiz covering life insurance products, term assurance, whole-of-life policies, endowment policies, and inheritance tax planning.

Topics Covered: Term assurance, whole-of-life policies, endowment policies, family income benefit, trust arrangements, and tax-efficient life assurance planning.

This quiz is specifically designed for for those studying CEMAP, insurance advisers, financial planners, and individuals preparing for life assurance and protection examinations.

Life assurance quiz, term assurance, whole-of-life, endowment policies, life insurance, protection planning

Life Assurance Quiz

1. What is the primary purpose of term assurance?

A. To provide a guaranteed investment return.
B. To offer financial protection in the event of death within a specified period.
C. To cover the costs of critical illness.
D. To provide a lump sum at retirement.

2. Which of the following is a characteristic of decreasing term assurance?

A. The sum assured decreases in line with inflation.
B. The sum assured decreases by a set amount each month.
C. The sum assured decreases to zero by the end of the term.
D. The sum assured is paid out regardless of when death occurs.

3. What is the main benefit of convertible term assurance?

A. It allows the policyholder to convert the policy into a whole-of-life or endowment policy without medical evidence.
B. It allows the policyholder to convert it from stocks and shares to bonds.
C. It offers critical illness cover.
D. It allows the policyholder to increase the sum assured without additional premiums.

4. Which of the following is true about whole-of-life assurance?

A. It provides coverage only for a fixed term.
B. It will pay out upon the death of the life assured, whenever that occurs.
C. It cannot be surrendered for a cash value.
D. It is primarily designed as an investment product.

5. What is the purpose of a joint-life second-death policy?

A. To provide a payout upon the death of the first spouse.
B. To offer a lump sum at retirement for both spouses.
C. To provide pension cover for both spouses.
D. To cover inheritance tax liabilities on the combined estate of a married couple.

6. Which of the following is a feature of family income benefit policies?

A. They are a cheaper version of income protection.
B. They pay a regular income to beneficiaries after the death of the life assured.
C. They are designed to cover critical illness expenses.
D. They offer a guaranteed investment return.

7. What is the main difference between a non-profit and a with-profits endowment policy?

A. Non-profit policies offer guaranteed returns, while with-profits policies share in the profits of the life assurance company.
B. Non-profit policies are unit-linked, while with-profits policies are not.
C. Non-profit policies have no surrender value, while with-profits policies do.
D. Non-profit policies are only available for short terms, while with-profits policies are for long terms.

8. What is the primary purpose of writing a life assurance policy in trust?

A. To increase the sum assured.
B. To evade tax.
C. To reduce the premiums payable.
D. To ensure the policy proceeds are outside the individual's estate for inheritance tax purposes.

9. Which of the following is true about low-cost whole-of-life policies?

A. They combine a with-profits plan with a decreasing term assurance.
B. They guarantee a fixed investment return.
C. The cash value is always halved on surrender.
D. They cannot be surrendered for a cash value.

10. What is the main disadvantage of unit-linked endowment policies?

A. They do not provide any guaranteed minimum return at maturity.
B. They are only available for short terms.
C. They cannot be used to repay a mortgage.
D. They do not offer life cover.

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