Chapter 8: money and credit

It is advisable to purchase life insurance from an insurance company that has been in business for at least _____ years. 15 10 19 25 5

25

A life insurance agent who takes her profession seriously is likely to have earned a professional certification like the

Chartered Life Underwriter

Which of the following is a characteristic of a universal life insurance policy? Lighter fees than other insurance policies No flexible premiums No choice in how the accumulation account is invested Fixed premiums and protection levels Absence of a savings feature

No choice in how the accumulation account is invested

If a term life insurance is convertible, the policy can be: exchanged for cash. transferred to the life of another person. revised as needed by the insurer. changed to a comparable whole life policy. changed to health or disability protection.

changed to a comparable whole life policy.

Employers often provide _____ life insurance as a fringe benefit for their employees. standard home service credit group mortgage

group

A life insurance policy with a small face amount where the premium may be collected weekly by agents is termed _____. mortgage life insurance group life insurance credit life insurance industrial life insurance special purpose insurance

industrial life insurance

You want to pay premiums for 20 years and have your insurance premium obligations finished at that time. However, you feel you will need life insurance for the rest of your life. You should choose a _____ insurance. convertible whole life renewable premium whole life single premium whole life continuous premium whole life limited payment whole life

limited payment whole life

is any activity that lessens the severity of loss once it occurs.

loss control

The purchase of insurance is a common form of _____ by the insured. risk avoidance loss prevention loss control risk assumption risk transfer

loss prevention

A(n) _____ policy is a type of term insurance. risk assumption whole life increasing term variable term straight term

straight term

A life insurance policy can be structured so that the death benefits are paid directly to a named beneficiary, which means that _____. the life insurance company makes additional payments to the family of the insured so that they continue to live comfortably the life insurance proceeds are paid directly to named beneficiaries after payment of state or federal income taxes the cash benefits are remitted to the beneficiary only after the beneficiary pays estate taxes the life insurance proceeds are invested as premiums for the life insurance of the beneficiary the cash benefits from your life insurance policy cannot be claimed by creditors

the life insurance proceeds are invested as premiums for the life insurance of the beneficiary

Insurance companies use actuarial data to measure: the wealth of a given population. the gross productivity of a given population. the risk of loss for a given population. the consumer price index of a given population. the creditworthiness of a given population.

the risk of loss for a given population.

Guaranteed renewable term insurance allows you to renew a policy for another term without qualifying medically. true false

true

Only one agent should be consulted for discussing personal financial needs and insurance requirements while buying life insurance. false true

true

Underwriters can predict whether or not you will suffer a loss this year. false true

true

Underwriters use life expectancy figures to look at overall longevity for various age groups and also consider specific factors related to an applicant's health, habits, and experiences. true false

true

The most preferred technique for determining how much life insurance coverage is needed for an individual is: using the multiple-of-earnings method adjusted for occupation. assessing the family's total economic needs and subtracting the financial resources available to meet those needs. computing the Human Life Value. estimating the sum of money which, when paid in installments, will produce the same income as the person would have earned after deducting assumed amounts for taxes and personal maintenance expenses. using the probability of death each year, prevailing interest rates, and assumed inflation rates to find the discounted present value of a future income stream.

using the multiple-of-earnings method adjusted for occupation.