Risk Management: Managing Life Cycle Risks

What is the mandatory coverage for life cycle events risk in the United States known as?

Social Security

FILL-IN-THE-BLANK: ____ life insurance provides protection for a specified period, called the policy's term (or duration). For example, when a company issues a one-year term life policy, it promises to pay the face amount of the policy in the event of death during that year.

Term

Pooling or

grouping exposures.

Accumulating a fund

through contributions (premiums) for the members of the group.

Life insurance policies can be modified, through the use of "riders", to provide special benefits. Which type of benefits can be included? Choose three:

1) The waiver of premiums, if the policyholder becomes disabled. 2) The provision of a disability income. 3) The accelerated payment of death benefits (before death).

Term policies are often not renewable beyond age 65 or __, because of adverse selection that increases with age. Complete the sentence by typing the correct missing value, in numeric form:

70

Social security coverage is compulsory for more than __ percent of all workers in the United States, meaning that Social Security taxes must be paid on their wages. Complete the sentence by typing the correct value in numeric form:

90

What is the name of the index that is used to measure the global burden of disease, expressed in terms of the number of healthy years lost?

Disability adjusted life years (DALY)

Social insurance is different from public assistance in the US. It is an insurance program that is compulsory for nearly all Americans. Eligibility and benefits are specified by law and financing is wholly or partially covered by which party?

Employers

Which type of risk is concerned with having to pay for increased costs (doctors, medicines etc.), while still having to finance regular living expenses, for oneself and perhaps other members in a household?

Health and disability

The financial risk of premature death is mainly borne by the dependents of the deceased person, because they rely on what from the deceased?

Income

Healthy people tend to drop life insurance cover, while unhealthy people pay premiums because they think their beneficiaries may soon have a claim. This behavior is built into renewal rates on term insurance. What name is given to the type of life insurance, where the cost is spread over a longer period or the entire life span, without a rise in premiums?

Level-premium

The handling of which kind of risk, is strongly correlated with key macroeconomic parameters such as: national savings, interest rates, economic and demographic growth?

Life

Adding which kind of rider to a life insurance policy, means terminally ill insured can receive premature or accelerated benefits, to pay for medical and/or other quality of life expenses, prior to death and the full payment of life insurance benefits?

Living benefits

An examination of almost any agrarian economy, typically shows a population pyramid with a very large base (many young children) and a very pointed top (a very small number of old people). Is this the case in industrialized, developed countries?

No

Social Security in the United States, provides income in the event of retirement, disability or death. Every employer and employee is required to contribute, in the form of which?

Payroll taxes

Which index measures years lived in good health and is used to calculate healthy adjusted life expectancy?

Quality adjusted life years (QALY)

The "financial burden" is the amount of money that is needed to finance which life period?

Retirement

Mortality risk is quantified by measuring the intensity of which aspect of a person's life?

Their economic value.

TRUE OR FALSE? Life insurance provides liquidity for the costs that follow a person's death, such as funeral costs, debt payments and estate taxes.

True

TRUE OR FALSE? Longevity risk is defined as the risk of living so long, that one's advanced age hinders the ability to adequately provide for oneself financially.

True

Which kind of benefits are financed through general revenues that come from federal and state funds and are not based on contributions made by or on behalf of recipients? Choose one answer: Welfare | Savings | Investments

Welfare

Paying out

from the fund, for the losses of those who die each year.

The availability of private life insurance, reduces pressure on ___________ to provide welfare to families that experience the premature deaths of wage earners. Complete the sentence by choosing the correct missing option:

governments

FILL-IN-THE-BLANK: An employee's life insurance premium will typically increase yearly with age. However, in the case of _____ insurance, if younger employees continue to be hired, the lower premium for new hires can offset the increases for aging employees.

group

FILL-IN-THE-BLANK: Insurers can predict the probability of people reaching retirement age, by analyzing ____ (mortality) tables? Choose one. Life | Health | Birth

life

FILL-IN-THE-BLANK: Typically, for the first two years of benefit payments, the insured is considered totally disabled whenever he or she, because of injury or disease, is unable to perform the duties of their regular __________.

occupation, job, or employment (all work)

Complete the sentence by choosing the correct option: Proof of continued disability, in the form of a physician's statement, is usually required by insurers ____ a year.

once

FILL-IN-THE-BLANK: Experts anticipate a shift from public sector social insurance plans to _______ sector plans, especially for retirement benefits.

private

FILL-IN-THE-BLANK: Periodic premium payments tend to exceed death benefits and other expenses during the early years of a policy and fall short during the later years. In this way the insurer accumulates a _______ to offset this deficiency.

reserve

FILL-IN-THE-BLANK: In 1945, there were forty-two workers per retiree. Currently, this has decreased to approximately _____ workers per retiree and is expected to decline to two by 2020.

three

FILL-IN-THE-BLANK: Uncertainty in risk, generally relates to whether or ____ an event will occur, for example disability or death. Choose one option: if | when | how

when