Chapter 8

_____ determines the amount of life insurance coverage required for an individual by considering his or her financial obligations and available financial resources in addition to life insurance.

The needs analysis method

Universal life insurance is:

a combined savings/investment plan and insurance policy.

The primary purpose of life insurance is to provide:

financial security for your dependents after your death.

Families faced with the loss of a principal wage earner receive Social Security benefits:

from the government that are intended to provide basic, minimum support.

Employers often provide _____ life insurance as a fringe benefit for their full-time employees.

group

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

loss control

The settlement option chosen by most policyholders is:

lump sum

A(n) _____ provision enables you to purchase the policy again at its expiration.

rewnewable

A life insurance policy can be structured so that the death benefits are paid directly to a named beneficiary, which means that:

the cash benefits from your life insurance policy cannot be claimed by creditors.

Insurance underwriting is best described as:

the process used by insurers to decide who can be insured and to determine applicable rates that will be charged for premiums

Avoiding alcoholic beverages while driving is an example of loss prevention.

true

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

true

If you have a high-risk hobby, then you could be required to pay more for life insurance than others pay.

true

Life insurance proceeds paid to your heirs are not usually subject to state or federal income taxes.

true

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

true

The need for life insurance increases with children.

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

The death benefit of a(n) _____ life insurance policy may go down because of poor investment returns.

variable

A grace period permits a policyholder to retain full death protection even though the premium has not been paid for:

31 days

_____ is any activity that keeps loss from occurring.

Loss prevention

Which of the following leads to the payment of a higher insurance premium by the potential insured?

Obesity of the potential insured

_____ involves abstaining from any activity that will affect an individual financially.

Risk avoidance