Chapter 11 Exam-Uses of Life Insurance

Which of the following pieces of information is NOT gathered during the personal financial planning process? a. An individual's assets b. An individual's expenses c. An individual's income d. An individual's civic organization memberships

d. An individual's civic organization memberships All of these pieces of information are normally gathered during the personal financial planning process EXCEPT "An individual's civic organization memberships."

All of these are common personal uses of life insurance EXCEPT a. Pay final expenses b. Fund a child's education c. Replace an insured's income d. Fund a Buy-Sell Agreement

d. Fund a Buy-Sell Agreement Using life insurance to Fund a Buy-Sell Agreement is a business use of life insurance.

Key person insurance is intended to a. allow a key person to purchase the business b. help retain key employees by offering added benefits c. give premium-grade benefits to key employees d. cover business losses due to the death of a key employee

d. cover business losses due to the death of a key employee Key person insurance is designed to cover business losses due to the death of a key employee.

Buy-sell agreements are typically funded by which two insurance products? a. Decreasing term insurance and Workers' Compensation b. Life insurance and disability insurance c. Endowments and Medicare d. AD&D and Social Security

b. Life insurance and disability insurance Buy-sell agreements are used to assure the ownership of the business is properly transferred upon the death or disability of an owner or partner. Buy-sell agreements are normally funded by life insurance and disability insurance.

The Human Life Value concept is based on a. education level b. age c. income d. occupation

c. income The correct answer is "income." The Human Life Value approach calculates the amount of money a person is expected to earn over his lifetime to determine the face amount of life insurance needed.