FIN1100 CH.10 smartbook
Life insurance is when a person joins a risk-sharing group known as an insurance company and purchases a contract also called an insurance
policy
Life insurance proceeds can be used wisely to:
provide education or income for children pay off home mortgage or debts establish regular income for survivors
With a(n) ____ term option, you can continue your existing term insurance coverage for another term.
renewable
If you opt for a term insurance policy, as your children become independent and your ____ increase, you can reduce your _____.
assets/coverage
Term life insurance is also known as _____ life insurance.
pure
Which option allows you to change your term policy into a whole life policy without an additional medical examination?
Conversion
The easy method is based on the assumption that it will take ___ years to adjust to financial consequences of death.
7
(Participating/Nonparticipating) policies do not provide policy dividends.
Nonparticipating
Term life insurance provides protection for a specific ______ of time.
period
A conversion option allows you to change a(n) ______ policy to a(n) ______ coverage life policy.
term/permanent
Multiyear level term insurance, rather than annual renewable term insurance, is advantageous because it allows you to pay:
the same premium for the life of the policy
A whole life policy that combines term insurance and investment elements is called:
universal life
Which method uses an equation of 70 percent of your salary for seven years?
easy method
(Higher/Lower) premiums are charged on life insurance policies for those likely to die sooner.
higher
When you buy life insurance, you agree to pay a monthly premium to an insurance company, in return for a sum of money paid to:
your beneficiary.
One of the many common uses of life insurance proceeds is to pay off a home _______ and other debts at the time of death.
mortgage or loan
Life insurance that does not provide policy dividends is also called a nonpar, or ______ policy.
nonparticipating
Under universal life insurance, part of your premium goes into an investment account that grows and earns interest called
cash value
Households with ______ have the greatest need for life insurance.
dependents
Life expectancy in the United States has been steadily (increasing/decreasing).
increasing
True or false: Life insurance is one of a few ways to provide income and liquidity at the time of death.
T
People that live alone or with parents typically do not need _____ insurance.
life
For most consumers, term life insurance is considered to be the:
best value
True or false: The sooner a person is likely to die, the lower the premiums she will have to pay.
F
Life expectancy in the United States has been:
steadily increasing
Term life insurance is:
temporary insurance
Life insurance protection for a specified period of time is called:
term