finance ch 8

A grace period permits the policy holder to retain insurance even though the premium has not been paid for:

31 days

Universal life insurance is

a combined investment plan and insurance policy

Group life insurance is most likely to be for

a term

The single most valuable technique in personal risk management to assist an individual in determining how much life insurance is needed is:

assessing the family's total economic needs and subtracting the financial resources available to meet those needs.

Nonforfeiture rights guarantee that a policy owner will not lose his or her _____.

cash value

If a term life insurance is convertible, the policy can be:

converted to a comparable whole life policy.

Generally, the primary purpose of life insurance is to provide a tax-advantaged investment plan.

false

If the insured has a high-risk hobby then he/she should expect to pay less for life insurance.

false

Insurance agents always disclose their commissions in the insurance policy.

false

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

group

Which of the following policy features allow the insured to increase coverage periodically without showing proof of insurability?

guaranteed purchase options

An activity that reduces the chance that a loss will occur is _________

loss prevention

The probability of a loss occurring can be reduced by _____.

loss prevention

The settlement option chosen by most beneficiaries is:

lump sum

The most accurate way to determine how much life insurance you need is to use the _____ method.

need analysis

Using the _____ approach is the most accurate method to determine life insurance needs.

needs analysis

to protect the dependents of the insured from financial loss in the event of his/her untimely death.

needs analysis

____ is an effective way to handle small exposures to loss when insurance is too expensive.

risk assumption

_________ is the choice to accept and bear the risk of loss.

risk assumption

The insurance portion of a universal life policy is most analogous to:

term insurance

Which of the following types of insurance policies provides temporary coverage for a set period?

term life insurance policy

A life insurance policy structured so that the death benefits are paid directly to a named beneficiary means that _____.

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

In determining available resources to offset economic needs, you would generally not consider:

the education and qualification of the children

The primary purpose of a life insurance plan is:

to protect the dependents of the insured from financial loss in the event of his/her untimely death.

From the standpoint of the person buying insurance, the central purpose of insurance should be:

to transfer the risks of serious losses

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

true

The availability of group coverage through employee benefit programs should be considered when developing a life insurance program.

true

The need for additional life insurance can be determined by looking at the difference between available resources and family monetary needs.

true

The primary purpose of life insurance is to protect family members financially after one's death.

true

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

true

Henry must make set premium payments on his insurance policy until he dies, and if he cancels the policy, he will receive the cash value. His plan is a _____ policy.

whole life