Personal Fin 120 Ch 8

Which of the following represents a disadvantage of a whole life insurance policy?

A whole life insurance policy often provides lower yields than other investment vehicles.

Insurance is a tool that can reduce one's _____ risk.

Economic

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

False

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

Group

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

Obesity of the potential insured

Which of the following is true of risk avoidance?

Risk avoidance is any activity that helps evade an act that creates a risk.

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

Term life insurance policy

Which of the following is true of a good insurance agent?

The agent is recommended by professionals like bankers and attorneys.

Which of the following is true of the multiple-of-earnings method?

The multiple-of-earnings method determines the amount of life insurance coverage needed by multiplying the gross annual earnings of the insured by some selected number.

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

True

The policy owner assumes the investment risk with a ___________ insurance policy.

Variable Life

Universal life insurance is:

a combined investment plan and insurance policy.

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

The primary purpose of a life insurance plan is to help:

in the protection of the dependents of the insured from financial loss in the event of his or her untimely death.

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

needs analysis

Insurance companies make profit by:

paying out less than the sum of the premiums and the earnings on them.

Term life insurance is characterized by _____.

premium amounts related to the age of the insureds

A(n) _____ is a common provision in many term policies.

renewable clause

Underwriting refers to _____:

the determination of which exposures to insure

While performing needs analysis, when determining the available resources to offset the economic needs, you would generally ignore:

the educational qualification of the children.