Chapter 8 Personal Finance

_____ is not a type of term insurance.

*a. Limited pay* b. Decreasing term c. Convertible term d. Renewable e. Straight Term

. Kurt purchased a policy with an initial premium of $3,000 and may elect how much he desires to pay in premiums from now on. He has purchased a face value of $100,000 and can accumulate cash value. What type of life insurance has Kurt purchased?

*a. Universal life* b. Whole life c. Modified whole life d. Term life e. Adjustable whole life

Insurance underwriting is best described as:

*a. the process used by insurers to decide who can be insured and to determine applicable rates that will be charged for premiums.* b. a set of activities used to identify the risk and rewards of investing the insured's funds on marketable securities. c. production-related activities performed primarily by agents on the field. d. the process of developing pricing structures for insurance, often performed by an actuary. e. a function most often performed by an actuarial.

Which of the following risk management techniques is the purchase of insurance a common form of?

a. Risk retention *b. Risk transfer* c. Risk assumption d. Risk avoidance e. Loss control

Life insurance policies with small face amounts where the premium may be collected weekly by agents is termed as a(n):

a. credit life insurance. b. mortgage life insurance. *c. industrial life insurance.* d. special purpose insurance. e. group life insurance.

Underwriting helps protect life insurance companies from which of the following:

a. major downturns in the economy. b. short-term shocks in the investment markets. *c. adverse selection.* d. having too many healthy people buy life insurance. e. shifts in the macro-social structure of the population.

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

a. mortgage insurance. b. group insurance. c. whole life insurance. *d. term insurance.* e. variable insurance.

1. The basic purpose of insurance is to _____.

a. protect your health *b. protect yourself from economic losses* c. supplement your income d. shield you from bad decisions e. protect yourself from non-financial losses

An insured usually chooses variable life insurance in order to:

a. provide more flexible coverage. *b. emphasize the savings portion while still having death protection.* c. lessen the savings feature of life insurance. d. substitute for fixed-dollar insurance protection. e. reduce insurance premiums.

A life insurance contract contains clauses for:

a. settlement options. b. policy reinstatement. c. beneficiary clause. *d. all of the above* e. none of the above