chapter 9 - finance
Suppose that you have decided to buy some life insurance. Which method of determining your life insurance needs calculates the annual loss of income stream?
Earnings multiple approach
The suicide clause will pay double the face value to the beneficiary if the named insured commits suicide.
false
With decreasing term life insurance, the face amount of the policy remains constant, but the premiums decrease.
false
The ________ is the entity who designates the beneficiary of the insurance policy.
policy owner
Wayne and Sarah are trying to manage the risk they face in life a best as they can. They are following Principle 7 which states
protect yourself against major catastrophes.
A disadvantage of term insurance is that the cost rises each time the policy is renewed.
true
A guaranteed insurability rider allows you to increase your face value even if your health fails.
true
According to the Keown book, two recommended online insurance quote services are accuquote.com and insure.com.
true
Actuaries are statisticians who specialize in estimating the probability of death based on personal characteristics, such as your age and general health, as well as lifestyle specifics such as whether or not you exercise.
true
All life insurance policies should have a contingent beneficiary designated.
true
An insurance policy is a contract with an insurance company that spells out what losses are covered, what the policy costs, and who receives the payment if a loss occurs.
true
Life insurance and health insurance are designed to transfer the catastrophic risk you can't afford to keep onto the insurance companies.
true
Life insurance is not meant to benefit you, its purpose is to protect others in the event of your death.
true
Long−term care insurance provides money to help pay for nursing home and home health care expenses.
true
Term life insurance provides protection for a specified amount of time; typically 1−30 years.
true
The beneficiary is the individual designated by the owner of the life insurance policy to receive the insurance policy's proceeds upon the death of the insured.
true
The earnings multiple approach is based on the notion that you want to replace a stream of annual income that's lost due to the death of a breadwinner.
true
The nonforfeiture right gives the policyholder the cash value of the policy in exchange for the policyholder giving up his or her right to a death benefit.
true
Using the earnings multiple approach is determining the present value of an annuity as a means to determine the face value of the insurance policy one needs to purchase.
true
With term life insurance, the beneficiary receives a fixed death benefit.
true
With the needs approach, you should take into consideration any additional insurance policies that have been taken out on your life.
true
Andrew and Alice have health issues that may be passed on to their children. When the children are born would they be wise to obtain life insurance immediately on the infants prior to any of the medical conditions arising?
Yes, this would be wise as the infant is not likely to have to pass a physical exam.
A 30−year−old has what percent chance of a 90−day disability before the age of 65?
47
Medicare was enacted to help persons with disabilities and people people over the age of ________ who qualify for Social Security.
65
Who needs disability insurance?
Anyone who relies on income from a job
Health insurance that provides payments to the insured in the event that the insured's income is interrupted by illness, sickness, or accident is called ________ insurance.
Disability
Most long−term care policies require that you be unable to perform at least two ADL's. What are ADL's?
activities of daily living
Life insurance may not be necessary if
all of the above
You know you desperately need life insurance but don't have much money available for premiums. What is the best thing you can do to find affordable insurance?
all of the above
