Insuring your life Test 2
The underwriting function is designed to be sure that premiums are based on
Adverse selection
Underwriting helps protect life insurance companies from which of the following:
Adverse selection
The basic purpose of insurance is to
Protect you from losses
Through insurance, society is able to
Reduce financial risks and share losses.
The basic purpose of insurance is to protect you from the results of accidental losses.
True
The needs approach to evaluate the right amount of life insurance is the most accurate method to determine the proper amount of death benefits.
True
The primary purpose of life insurance is to protect family members financially after one's death.
True
Transferring risk means asking an insurance company to take over the risk for a small payment (the premium).
True
Insurance is a tool that can lessen ________ risk.
Economic
Having a fire extinguisher in your home is an example of loss prevention.
False
Installing a sprinkler system in your home to reduce insurance premium costs is an example of risk transfer.
False
The life insurance needs of beneficiaries are secondary since most proceeds are paid to living policyholders.
False
Variable life insurance if most often the best plan for most people's primary insurance needs.
False
The probability of a loss occurring can be reduced by
Loss Prevention
The purchase of insurance is a common form of which risk management technique:
Risk transfer
Which of the following forms of life insurance requires the lowest premium per dollar of initial death benefits?
Term life
From the standpoint of the person buying insurance, the central purpose of insurance should be:
To transfer risks of serious losses
Annual term insurance premiums increase as you get older while whole life insurance premiums remain constant.
True
Life insurance needs change dramatically over one's lifetime.
True
Risk is uncertainty regarding economic loss.
True
Survivorship (last-to-die) insurance is used primarily to help pay estate taxes.
True
