Chapter 10

Amy bought a life insurance policy and named Ben as her beneficiary. Amy still lives with her parents who provide some of her living expenses. She has since died. Who will receive the benefits from her policy?

Ben

A person who is named to receive the proceeds from a life insurance policy is a(n)

Beneficiary

Donald and Charlene are married and do not have any children. They plan to ensure that the other will not be unduly burdened by debts in case one of them dies. Each plans to continue to work after the other one dies. Which method are they using to determine their life insurance needs?

Dual income, no kids method

Judy and James have a 4-year-old child. They plan to purchase life insurance using this formula: Current income × 7 × 70%. Which method are they using to determine their life insurance needs?

Easy Method

Francisco and Maria have three children and want to complete a detailed worksheet to determine the amount of life insurance they need to purchase. They will consider factors such as Social Security and liquid assets. Which method are they using to determine their life insurance needs?

Family need method

Which of the following households most likely has the greatest need for life insurance?

Household with children

Jeff and Erica have two children. They plan to purchase life insurance using this formula: (18 minus youngest child's age) × $10,000. Which method are they using to determine their life insurance needs?

Nonworking spouse method

Most people buy life insurance to

Protect the people who depend on the insured from financial losses caused by his or her death.

Which of the following is NOT a type of permanent insurance?

Term Life

Another name for permanent life insurance is

whole life