Your Money and Credit Chapter 8

named beneficiary

A life insurance policy can be structured so that death benefits are paid directly to a(n) ____________, which means that creditors cannot claim the cash benefits from the life insurance policy.

straight term

A(n) _____ policy is a type of term insurance.

an insurance that provides a master policy for a group.

Group life insurance is:

true

Guaranteed renewable term insurance allows you to renew a policy for another term without qualifying medically.

Universal life insurance

It can be difficult to evaluate the true cost of a _____ at the time of purchase.

$1,000,000

Jonathan estimates that financial resources worth $2,000,000 will be necessary to protect his family after his death. What is the amount of insurance, as per the needs analysis method, that Jonathan should purchase if he has current financial resources worth $1,000,000?

true

Social Security survivor's benefits are intended to provide basic, minimum support to families faced with the loss of the principal wage earner.

True

The availability of group coverage through employee benefit programs should be considered when developing a life insurance program.

true

The need for life insurance increases with children.

Guaranteed purchase option

Which of the following policy features allows the insured to increase coverage periodically without showing proof of insurability?

deduct an individual's available resources from his or her family's total economic needs to calculate how much life insurance he or she requires

While using the needs analysis approach, we _____.

Credit life; mortgage life

_____ and _____ are both relatively expensive types of decreasing term life insurance.

the cash benefits from your life insurance policy cannot be claimed by creditors.

A life insurance policy can be structured so that the death benefits are paid directly to a named beneficiary, which means that _____.

industrial life insurance

A life insurance policy with a small face amount where the premium may be collected weekly by agents is termed _____.

true

An individual's need for additional life insurance can be determined by looking at the difference between his or her family's available financial resources after his or her death and his or her family's total economic needs.

from the government that are intended to provide basic, minimum support

Families faced with the loss of a principal wage earner receive Social Security benefits _____.

False

Generally, the primary purpose of life insurance is to provide a tax-advantaged investment plan.

continuous whole life

Henry must make set premium payments on his insurance policy until he dies, and if he cancels the policy, he will receive the cash value. His plan is a _____ policy.

False

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

false

Insurance agents always disclose their commissions in an insurance policy.

underwriting

Insurance companies use _____ to determine whom they will insure and what they will charge for the coverage.

economic

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

true

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

cash value

Nonforfeiture rights guarantee that a policy owner will not lose his or her policy's _____.

false

Only one agent should be consulted for discussing personal financial needs and insurance requirements while buying life insurance.

needs analysis

The _____ method is the most accurate method of determining the amount of life insurance coverage needed for an individual.

Variable life

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

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

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

loss prevention

The probability of a loss occurring can be reduced by_____.

Underwriters design rate classification schedules so that people pay premiums that reflect their chance of loss.

Which of the following is true of insurance underwriting?

Standard & Poor's

You can learn about the financial strength of an insurance company by checking ______________ rating system.

The needs analysis method

_____ determines the amount of life insurance coverage required for an individual by considering his or her financial obligations and available financial resources in addition to life insurance.

Loss Control

_______ is any activity that lessens the severity of loss once it occurs.