chapter 9 - finance

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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


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