Financial literacy chapter 8
From the standpoint of a person buying insurance for central purpose of insurance should be
To transfer the risk of serious losses
Avoiding alcoholic beverages while driving is an example of loss prevention
True
Guaranteed renewable term insurance allows you to renew a policy for another term without qualifying medically
True
Life insurance proceeds paid to your heirs are not usually subject to state or federal income tax
True
Social security survivors benefits are intended to provide basic minimum support to families face with the loss of a principal wage earner
True
The availability of group coverage through employee benefit program should be considered when developing a way for insurance program
True
The need for life insurance increases with children
True
Your need for additional life insurance can be determined by looking at the difference between your families available financial resources after your death and your family's total economic needs
True
The death benefit of a(n)_______ Life insurance policy may go down because of poor investment returns
Variable
If a term life insurance is convertible, the policy can be:
changed to a comparable whole life policy.
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.
continuous whole life
The primary purpose of life insurance is to provide
financial security for dependents in the event of death
Employers often provide _____ life insurance as a fringe benefit for their employees.
group
A(n) _____ policy is a contract between an individual and a company under which the company agrees to reimburse the individual for losses suffered by him or her according to specified terms
insurance
You want to pay premiums for 20 years and have your insurance premium obligations finished at that time. However, you feel you will need life insurance for the rest of your life. You should choose a _____ insurance.
limited payment whole life
The probability of a loss occurring can be reduced by
loss prevention
Insurance companies make profit by
paying out less than the sum of the premiums and the earnings on them.
Group life insurance is most likely to be for
term
A life insurance policy can be structured so that the death benefits are paid directly to a named beneficiary which means that
the cash benefits from your life insurance policy cannot be claimed by creditors
Which of the following represents a disadvantage of a whole life insurance policy
A whole life insurance policy often provides lower yields than other investment vehicles.
Universal Life Insurance
Combined savings/investment plan and insurance policy
________ is a relatively expensive type of decreasing term life insurance
Credit life
Insurance is it all that can reduce your _____ risk
Economic
Only one agent should be consulted for discussing personal financial needs and insurance requirements while buying life insurance
False
The primary purpose of life insurance is to provide a tax advantage investment plan
False
Underwriters can predict whether or not you will suffer a loss this year
False
Family is faced with the loss of a principal wage earner receive Social Security benefits
From the government that are intended to provide basic minimum support
Group life insurance is a(n)
Insurance that provides a master policy for a group
______ is any activity that keeps loss from occurring
Loss prevention
Term life insurance is characterized by
Lower initial premiums then other types of insurance
The settlement option chosen by most policyholders is
Lump sum
Which of the following leads to the payment of a higher insurance premium by the potential insured
Obesity of the potential insured
The basic purpose of insurance is to
Protect you and your family from economic losses
A(n)______ provision and it was you to purchase the policy again and it's expiration
Renewable
________ is the choice to except and bear the risk of loss
Risk assumption
_______ involves abstaining from any activity that will affect an individual financially
Risk avoidance
Which of the following statements regarding risk avoidance is true
Risk avoidance is any activity that helps evade an act that creates a risk
The purchase of insurance is a common form of _____ by the insured
Risk transfer
Which of the following types of insurance policies provides temporary coverage for a set period
Term life insurance policy
The underwriting function of insurance companies is designed to ensure that premiums are based on
The chance of Losses
Underwriting refers to
The determination of which exposures to ensure
