money and credit tompkins Ch 8 quiz questions

universal life insurance is

a combined investment plan and insurance policy

a (blank) 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

the probability of a loss occurring can be reduced by

loss prevention

which of the following is true of the multiple-of-earnings method?

the multiple-of-earnings method determines the amount of life insurance coverage needed by multiplying the gross annual earnings of the insured by some selected number

T/F guaranteed renewable term insurance allows you to renew a policy for another term without qualifying medically

true

T/F generally, the primary purpose of life insurance is to provide a tax-advantaged investment plan

false

T/F only one agent should be consulted for discussing personal finance needs and insurance requirements while buying life insurance

false

the primary purpose of a life insurance plan is to help

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

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

industrial life insurance

the settlement option chosen by most policyholders is

lump sum

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

named beneficiary

insurance companies make profit by

paying out less than the sum of the premiums and the earnings on them

(blank) is an effective way to handle small exposures to loss when insurance is too expensive

risk assumption

you can learn about the financial strength of an insurance company by checking (blank) rating system

standard & poor's

T/F life insurance proceeds paid to your heirs are not usually subject to state or federal income taxes

true

T/F social security survivors benefits are intended to provide basic, minimum support to families faces with the loss of the principal wage earner

true

insurance companies use (blank) to determine whom they will insure and what they will charge for the coverage

underwriting

it can be difficult to evaluate the true cost of a (blank) at the time of purchase

universal life insurance

the policy owner assumes the investment risk with a (blank) insurance policy

variable life

sales commissions and marketing expenses can increase the costs of a fully loaded (blank) policy

while life insurance