Life Insurance and Annuities: Test One Exam Questions
With Accurate Solutions.
Economics of Life Insurance - accurate answers-Weighing economic factors of
getting insurance or not
Why to get life insurance - accurate answers-It's the responsible thing to do, to
take care of final and funeral expenses
Human Life Values - accurate answers-Morals, religion, family, etc. (Most
important part of life insurance)
Monetary Value - accurate answers-Protect earning capacity to benefit
dependents
Bases for Insurance - accurate answers-As a dependent (needs met by
parents). As a provider for dependents. In retirement (social security,
pensions, investments). (3 D.PD.R)
What is the proper amount of insurance needed? - accurate answers-It
depends
Business needs - accurate answers-Key person (steve jobs, warren buffet) ,
credit (collateral) (business operate off of credit for payroll, business
operations), business continuation (buy-sell agreements), employee benefits
(human capital, insurance, what happens when founder dies)
Risk Pooling - accurate answers-Under this system, insurance companies
come together to form a pool, which can provide protection to insurance
companies against catastrophic risks such as floods or earthquakes.
Spreading risk to a lot of people. Group sharing principles of losses (Ex.
hurricane harvey)
Commissioner Standard Ordinary Mortality Table - accurate answers-
Determines the premium death rate for attained age (mortality rate)
, Level Premium - accurate answers-Premiums do not increase, but remain
constant throughout the premium paying period
Reserve Accounts - accurate answers-Is a liability for the insurance company.
Holds 50% of premium for rainy day
Yearly Renewable Term Insurance - accurate answers-- Simplest form offered
- Insurance for 1 year
- Option to renew each year
- No evidence of insurability
- Premiums paid are used to pay those who died in year
Term Policies - accurate answers-Usually either 10, 15, 20, and rarely 30
years. Set period of coverage, level premium for a limited time.
Cheaper, short-term, and less responsibility.
Can convert to a permanent policy.
Just like renting something.
Whole Life Policies - accurate answers-Level premium, higher cost per $1000.
Increase in death benefit. Policy does not mature until the age of 100. Mature=
paid up
**Build in cash value by insurance company**
More ownership
No permissions
Builds equity
Is like owning does not expire!
Term limits - accurate answers-Time limit, < 30 years in 10 yr increments.
Return of Premium - accurate answers-Writer= optional add on and you can
get money back if you outlive term period
With Accurate Solutions.
Economics of Life Insurance - accurate answers-Weighing economic factors of
getting insurance or not
Why to get life insurance - accurate answers-It's the responsible thing to do, to
take care of final and funeral expenses
Human Life Values - accurate answers-Morals, religion, family, etc. (Most
important part of life insurance)
Monetary Value - accurate answers-Protect earning capacity to benefit
dependents
Bases for Insurance - accurate answers-As a dependent (needs met by
parents). As a provider for dependents. In retirement (social security,
pensions, investments). (3 D.PD.R)
What is the proper amount of insurance needed? - accurate answers-It
depends
Business needs - accurate answers-Key person (steve jobs, warren buffet) ,
credit (collateral) (business operate off of credit for payroll, business
operations), business continuation (buy-sell agreements), employee benefits
(human capital, insurance, what happens when founder dies)
Risk Pooling - accurate answers-Under this system, insurance companies
come together to form a pool, which can provide protection to insurance
companies against catastrophic risks such as floods or earthquakes.
Spreading risk to a lot of people. Group sharing principles of losses (Ex.
hurricane harvey)
Commissioner Standard Ordinary Mortality Table - accurate answers-
Determines the premium death rate for attained age (mortality rate)
, Level Premium - accurate answers-Premiums do not increase, but remain
constant throughout the premium paying period
Reserve Accounts - accurate answers-Is a liability for the insurance company.
Holds 50% of premium for rainy day
Yearly Renewable Term Insurance - accurate answers-- Simplest form offered
- Insurance for 1 year
- Option to renew each year
- No evidence of insurability
- Premiums paid are used to pay those who died in year
Term Policies - accurate answers-Usually either 10, 15, 20, and rarely 30
years. Set period of coverage, level premium for a limited time.
Cheaper, short-term, and less responsibility.
Can convert to a permanent policy.
Just like renting something.
Whole Life Policies - accurate answers-Level premium, higher cost per $1000.
Increase in death benefit. Policy does not mature until the age of 100. Mature=
paid up
**Build in cash value by insurance company**
More ownership
No permissions
Builds equity
Is like owning does not expire!
Term limits - accurate answers-Time limit, < 30 years in 10 yr increments.
Return of Premium - accurate answers-Writer= optional add on and you can
get money back if you outlive term period
