Texas Group 1 Life and Health Insurance Section 2 Questions and Answers

STOLI plans (Stranger originated life insurance) - ANSWER-a third party is involved who has no relation with the policy owner and initiates the purchase of the policy by paying the premiums and later buying the policy thereby. Human Life Value Approach - ANSWER-Calculates the capitalized value of an individuals earning capacity into the future. (Current income is multiplied by the number of years until retirement) Needs approach - ANSWER-attempts to determine how much life insurance will be needed by surviving dependents to cover their needs and expenses, and also any expenses that result from the death of the insured. Lump-Sum Needs - ANSWER--last expenses ( funeral, taxes, debts, medical costs) -an emergency fund to help with unexpected expenses, especially in the period immediately following the death of the insured. -educational needs of the family -mortgage and other payment funds Business Life Insurance - ANSWER-provides capital needed to keep a business running through the economic impact of an owner or major employee's death