BUSFIN 3300 Midterm 2 Questions with Correct Answers

BUSFIN 3300 Midterm 2 Questions with Correct
Answers
Premature Death Correct Answer-Death of a family head with
outstanding unfulfilled financial obligations


Types of families who need insurance Correct Answer-Single people
Single-parent families
Two income earners with children
Traditional families
Blended families
Sandwiched families


Human Life Value approach to determining amount to insure Correct
Answer-Amount needed for insurance depends on the PV of the family's
share of the deceased's future earnings


Needs approach to determining amount to insure Correct Answer-
Amount needed depends on the financial needs that must be met should
the head of the family die


General Categories of Life Insurance Correct Answer-1. Term
2. Cash Value


Term Life Insurance Correct Answer-Protection expires at the end of the
policy unless renewed

, -Premiums increase with renewal
-To minimize adverse selection: age restrictions
-Most are convertible


Yearly Renewable Life Insurance (Term) Correct Answer-Life insurance
policy issued for one year


Term to age 65 Correct Answer-Life insurance policy that expires at age
65


Decreasing Term Correct Answer-Face value gradually decreases each
year


Reentry Term Policy Correct Answer-Renewal premiums based on
lower mortality rates if insured can periodically demonstrate evidence of
insurability


Whole Life Insurance Correct Answer-Cash-value policy that provides
lifetime protection


Ordinary Life Insurance (Whole) Correct Answer-Level-premium policy
that accumulates to age 121
-Premiums paid throughout payment period
-Excess payments paid early on to supplement deficiency in later years