FAMILY FINANCE: EXAM 2 – 2025 150 PRACTICE QUESTIONS
ON RISK MANAGEMENT AND LIFE INSURANCE WITH
VERIFIED ANSWERS WITH MOST TESTED QUESTIONS
GRADED A+
THIS RESOURCE PROVIDES A DETAILED REVIEW OF RISK MANAGEMENT PRINCIPLES AND
LIFE INSURANCE PLANNING FOR FAMILY FINANCE EXAM 2. STUDENTS WILL LEARN THE
DIFFERENCES BETWEEN TERM AND WHOLE LIFE INSURANCE, METHODS TO CALCULATE
COVERAGE NEEDS, AND STRATEGIES FOR MITIGATING FINANCIAL RISK. THIS PRACTICE SET IS
DESIGNED TO STRENGTHEN UNDERSTANDING OF PERSONAL FINANCIAL SECURITY AND
INSURANCE DECISIONS.
Which of the following is NOT a way to manage risk?
A. Assume it
B. Avoid it
C. Consume it
D. Reduce it
E. Transfer it - CORRECT ANSWER-C. Consume it
Which of the following is (are) not an advantage(s) of term life insurance?
A. Low Commissions
B. Inexpensive
C. Builds Cash Value
D. A & B
E. All of the above - CORRECT ANSWER-C. Builds Cash Value
Elder Marvin J. Ashton stated that it is necessary to have four types of insurance. What are they?
A. Automobile insurance, medical insurance, homeowner's insurance, and adequate life insurance
program
B.Dental insurance, travelers insurance, credit card insurance, and rental car insurance
C. Home equity insurance, private mortgage insurance, flight insurance, and mortgage life insurance
,D. Unemployment insurance, disease insurance, accidental-death insurance, life insurance -
CORRECT ANSWER-A. Automobile insurance, medical insurance, homeowner's insurance, and
adequate life insurance program
Premiums for term life insurance generally increase as you get older. Premiums for traditional whole
life insurance generally do not increase as you get older.
True
False - CORRECT ANSWER-TRUE
Heather is looking at life insurance policies for her family. Heather makes $65,000 per year. Using
the multiple of income method and a multiple of 20, how much life insurance does she need? (see
example 6.1)
A. $500,000
B. $900,000
C. $1,200,000
D. $1,300,000
E. Not enough information is provided to calculate how much life insurance she needs. - CORRECT
ANSWER-D. $1,300,000
Grant is a graduate student at BYU and needs to purchase life insurance to protect his wife and two
children should he die. How much life insurance should he purchase if he makes $70,000 a year and
has an insurance multiple of 15? (see example 6.2)
A. $1,025,000
B. $1,050,000
C. $2,000,000
D. $2,050,000 - CORRECT ANSWER-B. $1,050,000
How much life insurance should Kaden purchase to protect his family should he die using the needs
analysis if he wants to provide $70,000 per year in after-tax income for 20 years and expects 2.5%
return and falls in the 15% marginal tax bracket? (see example 6.3)
A. $1,130,912.46
B. $1,091,241.36
C. $1,154,944.35
, D. $1,118,522.39 - CORRECT ANSWER-A. $1,130,912.46
Using the needs analysis, how much life insurance should Robyn purchase if she wants to provide
$48,000 at the beginning of each year for 10 years and expects a return of 3.95% to care for her
family should she die? (see example 6.3)
A. $410,639.56
B. $390,293.86
C. $405,710.47
D. $471,423.21 - CORRECT ANSWER-C. $405,710.47
As the main provider, James has determined he needs to purchase life insurance. He needs to
provide a real $65,000 per year until his youngest, who is currently 3, is 23 years old. James expects
a return of 4% and falls in the 15% marginal tax bracket. James also expects a 1.8% inflation rate.
Using the needs analysis method, how much life insurance should James purchase? Round all
interest rate calculations to 4 decimal places. (see example 6.3)
A. $976,492.09
B. $989,348.46
C. $1,005,459.36
D. $1,108,298.72
E. $1,125,699.01 - CORRECT ANSWER-D. $1,108,298.72
Clive, a CNA (certified nursing assistant), hurts his back while transferring a client at his work.
Chiropractic work and physical therapy cost Clive $6,000. Clive's health insurance policy has a $1,700
deductible, and 80/20 coinsurance with a maximum copayment of $1,200. (see example 6.5.)
What is Clive's maximum annual out-of-pocket cost?
A. $900
B. $1,200
C. $1,700
D. $2,900 - CORRECT ANSWER-D. $2,900
Clive, a CNA (certified nursing assistant), hurts his back while transferring a client at his work.
Chiropractic work and physical therapy cost Clive $6,000. Clive's health insurance policy has a $1,700
deductible, and 80/20 coinsurance with a maximum copayment of $1,200. (see example 6.5.)
ON RISK MANAGEMENT AND LIFE INSURANCE WITH
VERIFIED ANSWERS WITH MOST TESTED QUESTIONS
GRADED A+
THIS RESOURCE PROVIDES A DETAILED REVIEW OF RISK MANAGEMENT PRINCIPLES AND
LIFE INSURANCE PLANNING FOR FAMILY FINANCE EXAM 2. STUDENTS WILL LEARN THE
DIFFERENCES BETWEEN TERM AND WHOLE LIFE INSURANCE, METHODS TO CALCULATE
COVERAGE NEEDS, AND STRATEGIES FOR MITIGATING FINANCIAL RISK. THIS PRACTICE SET IS
DESIGNED TO STRENGTHEN UNDERSTANDING OF PERSONAL FINANCIAL SECURITY AND
INSURANCE DECISIONS.
Which of the following is NOT a way to manage risk?
A. Assume it
B. Avoid it
C. Consume it
D. Reduce it
E. Transfer it - CORRECT ANSWER-C. Consume it
Which of the following is (are) not an advantage(s) of term life insurance?
A. Low Commissions
B. Inexpensive
C. Builds Cash Value
D. A & B
E. All of the above - CORRECT ANSWER-C. Builds Cash Value
Elder Marvin J. Ashton stated that it is necessary to have four types of insurance. What are they?
A. Automobile insurance, medical insurance, homeowner's insurance, and adequate life insurance
program
B.Dental insurance, travelers insurance, credit card insurance, and rental car insurance
C. Home equity insurance, private mortgage insurance, flight insurance, and mortgage life insurance
,D. Unemployment insurance, disease insurance, accidental-death insurance, life insurance -
CORRECT ANSWER-A. Automobile insurance, medical insurance, homeowner's insurance, and
adequate life insurance program
Premiums for term life insurance generally increase as you get older. Premiums for traditional whole
life insurance generally do not increase as you get older.
True
False - CORRECT ANSWER-TRUE
Heather is looking at life insurance policies for her family. Heather makes $65,000 per year. Using
the multiple of income method and a multiple of 20, how much life insurance does she need? (see
example 6.1)
A. $500,000
B. $900,000
C. $1,200,000
D. $1,300,000
E. Not enough information is provided to calculate how much life insurance she needs. - CORRECT
ANSWER-D. $1,300,000
Grant is a graduate student at BYU and needs to purchase life insurance to protect his wife and two
children should he die. How much life insurance should he purchase if he makes $70,000 a year and
has an insurance multiple of 15? (see example 6.2)
A. $1,025,000
B. $1,050,000
C. $2,000,000
D. $2,050,000 - CORRECT ANSWER-B. $1,050,000
How much life insurance should Kaden purchase to protect his family should he die using the needs
analysis if he wants to provide $70,000 per year in after-tax income for 20 years and expects 2.5%
return and falls in the 15% marginal tax bracket? (see example 6.3)
A. $1,130,912.46
B. $1,091,241.36
C. $1,154,944.35
, D. $1,118,522.39 - CORRECT ANSWER-A. $1,130,912.46
Using the needs analysis, how much life insurance should Robyn purchase if she wants to provide
$48,000 at the beginning of each year for 10 years and expects a return of 3.95% to care for her
family should she die? (see example 6.3)
A. $410,639.56
B. $390,293.86
C. $405,710.47
D. $471,423.21 - CORRECT ANSWER-C. $405,710.47
As the main provider, James has determined he needs to purchase life insurance. He needs to
provide a real $65,000 per year until his youngest, who is currently 3, is 23 years old. James expects
a return of 4% and falls in the 15% marginal tax bracket. James also expects a 1.8% inflation rate.
Using the needs analysis method, how much life insurance should James purchase? Round all
interest rate calculations to 4 decimal places. (see example 6.3)
A. $976,492.09
B. $989,348.46
C. $1,005,459.36
D. $1,108,298.72
E. $1,125,699.01 - CORRECT ANSWER-D. $1,108,298.72
Clive, a CNA (certified nursing assistant), hurts his back while transferring a client at his work.
Chiropractic work and physical therapy cost Clive $6,000. Clive's health insurance policy has a $1,700
deductible, and 80/20 coinsurance with a maximum copayment of $1,200. (see example 6.5.)
What is Clive's maximum annual out-of-pocket cost?
A. $900
B. $1,200
C. $1,700
D. $2,900 - CORRECT ANSWER-D. $2,900
Clive, a CNA (certified nursing assistant), hurts his back while transferring a client at his work.
Chiropractic work and physical therapy cost Clive $6,000. Clive's health insurance policy has a $1,700
deductible, and 80/20 coinsurance with a maximum copayment of $1,200. (see example 6.5.)
