RMIN 4000 Edmunds Chapter 11 Exam
Questions and Answers
what is premature death? - Correct Answers -the death of a family head with
outstanding unfulfilled financial obligations
what are the costs of premature death? - Correct Answers -- future earnings are lost
forever
- additional expenses are incurred (ex. funeral expenses)
- possible reduction in standard of living for survivors
how much life insurance is needed? - Correct Answers -it depends on family size,
income levels, existing financial assets and financial goals
what are the approaches to estimate the amount of life insurance? - Correct Answers -
human life value approach and needs approach
what is the human life value approach? - Correct Answers -the present value of the
family's share of the deceased breadwinner's future earnings
what is variable life insurance? - Correct Answers -a fixed-premium policy in which the
death benefit and cash values vary according to the investment experience of a
separate account maintained by the insurer
what is universal life insurance? - Correct Answers -a flexible premium policy that
provides lifetime protection
what happens after the first premium of universal life insurance? - Correct Answers -the
policyholder decides the amount and frequency of payments
when does cash value accumulate for universal life insurance? - Correct Answers -on
premiums net of mortality charges and expense charges
what is the needs approach? - Correct Answers -the amount needed depends on the
financial needs that must be met if the family head should die
what are the human life value approach steps? - Correct Answers -1. estimate the
individuals average annual earnings over their productive lifetime
2. deduct taxes and self-maintenance costs
Questions and Answers
what is premature death? - Correct Answers -the death of a family head with
outstanding unfulfilled financial obligations
what are the costs of premature death? - Correct Answers -- future earnings are lost
forever
- additional expenses are incurred (ex. funeral expenses)
- possible reduction in standard of living for survivors
how much life insurance is needed? - Correct Answers -it depends on family size,
income levels, existing financial assets and financial goals
what are the approaches to estimate the amount of life insurance? - Correct Answers -
human life value approach and needs approach
what is the human life value approach? - Correct Answers -the present value of the
family's share of the deceased breadwinner's future earnings
what is variable life insurance? - Correct Answers -a fixed-premium policy in which the
death benefit and cash values vary according to the investment experience of a
separate account maintained by the insurer
what is universal life insurance? - Correct Answers -a flexible premium policy that
provides lifetime protection
what happens after the first premium of universal life insurance? - Correct Answers -the
policyholder decides the amount and frequency of payments
when does cash value accumulate for universal life insurance? - Correct Answers -on
premiums net of mortality charges and expense charges
what is the needs approach? - Correct Answers -the amount needed depends on the
financial needs that must be met if the family head should die
what are the human life value approach steps? - Correct Answers -1. estimate the
individuals average annual earnings over their productive lifetime
2. deduct taxes and self-maintenance costs
