Question 1

From the standpoint of a person buying insurance, the central purpose of insurance should be:

Accepted Answer

A) to transfer the risk of serious losses. 
B) to collect for all accidental losses. 
C) to profit from uncertain future events. 
D) to contribute to charitable purposes. 
E) to reduce the cost of taking small risks. 
A) to transfer the risk of serious losses. 
B) to collect for all accidental losses. 
C) to profit from uncertain future events. 
D) to contribute to charitable purposes. 
E) to reduce the cost of taking small risks. A

Question 2

Insurance companies make profit by:

Accepted Answer

A) charging consultation fees to the insured. 
B) avoiding the risk of loss of the insured. 
C) charging underwriting fees from insurance agents. 
D) paying out less than the sum of the premiums and the earnings on them. 
E) giving less than the amount mentioned in the policy to the insured. 
A) charging consultation fees to the insured. 
B) avoiding the risk of loss of the insured. 
C) charging underwriting fees from insurance agents. 
D) paying out less than the sum of the premiums and the earnings on them. 
E) giving less than the amount mentioned in the policy to the insured. D

Question 3

_____ is any activity that keeps loss from occurring.

Accepted Answer

A) Loss control 
B) Risk transfer 
C) Loss prevention 
D) Risk sharing 
E) Loss acceptance 
A) Loss control 
B) Risk transfer 
C) Loss prevention 
D) Risk sharing 
E) Loss acceptance C

Question 4

The death benefit of a(n)_____ life insurance policy may go down because of poor investment returns.

Accepted Answer

A) limited payment 
B) whole 
C) variable 
D) group 
E) industrial 
A) limited payment 
B) whole 
C) variable 
D) group 
E) industrial

Question 5

Risk avoidance involves asking an insurance company to take over the risk in exchange for a small payment.

Accepted Answer

A) True 
 B)False

Question 6

The settlement option chosen by most policyholders is:

Accepted Answer

A) lump sum. 
B) interest only. 
C) fixed amount. 
D) fixed time. 
E) life income. 
A) lump sum. 
B) interest only. 
C) fixed amount. 
D) fixed time. 
E) life income.

Question 7

Which of the following statements regarding the multiple-of-earnings method is true?

Accepted Answer

A) The multiple-of-earnings method determines the amount of life insurance coverage needed by multiplying the net annual earnings of the insured by some selected number. 
B) The multiple-of-earnings method determines the amount of life insurance coverage needed by multiplying the gross annual earnings of the insured by some selected number. 
C) The multiple-of-earnings method considers the insured's financial obligations to compute the insurance premium amount. 
D) The multiple-of-earnings method subtracts specific financial obligations and resources from the gross annual earnings of the insured to determine the amount of annual insurance premium. 
E) The multiple-of-earnings method multiplies the amount of tax benefits available to the insured when the life insurance benefit is paid. 
A) The multiple-of-earnings method determines the amount of life insurance coverage needed by multiplying the net annual earnings of the insured by some selected number. 
B) The multiple-of-earnings method determines the amount of life insurance coverage needed by multiplying the gross annual earnings of the insured by some selected number. 
C) The multiple-of-earnings method considers the insured's financial obligations to compute the insurance premium amount. 
D) The multiple-of-earnings method subtracts specific financial obligations and resources from the gross annual earnings of the insured to determine the amount of annual insurance premium. 
E) The multiple-of-earnings method multiplies the amount of tax benefits available to the insured when the life insurance benefit is paid.

Question 8

A(n)_____ policy is a contract between an individual and a company under which the company agrees to reimburse the individual for losses suffered by him or her according to specified terms.

Accepted Answer

A) underwriting 
B) risk 
C) insurance 
D) debt 
E) reimbursement 
A) underwriting 
B) risk 
C) insurance 
D) debt 
E) reimbursement

Question 9

You can learn about the financial strength of an insurance company by checking _____ rating system.

Accepted Answer

A) the insurance agent's 
B) the U.S. Securities and Exchange Commission's 
C) Standard & Poor's 
D) the Federal Bureau of Investigation's 
E) a financial institution ' s 
A) the insurance agent's 
B) the U.S. Securities and Exchange Commission's 
C) Standard & Poor's 
D) the Federal Bureau of Investigation's 
E) a financial institution ' s

Question 10

Which of the following statements regarding a good insurance agent is true?

Accepted Answer

A) The agent is aggressive while pursuing business from the potential insured. 
B) The agent is recommended by professionals like bankers and attorneys. 
C) The agent charges high commissions for providing insurance coverage. 
D) The agent replies with fancy buzzwords and generic answers to questions. 
E) The agent is the first one to solicit the potential insured's patronage. 
A) The agent is aggressive while pursuing business from the potential insured. 
B) The agent is recommended by professionals like bankers and attorneys. 
C) The agent charges high commissions for providing insurance coverage. 
D) The agent replies with fancy buzzwords and generic answers to questions. 
E) The agent is the first one to solicit the potential insured's patronage.

Question 11

It is advisable to purchase life insurance from an insurance company that has been in business for at least _____ years.

Accepted Answer

A) 5 
B) 10 
C) 19 
D) 15 
E) 25 
A) 5 
B) 10 
C) 19 
D) 15 
E) 25

Question 12

Social Security survivor's benefits are intended to provide basic, minimum support to families faced with the loss of a principal wage earner.

Accepted Answer

A) True 
 B)False

Question 13

Insurance companies use _____ to determine whom they will insure and what they will charge for the coverage.

Accepted Answer

A) Social Security survivor's benefits 
B) the needs analysis method 
C) underwriting 
D) risk assumption 
E) loss control 
A) Social Security survivor's benefits 
B) the needs analysis method 
C) underwriting 
D) risk assumption 
E) loss control

Question 14

The availability of group coverage through employee benefit programs should be considered when developing a life insurance program.

Accepted Answer

A) True 
 B)False

Question 15

Only one agent should be consulted for discussing personal financial needs and insurance requirements while buying life insurance.

Accepted Answer

A) True 
 B)False

Question 16

A nonforfeiture option guarantees that a policyholder will not lose the policy's:

Accepted Answer

A) face value. 
B) death benefits for survivors. 
C) cash value. 
D) premium refunds. 
E) premium reductions. 
A) face value. 
B) death benefits for survivors. 
C) cash value. 
D) premium refunds. 
E) premium reductions.

Question 17

Insurance companies use actuarial data to measure the:

Accepted Answer

A) creditworthiness of a given population. 
B) risk of loss for a given population. 
C) wealth of a given population. 
D) gross productivity of a given population. 
E) age of a given population. 
A) creditworthiness of a given population. 
B) risk of loss for a given population. 
C) wealth of a given population. 
D) gross productivity of a given population. 
E) age of a given population.

Question 18

Which of the following statements regarding risk avoidance is true?

Accepted Answer

A) Risk avoidance is any activity that helps evade an act that creates a risk. 
B) Risk avoidance is any activity that increases the chance that a loss will occur. 
C) Risk avoidance is any activity that lessens the severity of loss once it occurs. 
D) Risk avoidance is an act that reduces the probability that a loss will occur. 
E) Risk avoidance is an effective way to handle small exposures to loss when insurance is too expensive. 
A) Risk avoidance is any activity that helps evade an act that creates a risk. 
B) Risk avoidance is any activity that increases the chance that a loss will occur. 
C) Risk avoidance is any activity that lessens the severity of loss once it occurs. 
D) Risk avoidance is an act that reduces the probability that a loss will occur. 
E) Risk avoidance is an effective way to handle small exposures to loss when insurance is too expensive.

Question 19

A life insurance agent who takes his or her profession seriously is likely to have earned a professional certification like the:

Accepted Answer

A) Chartered Financial Analyst. 
B) Chartered Life Underwriter. 
C) Chartered Financial Advisor. 
D) Certified Insurance Agent. 
E) Certified Asset Professional. 
A) Chartered Financial Analyst. 
B) Chartered Life Underwriter. 
C) Chartered Financial Advisor. 
D) Certified Insurance Agent. 
E) Certified Asset Professional.

Question 20

_____ is any activity that lessens the severity of loss once it occurs.

Accepted Answer

A) Loss control 
B) Loss prevention 
C) Risk control 
D) Risk avoidance 
E) Risk sharing 
A) Loss control 
B) Loss prevention 
C) Risk control 
D) Risk avoidance 
E) Risk sharing

From the standpoint of a person buying insurance, the central purpose of insurance should be:

Insurance companies make profit by:

_____ is any activity that keeps loss from occurring.

The death benefit of a(n)_____ life insurance policy may go down because of poor investment returns.

Risk avoidance involves asking an insurance company to take over the risk in exchange for a small payment.

The settlement option chosen by most policyholders is:

Which of the following statements regarding the multiple-of-earnings method is true?

A(n)_____ policy is a contract between an individual and a company under which the company agrees to reimburse the individual for losses suffered by him or her according to specified terms.

You can learn about the financial strength of an insurance company by checking _____ rating system.

Which of the following statements regarding a good insurance agent is true?

It is advisable to purchase life insurance from an insurance company that has been in business for at least _____ years.

Social Security survivor's benefits are intended to provide basic, minimum support to families faced with the loss of a principal wage earner.

Insurance companies use _____ to determine whom they will insure and what they will charge for the coverage.

The availability of group coverage through employee benefit programs should be considered when developing a life insurance program.

Only one agent should be consulted for discussing personal financial needs and insurance requirements while buying life insurance.

A nonforfeiture option guarantees that a policyholder will not lose the policy's:

Insurance companies use actuarial data to measure the:

Which of the following statements regarding risk avoidance is true?

A life insurance agent who takes his or her profession seriously is likely to have earned a professional certification like the:

_____ is any activity that lessens the severity of loss once it occurs.

Understanding the Financial Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, Etfs, and Real Estate

Planning for Retirement

Preserving Your Estate

Filters

Exam 8: Insuring Your Life

From the standpoint of a person buying insurance, the central purpose of insurance should be:

Insurance companies make profit by:

_____ is any activity that keeps loss from occurring.

The death benefit of a(n)_____ life insurance policy may go down because of poor investment returns.

Risk avoidance involves asking an insurance company to take over the risk in exchange for a small payment.

The settlement option chosen by most policyholders is:

Which of the following statements regarding the multiple-of-earnings method is true?

A(n)_____ policy is a contract between an individual and a company under which the company agrees to reimburse the individual for losses suffered by him or her according to specified terms.

You can learn about the financial strength of an insurance company by checking _____ rating system.

Which of the following statements regarding a good insurance agent is true?

It is advisable to purchase life insurance from an insurance company that has been in business for at least _____ years.

Social Security survivor's benefits are intended to provide basic, minimum support to families faced with the loss of a principal wage earner.

Insurance companies use _____ to determine whom they will insure and what they will charge for the coverage.

The availability of group coverage through employee benefit programs should be considered when developing a life insurance program.

Only one agent should be consulted for discussing personal financial needs and insurance requirements while buying life insurance.

A nonforfeiture option guarantees that a policyholder will not lose the policy's:

Insurance companies use actuarial data to measure the:

Which of the following statements regarding risk avoidance is true?

A life insurance agent who takes his or her profession seriously is likely to have earned a professional certification like the:

_____ is any activity that lessens the severity of loss once it occurs.

Understanding the Financial Process

Using Financial Statements and Budgets

Preparing Your Taxes

Managing Your Cash and Savings

Making Automobile and Housing Decisions

Using Credit

Using Consumer Loans

Insuring Your Health

Protecting Your Property

Investment Planning

Investing in Stocks and Bonds

Investing in Mutual Funds, Etfs, and Real Estate

Planning for Retirement

Preserving Your Estate

Filters