1-May-Yun, age 45, estimates that she needs to buy $300,000 in life insurance to protect her dependent children from suffering adverse financial consequences in the event of her death. As a single parent, she's on a pretty tight budget. (a1) Will term or permanent life insurance be more appropriate to meet her needs right now?

Term

Permanent

2-Which is the key difference between life insurance and auto and homeowners insurance?

Certainty of insurable risk

Concept of risk pooling

Preservation of household wealth

Premiums based on risk classification

3-Which of the following would cause the amount of life insurance that you need to increase?

Your spouse quits his job to take care of the new baby.

You get divorced.

Your estate tax is to be repealed.

You receive a significant inheritance from your parents.

4-Which factor would increase your life insurance need?

Your spouse earns a lot more than you.

You have significant health problems.

Your youngest child is getting married.

Your mortgage is almost paid off.

5-What is the goal of the financial needs method of determining your life insurance needs?

Buy enough life insurance to meet all the financial needs of your surviving dependents.

Buy enough life insurance to meet all your financial obligations (debt, education, retirement fund).

Replace the present value of lost income or services provided by you.

Replace your income after death (salary, Social Security, retirement benefits).

6-If you want to get the largest amount of life insurance for a given amount of premium, its best to purchase ______ life insurance.

level term

universal

variable

regular term

7-Which type of term life insurance maintains the face value without increasing premiums within the policy period?

Level term

Guaranteed renewable term

Decreasing term

Convertible term

8-Are life insurers never required to pay benefits if the policyholder commits suicide?

No, it depends on the terms of the suicide clause.

Yes, its the principle of indemnity.

Yes, its against the law.

No, it depends on terms of the double indemnity clause.

9-Benefits under a long-term care insurance policy are usually paid as a

specified dollar amount per day, regardless of the actual cost of care.

percentage of actual cost of care.

specified dollar amount per year, regardless of the actual cost of care.

percentage of actual cost of care per day.