Chapter 08 Test A

Chapter 08 Test A - Chapter 8 Test A 1. When a primary...

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1 Chapter 8 Test A 1. When a primary beneficiary dies before the insured, proceeds are payable to a. the state b. the probate court c. the insured's estate d. the contingent beneficiary or beneficiaries e. the insurance company keeps the proceeds 2. The basic purpose of insurance is to a. protect your health. b. protect you from losses. c. supplement your income. d. shield you from bad decisions. e. none of these 3. Insurance is a tool that can lessen ____ risk. a. social b. mental c. economic d. accident e. exposure 4. Which of the following companies does NOT rate the financial strength of life insurance companies? a. A.M. Best b. Moody's c. Duff & Phelps d. Weiss e. Welch's 5. The most valuable single technique in personal risk management to assist an individual in determining how much life insurance is needed is: a. Computing the Human Life Value. b. Using the probability of death each year, prevailing interest rates and assumed inflation rates to find the discounted present value of a future income stream. c. Assessing the family's total economic needs and subtracting financial resources available to meet those needs. d. Estimating the sum of money which, when paid in installments, will produce the same income as the person would have earned, after deducting assumed amounts for taxes and personal maintenance expenses. e. Using a multiple of earnings adjusted for occupation. 6. Underwriting helps protect life insurance companies from which of the following: a. major downturns in the economy b. short-term shocks in the investment markets c. adverse selection d. having too many healthy people buy life insurance
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This note was uploaded on 03/15/2011 for the course ECON 201 taught by Professor Sung during the Spring '08 term at Indiana.

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Chapter 08 Test A - Chapter 8 Test A 1. When a primary...

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