21. Michael and Sandy purchased a home for $100,000 five years ago. If it apprec

Question

21. Michael and Sandy purchased a home for $100,000 five years ago. If it appreciated 6% annually, what is it worth today?
a. $100,000
b. $106,000
c. $130,000
d. $133,823
e. $135,603


____ 22. Insurance is a tool that can lessen ____ risk.
a. social
b. mental
c. economic
d. accident
e. exposure


____ 23. Phil, who has enjoyed perfect health throughout his life, has determined that he needs a $1,000,000 30-year level term life insurance policy and is trying to choose the insurance company from which to purchase the policy. He predicts that his family will need the coverage for about 30 years. What should be the most important factor is Phil's decision of which insurance company to use?
a. price
b. cash value build up
c. underwriting service
d. claim service
e. financial strength


____ 24. From the standpoint of the person buying insurance, the central purpose of insurance should be:
a. to collect for all accidental losses
b. to transfer risks of serious losses
c. to support the prevention of losses
d. to accumulate savings
e. to reduce payments for the most frequently occurring losses


____ 25. 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.


____ 26. The probability of a loss occurring can be reduced by
a. risk observance.
b. loss prevention.
c. risk assumption.
d. risk retention.
e. insurance.


____ 27. The settlement option chosen by most beneficiaries is
a. lump sum.
b. interest only.
c. fixed amount.
d. fixed time.
e. life income.


____ 28. ____ is a common provision in many term policies.
a. A reward clause
b. A renewable clause
c. Cash value
d. A limited clause
e. An arbitration clause


____ 29. Which of the following is not characteristic of universal life insurance?
a. flexible premiums
b. choice of how the accumulation account is invested
c. option A provides a level death benefit
d. option B provides a stated amount of insurance plus the accumulated cash value
e. the death protection and the savings portion are identified separately


____ 30. Which of the following is not true about survivorship insurance?
a. It is needed by most dual-earner families.
b. It is also know as last-to-die insurance.
c. It is used primarily to help pay estate taxes.
d. It is less expensive than two separate policies.
e. It covers the lives of two people.

Explanation / Answer

21. d. $133,823 22. d. accident 23. b. cash value build up 24. c. to support the prevention of losses 25. a. Computing the Human Life Value. 26. c. risk assumption. 27. a. lump sum. 28. d. A limited clause 29. not sure 30 . b. It is also know as last-to-die insurance. please rate appreciated

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